X-Cart with the add-on VAT/GST enabled 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 keep in mind when configuring taxes and prices.
The guides below presume that the add-on VAT/GST is installed and enabled.
The price of a product in X-Cart is set via the ‘Prices & Inventory’ section of the product details page. This price is stored in the database. By default, the product price displayed on the storefront equals the price stored in the database.
A price stored in the database may or may not include VAT for a particular location, depending on the admin’s choice. According to our software logic, a product price stored in the database always includes VAT, and the % of VAT applied to the price depends on the location defined by the setting The VAT/GST inclusive prices as defined in the product details are intended for 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 setting “Display prices in catalog including VAT/GST”. For more details, see Configuring VAT/GST.
If the setting “Display prices in catalog including VAT/GST” is disabled, the system automatically decreases all the product prices displayed on the storefront by the % of the VAT rate configured for the location defined by the setting The VAT/GST inclusive prices as defined in the product details are intended for. The actual prices in the database remain unchanged.
Let us consider one of the most popular cases in the taxes setup routine.
A product has a price set to £100 in the database.
A store admin proceeds to taxes configuration (Store Setup > Taxes, VAT/GST tab). There the admin implements the following settings:
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 for a UK-based customer will be “£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.
If a store admin needs to keep the prices set in the database as a basis for VAT calculation for any possible location, 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 and 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 above-mentioned way, 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 for a UK-based customer as “£120 inc. VAT” (£100 + VAT 20%):
for a customer from Hungary - as “£127 including VAT” (£100 + VAT %27):
and for a customer from a location with a zero VAT rate defined (or without any VAT rate defined) - “£100”: