Post by Qphoria » Tue Dec 23, 2008 3:43 am

This is a spin off based on some interesting points that came up in another thread.

You have a store with a $10 product
That product is set to have a Tax of "Taxable Goods"
Taxable Goods tax only applies to customers that are in your zone

If you have Display Prices with Tax = NO
Customers will see $10 product in their cart
Customers will checkout and enter their address
If the customer's geozone matches the tax geozone, they will see the tax added at the checkout_confirm page. If not, then they don't see any tax.

BUT

If you have Display Prices with Tax = YES, and tax is set to 10%
Customers will see $11 product
Customers will checkout and enter their address
If the customer's geozone matches the tax geozone, then the price doesn't change. But if the customer is not in the taxable geozone... OR in a higher tax geozone, the price will change

This is bad for UK stores that have VAT... VAT is a sizable chunk of money, but Non-EU customers don't have to pay VAT. But if a customer from USA saw a $100 item selling for $115-$120... he would leave and not return because he might not realize that he doesn't have to pay the extra money, so you've just scared away a potential customer.

So really Display Prices with Tax = YES should only take effect when the customer is logged in. Otherwise they should just be the base price.
OR
the site www.dabs.com has a button at the top for "show with/without VAT included" so you can choose which price you want to see
OR
also on the site www.dabs.com the price shows as "£59.99 inc vat" or "£52.17 ex vat" which could be another way to display it.

Most places like Grocery markets, clothing stores and such in the USA show the base price of an item on the shelf, and when you checkout at the register, that is when tax is added. So usually USA stores would have Display Prices with Tax set to NO anyway as that is the way our economy flows. But UK stores use it mainly to show VAT included, since its such a ridiculously high tax, so people don't get blindsided by the price when they checkout.



Thoughts?
Last edited by Qphoria on Tue Dec 23, 2008 3:52 am, edited 1 time in total.

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Post by JNeuhoff » Fri Dec 26, 2008 9:18 pm

It even gets worse. If $config->get('config_tax') is true, that is, taxes are to be displayed for the products, but the customer isn't yet logged in, then the taxes are calculated based on the store's country and zone. The tax rate based on the store's country and zone may or may not be the same as the one based on the customer's country and zone according to the customer's address.

That means displaying products with taxes only makes sense when the store only ships to customers whose addresses are from the same geo-zone. For example, if a UK store displays the products including the VAT, it should only ship to UK customers, otherwise the store should display the products without the VAT.

I am not sure about the following scenario: A UK store ships to customers anywhere in the EU. Each EU country has different VAT rates. So, if for example a customer from France orders an item from a UK store, what VAT rate is he charged?

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Post by JNeuhoff » Fri Dec 26, 2008 10:06 pm

To answer some of my own questions: The website at http://www.businesslink.gov.uk/bdotg/ac ... 1075326234 has some information on the VAT issue. A VAT-registered store in the UK selling to EU customers normally charges the UK VAT rate, with a few exceptions though as explained in that document.

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Post by Qphoria » Fri Dec 26, 2008 10:18 pm

JNeuhoff wrote: It even gets worse. If $config->get('config_tax') is true, that is, taxes are to be displayed for the products, but the customer isn't yet logged in, then the taxes are calculated based on the store's country and zone. The tax rate based on the store's country and zone may or may not be the same as the one based on the customer's country and zone according to the customer's address.

That means displaying products with taxes only makes sense when the store only ships to customers whose addresses are from the same geo-zone. For example, if a UK store displays the products including the VAT, it should only ship to UK customers, otherwise the store should display the products without the VAT.
LOL is there an echo in here? I thought that is what I just said... maybe not clear enough. :-\ ;)

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Post by JNeuhoff » Fri Dec 26, 2008 10:40 pm

is there an echo in here?


Sorry, yes, I should have read your post more carefully.

Nevertheless, the conclusion is still the same: Displaying products with taxes only makes sense when the store ships to customers located within the same tax zone.

