With the VAT/GST add-on enabled, X-Cart allows you to use either VAT-inclusive or VAT-exclusive representation for prices.
Setting up VAT-inclusive prices has some peculiarities that a store admin should consider when configuring taxes and costs.
The guides below presume that the VAT/GST add-on is installed and enabled.
The product's price in X-Cart is defined in the Prices & Inventory section of the product details page. This value is stored in the database. By default, the product price displayed on the storefront equals the price stored in the database.
Depending on the admin's choice, a price stored in the database may or may not include VAT for a particular location. According to the X-Cart software logic, a product price stored in the database always includes VAT. The % of VAT applied depends on the location set as the "The VAT/GST inclusive prices as defined in the product details are intended for" value defined on the VAT/GST settings page (Store Setup -> Taxes). If there is no VAT configured for this location, or there is a 0% VAT rate applied, one can consider the prices stored in the database as VAT-exclusive.
Whether your prices are displayed as VAT-inclusive or VAT-exclusive on the storefront depends on the value of the "Display prices in catalog including VAT/GST" setting. For more details, see Configuring VAT/GST.
If the "Display prices in catalog including VAT/GST" setting is disabled, the system automatically decreases all product prices displayed on the storefront by the % of the VAT rate configured for the location defined by the "The VAT/GST inclusive prices as defined in the product details are intended for" setting. The actual prices in the database remain unchanged.
Let us consider one of the most popular tax setup cases.
A product has a price set to £100 in the database.
A store admin proceeds to the VAT/GST page to configure taxes.
X-Cart 5.4.x - Store Setup > Taxes
X-Cart 5.5.x - Store Management > Taxes
There the admin adjusts the settings as follows:
Display prices in catalog, including VAT/GST = On
The VAT/GST inclusive prices as defined in the product details are intended for = UK
After that, the store admin sets some tax rates; for example:
VAT for the UK = 20%
VAT for Hungary = 27%.
In this case, the product price displayed on the storefront will depend on the customer's location:
for a UK-based customer - "£100 inc. VAT" (the same as defined on the product details page in the Admin area):
for a customer from Hungary - "£105,83 inc. VAT":
and for a customer from a location without a VAT rate defined - "£83.33":
That happens because X-Cart decreases the original product price by the percent of VAT defined for the location specified in the "The VAT/GST inclusive prices as defined in the product details are intended for" setting.
Suppose a store admin needs to keep the prices set in the database as a basis for VAT calculation for any possible location. In that case, it is necessary to set "VAT/GST inclusive prices as defined in the product details are intended for" to any tax zone with a 0% tax rate, enable the "Display prices in catalog including VAT/GST" option, then set the actual VAT rates for the locations it is applied for.
If configured the way mentioned above, the product price set in the store Admin area as £100 will be taken as a basis for taxation and will be displayed in the storefront as follows:
for a UK-based customer - "£120 inc. VAT" (£100 + VAT 20%):
for a customer from Hungary - "£127 including VAT" (£100 + VAT %27):x
and for a customer from a location with a zero VAT rate defined (or without any VAT rate defined) - "£100":
Related pages: