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How Taxes are Calculated

How Taxes are being calculated for Dizlog POS

Updated over a year ago

There are two types of taxes that can be applied to the products/services with Dizlog All-in-One POS: "added to the price’ and ‘included in the price".

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TAX ADDED TO ITEM PRICE - where all the prices are listed without any tax type, but during checkout, the tax is added to the original price of the item purchased, and the customer pays the price of the item plus the added tax.

Here's an example:

Let's say the tax rate is 6% and the item price is ₱20. To find the added tax amount:

Tax amount = 0.06 * ₱20 = ₱ 1.20

Therefore, the added tax to the item price would be ₱ 1.20

TAX INCLUDED TO ITEM PRICE - The retail price of the item purchased already includes any taxes assigned to it.

To calculate the item's pre-tax price, divide the price by 1 + the tax rate in decimal form. To find the value of the tax that is included in the item’s price, you have to subtract the pre-tax price from the item price.

Here's an example:

Let's say the tax rate is 6% and the item price is ₱20. To find the included tax amount:

Tax amount = 20 ÷ 1.06 = ₱18.87

The value of the ‘Included in the price’ tax is 20 - 18.87 = ₱ 1.13.

Therefore, the included tax on the item price would be ₱ 1.13

Calculation of Multiple Added Taxes in an Item

HOW TO CALCULATE THE TAX VALUE IF MULTIPLE "ADDED TO THE PRICE" TAXES WERE APPLIED TO AN ITEM

The value of multiple ‘added to the price’ taxes of an item is calculated in the same way as if only one tax is applied (see above).

Here's an example:

Let's say the tax rates added are 5% and 4% the item price is ₱20. To find the added tax amount:

Tax amount = 0.05 * ₱20 = ₱ 1

Tax amount = 0.04 * ₱20 = ₱ 0.80

Therefore, the added tax to the item price would be ₱ 1.80

HOW TO CALCULATE THE TAX VALUE IF MULTIPLE ‘INCLUDED IN THE PRICE’ TAXES WERE APPLIED TO AN ITEM

The value of ‘included in the price’ tax of an item is calculated as the multiplication of the price of the item and the tax rate, divided by the sum of the rates of all included taxes plus one:

TI = the value of the ‘included in the price’ tax
p = the price of the item
TIPV = the included tax rate in decimal form
i = the number of tax rates included in the price

For example, if you sell an item at 12.00 with included tax A=2% and included tax B=5%, the value of TI will be 1.92 and 0.48 respectively:

HOW TO CALCULATE THE VALUE OF THE "ADDED TAX TO ITEM PRICE" IF THE ITEM HAS EXISTING "INCLUDED TAX IN ITEM PRICE"

TA = the value of the ‘added to the price’ tax
p = the price of the item
TAPV = the added tax rate in decimal form (1%=0.01)
TI = the value of the ‘included in the price’ tax
i = the number of tax rates included in the price

TA

For example, if you sell an item at 12.00 with included tax A=2% and included tax B=5%, and also added tax C=10%, the value of TA will be 0.96

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