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Post by Qphoria » Fri Dec 26, 2008 11:02 pm

Agreed.
Amazingly this is how Zen-Cart and osCommerce does it and has been doing it all along... This is also how most UK stores I see do it. Maybe there are others. I guess they need smarter people like us over there :)

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Post by hm2k » Sat Dec 27, 2008 12:12 am

JNeuhoff wrote: To answer some of my own questions: The website at http://www.businesslink.gov.uk/bdotg/ac ... 1075326234 has some information on the VAT issue. A VAT-registered store in the UK selling to EU customers normally charges the UK VAT rate, with a few exceptions though as explained in that document.
As far as I was aware, UK sites must display the price on the site including VAT. It should be in the documentation.

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Post by Qphoria » Sat Dec 27, 2008 1:07 am

maybe there should be a regional browser check or something. Or something that says "inc VAT" or "w/tax" on the price.

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Post by OzFitzy » Wed Jan 14, 2009 12:29 pm

Here in Australia it is the law that all products and services display the price inclusive of tax (called GST here and the rate is 10%). Only some fresh food items are exclusive of GST (and I don't sell food). So some businesses need to be able to flag some products as tax exempt. I don't have to.

People purchasing from abroad don't pay GST (that could be handled by zones) - but at this stage I only intend servicing the Australian market. Anyway a person abroad would expect to get the items at less 1/11th (not less 10%) of the displayed price. Maybe a radio button saying
Show Pricing {0}In Australia {0}Outside Australia.
would display prices less 1/11th of the Domestic price??


To satisfy Australian Law:-

So the Domestic invoice just totals up the (tax-included) products as a sub total. Any shipping costs also include GST (10%) and by Australian law the bottom of the invoice has to have a line saying "GST included $X.XX" (NOTE that this not added on - just saying how much is included in the total transaction).

Also the words "TAX INVOICE" have to appear on the invoice.
As and aside it is usual that the business quotes it's ABN "Australian Business Number" (11 digits) for tax purposes - somewhere on the invoice.

I am most interested in using OpenCart for two Australian sites but I would have to overcome those issues. I will have to go looking for example Australian Stores that have solved this. Anyone know of one I can look at?

OzFitzy aka Wayne
Last edited by OzFitzy on Wed Jan 14, 2009 12:36 pm, edited 1 time in total.

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:)
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Post by Qphoria » Wed Jan 14, 2009 12:48 pm

Easy. Move out of Australia :)

The GST thing in the totals can be easily done by changing the existing "VAT" one to "GST".
If you want the order confirmation to say "TAX INVOICE" then you can change the language file

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Post by gchristo » Fri Jan 30, 2009 1:07 am

Where do I find the place to set Display Prices with Tax to NO?

Thanks.

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Post by Qphoria » Fri Jan 30, 2009 1:29 am

Admin->Configuration->Setting->Local Tab

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Post by gchristo » Fri Jan 30, 2009 7:12 am

Thanks! Now, how do I get the home page to update with the change (Latest Products)?

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Post by gchristo » Fri Jan 30, 2009 7:35 am

i should add that I am using the "Latest Products" for the home page. The individual categories are updating and have dropped the tax in the display.
Thanks again.

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Post by jty » Fri Jan 30, 2009 9:16 pm

OzFitzy wrote: Here in Australia it is the law that all products and services display the price inclusive of tax (called GST here and the rate is 10%). Only some fresh food items are exclusive of GST (and I don't sell food).
Are you sure about this being law in Australia ?
It is law that a business must charge GST for all Australian sales (excepting the exempt ones) if the business is registered for GST
But I don't believe it is "law" that the prices must be "shown" inclusive of GST
Though retailers show the prices incl GST, there are many wholesale sites that show prices ex-GST.

The words TAX INVOICE is also only required if the business is registered for GST. Businesses doing a turnover of less than 75K/yr do not need to register for GST. You can also use your accounting program to put the words Tax Invoice, ABN etc for the invoice. It doesn't need to be done in Open Cart.

The answer is simple :
Option 1: per Qphoria
Easy. Move out of Australia
Option 2: Sell condoms. Condoms are GST exempt  8)

BTW - I think eBay Law makes it mandatory to show prices incl GST but eBay law is not Australian law

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Post by gchristo » Fri Jan 30, 2009 10:52 pm

Woohooo. Nevermind. I figured it out. I took a snippet of code from the category page where it was calculating correcty and added it to the home.php file.

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Post by Qphoria » Fri Jan 30, 2009 10:54 pm

what version of opencart are you running? The calculations are the same on all pages since 0.7.8

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