[OFBiz] Users - Sales Tax / VAT

[Mike Metcalfe]

Using the includedTaxRate concept works for South Africa where it is illegal
to quote a price that does not include VAT.  We also have an indicator on
items that are zero rated - we don't pay VAT on basic foodstuffs like milk
and bread.
For example:
	Bread			R5.00 #
	Washing Powder	R10.00
	Total			R15.00
	Vat @ 14%		R1.40

So the R1.40 VAT is included in the price of the washing powder of R10.00
and the bread is not tax at all.

-----Original Message-----
From: users-bounces at lists.ofbiz.org
[mailto:users-bounces at lists.ofbiz.org]On Behalf Of David Garrett
Sent: 09 May 2005 04:58
To: 'OFBiz Users / Usage Discussion'
Subject: RE: [OFBiz] Users - Sales Tax / VAT


Sorry, I don't quite understand the purpose of includedTaxRate ... Could you
clarify.

The includeTaxRate (based on the way I interpret the idea) would need to be
associated with GEO. It is currently associated with currency, probably the
geo relationship similar to SimpleSalesTaxLookup.

With respect to rounding errors our tax office gives us the choice of 2
calculation methods for software:
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr200036.htm

** I think the requrement using the line Item Approach(below)for Aust would
therefore be to base the calculation on the incTax price and NOT the
exTaxPrice.
I suspect the same would apply for the UK.

Quoted from Tax Office ...
Total Invoice Approach
A business can total the prices of all taxable items, where the GST is
1/11(10% GST for Aust) of the price, on an invoice and then make a single
'divide by 11' calculation of the gross taxable amount to arrive at the
total GST. This total will then be rounded to the nearest whole cent. The
rounding rule will be: round down to the nearest whole cent below half a
cent; round up to the nearest whole cent from half a cent.

OR

Line Item Approach
A business may also calculate the GST on each taxable item or invoice line
and add up these amounts to arrive at the total GST for an invoice or for
the total GST liability.

In taking the line item approach a business must record the GST on each
taxable item or line of items to as many decimal points as their system
allows. The total GST for the invoice will then be the sum of the individual
line item amounts of GST. Where necessary to get to whole cents, this total
will then be rounded: round down to the nearest whole cent below half a
cent; round up to the nearest whole cent from half a cent.

If the accounting system can only record dollars and whole cents then the
amount of GST for each taxable item or line of items is to be recorded using
the rule: round down to the nearest whole cent below half a cent; round up
to the nearest whole cent from half a cent.





, maybe wherever the tax rate is stored may have an optional service name
that can be called to fix any rounding issues (if null default to a standard
treatment). We have tax rules for dealing with rounding ... I have not
looked at the detail and have just used standard rounding processing. BUT if
the desire is to display the incTaxPrice then we may still have a rounding
issue that

-----Original Message-----
From: users-bounces at lists.ofbiz.org [mailto:users-bounces at lists.ofbiz.org]
On Behalf Of David E. Jones
Sent: Saturday, 7 May 2005 4:37 PM
To: OFBiz Users / Usage Discussion
Subject: Re: [OFBiz] Users - Sales Tax / VAT


I'm not an expert on this, but of the options mentioned I think it makes the
most sense to flag different prices as tax included and to specify the tax
rate on them.

I would say just have the price not include tax and let the tax calculation
stuff take care of adding it, but that can results in rounding issues and
other undesirable side-effects.

We could do this by adding a single non-primary-key field to the
ProductPrice table that specifies the includedTaxRate, and if null it will
default to no tax included (ie 0%). The shopping cart and order creation
code, well and display code, okay and the calculateProductPrice service,
would have to be updated to support this.

Does that sound reasonable/sufficient? If so, perhaps some one could create
an abstract of this thread and create an issue for it in Jira.

-David


On May 6, 2005, at 3:53 AM, Ray wrote:

> Hi,
>
> Has anybody set up VAT (value added tax - basically sales tax in US
> terms) in OFBiz using the UK principles? I'll outline the format we
> use outside of OFBiz and would be interested in hearing if anybody has
> already set it up or suggestions on modifications that could be made
> to put support for it into the framework.
>
> We deal with 3 VAT categories (I'm sure there are more for other
> industries):
> 1) 0% - items like books are exempt
> 2) 13% - books with audio tapes would fall into this category
> 3) 17.5% - The normal VAT rate for all other products
>
> In the UK nearly all retail
 include VAT on the quoted price.
> So if I see a ball for sale at £10 then that's what it will cost me at
> checkout and the VAT will be listed as the proportion of the cost -
> £1.49, the cost of the goods without VAT being £8.51.
>
> As an additional burden on the receipt the VAT will be shown for each
> category, for example:
>     1 x My Favorite Book                                    £5.99
>     1 x My Favorite Book with audio reading       £8.99
>     1 x
> Ball                                                          £10.00
>                                                    VAT
> ( £2.52 )
>
> Total               £24.98
>
>     VAT rates:
>             0%       £0.0      of    £5.99
>            13%      £1.03    of    £8.99
>            17.5%   £1.49    of    £10.00
>
> Different organisations can claim the VAT back when doing their
> accounts so the information is essential for them to process those
> claims. Obviously formats of receipts vary from place to place so this
> is only for illustration of the principle.
>
> I have tested that OFBiz can handle the different categories for
> products and it works fine applying relevant rates to the products.
> The problem (or question) is related to entering prices including or
> excluding tax. We are using the price field types LIST and DEFAULT
> with both values invariably set to the retail price i.e.
> £10.00  if the item goes on sale we might change DEFAULT to say £8.00
> or set up a price rule. The important point is this value includes the
> VAT so any further VAT figures should only be showing the proportional
> value of VAT in the product price not adding it as VAT.
>
> Would it be acceptable to add another flag to the SimpleSalesTaxLookup
> entity that specified proportional only rates (prices include tax
> already), then other changes above that to use the flag? Or would it
> make more sense to have a something else on the price entity to
> indicate including tax? I know I can change my system to get it
> working how I want, but I'd rather do it with a view to adding it back
> into the framework so others can make use of it.
>
> For the separate rate reporting maybe a flag like the order item
> explode could be used to turn it on and off?
>
> Thanks,
>
> Ray
>
>
> _______________________________________________
> Users mailing list
> Users at lists.ofbiz.org
> http://lists.ofbiz.org/mailman/listinfo/users




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