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There is an option when setting up Tax Rates to apply the tax to "both (item + shipping costs)" however when testing on the front end the shipping cost is added after tax is applied to the product and no tax percentage is applied to the shipping cost.

The total amount payable is (Product + Tax) + Shipping. I want (Product + Shipping) + Tax.

Is there more configuration needed so that the adjustments show correctly at checkout and the customer is charged the right amount?

3

Currently there is a caveat, that order level shipping costs can not have tax applied to them.

This means if you have any 'base shipping costs' applied to the cart the tax engine can not see them because they are not on a line item. Currently the tax adjuster system only adds tax to line items.

This is an issue that will be fixed in a future release but will mean there needs to be a change to the way the adjustment system works. We would need to allow tax to be added to adjustments.

If you want tax on shipping cost you would need to make all shipping rules only add tax to line items. Let me know if you have further questions and I will update my answer.

UPDATE: see other answer for the final solution.

  • Hi Luke, Thanks for your reply. Do you know when that might be released? To complicate it further some companies will take into account the Tax code. Example "If customer has tax code and in Europe then apply tax to shipping". How can I add that logic in to work with shipping rules? I guess it exists to a point when you select country which then changes the shipping rule. Something to keep in mind when making the update. – Dan Lee Jul 5 '16 at 8:28
  • This is a problem I am also facing at the moment. Any ideas when this enhancement might be available or if there is a reasonable way to circumvent this at the moment? I am only dealing with VAT and so it is set at a fixed 20% which might make things a little easier? – Terry Upton Aug 17 '16 at 17:10
  • Any fix for this? – Paul Oct 12 '16 at 10:19
  • @PaulVerheul not in 1.2 - Working on a work-around. – Luke Holder Oct 12 '16 at 12:44
  • Any word the work-around? This is sort of important, what with being less than a week away from launch and stumbling upon this reality now. A thousand thank you's for any help – Stian Karlsen Nov 29 '16 at 23:14
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A tax rate set to 'price + shipping' only places tax on the line items, and does not take into account the baseShippingCost, this includes the changes to the baseShippingCost caused by the minimum and maximum shipping cost rules.

I have gone ahead and added 2 new taxable subjects to shipping rates in order to fix this limitation.

1) Order total shipping cost.

2) Order total price.

screenshot of new options

These shipping rates are order level taxes, so the tax category can not be taken into account (it is a line item/product level attribute), but this should allow you to set taxes on shipping on the order as a whole and avoid using the 'item + shipping' line item option.

It will be in the next release, due out in a couple of days.

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