Calculating Taxes

When a discount applies to the whole order, tax calculation becomes more complex. Different items offered can have different tax rates, and the tax must be calculated on the discounted price of each item. The solution is to proportionally distribute the discount among the items ordered.

Example:

if you sell an item A at $100, and a tax-free item B at $50 and give a discount of $15 on the whole order, then it is considered that the first item gets $10 off, and the second one gets $5. The total tax on the order would be the same as the tax on the discounted price of item A (which equals to $90 = $100 - $10), since item B is tax-free.

If the option 'Taxes included in product prices:' is enabled in the 'Taxes' section of the Admin menu, and you enter the special price as a fixed value, the discounted price is calculated including tax.