Defining Tax Rules and Conditions

LiteCommerce software features a sophisticated mechanism for defining tax rules and performing tax calculations. Taxes are calculated according to the rules specified in the 'Rates/Conditions' tab of the 'Taxes' section (Figure 3-39). They are calculated independently for each product in the shopping cart and for the shipping service, and then summed up into a tax total.

Here is how taxes are calculated. For example we have the following list of conditions:

1. For each product in the cart a suitable condition is found depending on product class. Then it is checked whether there are any suitable conditions depending on location.

The procedure described above is true if all the rules are defined. If some of the rules are not defined (for example, no rule for product class=shipping service or no rule for product class=Tax free) calculation will be done according to available rules. This means that if no specific rule is defined for shipping service, tax will be calculated for shipping as well as for all other product classes.

Taxes are defined by their names, conditions on which they apply, their values (%) and list positions. You can change tax values and positions by editing the corresponding fields in the list of tax rules and clicking on the 'Update' button to save the modifications. To edit tax name and conditions, locate it in the list and click on the corresponding 'Edit' link. This will open the 'Edit rate/condition' page (Figure 3-39) where you can edit the tax conditions, name and value by changing the corresponding data fields and clicking on the 'Update' button you save your changes.

Figure 3-39: Editing conditional rate definition

Depending on miscellaneous conditions, some taxes can have varying values. In such cases, tax rates have to be defined independently for each condition. When LiteCommerce software calculates taxes applicable to a product, it starts with the top condition and proceeds through the whole list. The last matching condition is used to calculate the applicable rate. For correct calculation of taxes it is essential that tax definitions are placed in the proper order by adjusting their 'Pos.' values: more general conditions must be placed before the specific ones to avoid undesirable replacements.

Example: The figure 3-40 shows the definitions for the tax named 'Tax', which is a predefined name for the tax total. The tax definition is comprised of three lines, the first being unconditional (the most general of all, meaning that it applies to all geographical locations, product classes, membership levels and payment methods) and equal to 10 percent. The next two lines redefine the value of the 'Tax' tax for specific product classes. Zero tax applies to all products that belong to the 'Tax free' product class, while 5 percent tax applies to shipping charges.

Figure 3-40: Rates/Conditions page with original tax definitions

The 'shipping service' product class is predefined, with shipping charges automatically falling into it, which makes it possible to define taxes on shipping charges separately. Other product classes can be defined using the 'Add rate/condition' page, there is no limit on their amount. A product can be assigned a product class from the list of defined product classes using the 'Product info' page (for further details on managing product catalog see the section "Modifying Product Details" of this manual).

•	click on the 'Add rate/condition' link at the top of the list of tax definitions. The 'Add rate/condition' page will appear (Figure 3-41);

Figure 3-41: Adding a new tax condition/rate definition

•	specify the relevant conditions by selecting the appropriate options from drop-down lists on the right or typing the explicit values in the corresponding text fields (Figure 3-41 demonstrates an addition of a product class named 'wooden goods');

•	specify the tax name, either existing or new;

•	specify the tax value either as a percentage of product price (without the percentage '%' sign) or as a formula comprised of existing tax names, preceded by the equality sign '=';

•	click on the 'Save' button (you can click on the 'Save & Add another' button instead to add more tax rate definitions).

Figure 3-42: New tax rate/condition definition added

Example: The addition of a new conditional tax rate displayed in Figure 3-41 will make the 'Rates/Conditions' page look like shown in Figure 3-42. Alternatively we could have defined an 'STD' tax equal to 10 percent for all products, a 'WOOD' tax equal to 40 percent for wooden products and define the total tax as a sum of an 'STD' tax plus the 'WOOD' tax (10+40=50). The tax definitions become more clear (Figure 3-43), while the resulting tax values remain the same.

Figure 3-43: Alternative definition of tax condition/rate

In cases of complex tax rules and conditions it is preferable to have all tax rules organized into a tree-like structure with most general conditions appearing at the first (root) level of the tree and more specific conditions defined within them. Multiple geographical areas using the same tax calculation formulas with different tax rates is one typical example.

•	click on the 'Add rate/condition' link at the top of the list of tax definitions, the 'Add rate/condition' page will appear (Figure 3-44);

•	specify the relevant conditions by selecting the appropriate options from drop-down lists on the right or typing the explicit values in the corresponding text fields;

Figure 3-44: Defining a new condition

•	leave the tax name and tax value fields empty;

•	click on the 'Save' button (you can click on the 'Save & Add another' button instead to add more conditions and/or tax rate definitions).

The newly defined condition will appear in the list of tax rates and conditions as shown in Figure 3-45.

Figure 3-45: New root level condition defined

You can now specify taxes for the new condition and define sub-conditions and taxes for those sub-conditions by clicking on the 'Add rate/condition' link to the right from the root condition.

Multiple conditions can be used to form one combined condition (Figure 3-46). The combined condition is met if every component of it is met.

Figure 3-46: Defining combined sub-conditions

One component of a combined condition can have one or several values. It is considered to be met if one of the values is matched. Multiple values are grouped into comma-separated lists without spaces before or after the comma sign as shown in Figure 3-46 (see the 'States' condition).

Example: Figure 3-47 demonstrates the tax scheme with the 'Tax' tax calculation rule, 'Tax'=STD+WOOD, and the 'STD' tax of 10 percent defined for the root level condition ('country=Narnia'). The 'Tax' takes different values depending on the value of the 'WOOD' tax which is defined individually for different product classes and geographic locations.

Figure 3-47: Tax scheme with sub-conditions

Note that the list of sub-conditions and conditional taxes has 'Pos.' ordering of its own, the same ordering rules apply to both root level conditions and sub-conditions. Also note the '[-]' sign to the left from the root level condition ('country=Narnia') which signifies that the list of sub-conditions and tax rates for this condition has been revealed. Clicking on the '[-]' sign hides the list and turns the '[-]' sign into '[+]' (Figure 3-48). Clicking on the '[+]' sign reveals the list once again. This feature is useful when extremely complex tax schemes are being used.

Figure 3-48: Hiding the list of sub-conditions

The 'Tax calculator' tool located in the 'Rates/Conditions' tab of the 'Taxes' section comes handy when you need to see the tax values for various conditions using the tax scheme definition in use. To use the tool:

•	Click on the 'Tax calculator' link. A new browser window will open (Figure 3-49).

•	Specify the conditions for which you would like the taxes to be estimated and click on the 'Calculate taxes' button. Calculated tax rates will appear underneath.

•	You can specify other conditions and see their rates without reopening the tax calculator.

Figure 3-49: Using tax calculator

To delete a tax rate or condition definition, in the 'Rates/Conditions' tab locate the definition in the list and click on the 'Delete' link.