Tax-Inclusive Pricing with Coupons & Discounts

Coupons and discounts get a little trickier, and how you want coupons to work in the context of tax-inclusive pricing isn't as obvious or globally agreed-upon as you might hope. (Please read the docs on that page first, if you haven't, as it has important context for this section of our documentation.) In particular, percentage-based discounts are generally “easy”, but set-amount discounts may require a few minutes to understand.

This is easiest to communicate by way of example. Assume an $100 (tax-exclusive) product ($110 tax-inclusive price), a 10% tax (inclusive), and a $15 coupon. Take a look at this table, and note the tips and warning:

The three settings to note are:

1. 1

   The template set's tax inclusive setting.

2. 2

   The coupon's “taxable” setting. In some industries or situations, a discount might be “after tax”. For instance, say you want to offer customers 100% off, but you still need to collect tax for the full sale amount. Set the coupon to taxable and the tax will be applied before the coupon's discount is applied.

3. 3

   The coupon's “inclusive tax rate” value. This gets a little more complicated, but if you compare scenario #3 and #4 above, you can see the impact. Setting a coupon's inclusive_tax_rate will decrease the applied (but not displayed) discount by that inclusive tax percentage. So a 15€ coupon becomes 15 / 1.1 = 13.64. The end result is a 15€ “tax-inclusive” discount, as you can see in the Order Total row.

   • <wrap tip>This is only important for “discount by an amount” coupons, not for “discount by a percentage” coupons, as %-based coupons will result in the correct order total regardless tax-inclusive or tax-exclusive settings.

   • Scenario #3 shows what would happen without an inclusive tax rate. (It behaves identically to scenario #1, which is tax-exclusive.)

   • The inclusive tax rate should be the default tax rate for the customers who'll use the coupon. This ensures your coupon is always for the expected amount, even if a customer's tax rate is different. This also prevents tax-exempt customers from receiving a higher-than-desired discount.

   • The inclusive tax rate functionality behaves identicaly regardless the tax-inclusive or taxable settings, but it's generally only useful in the tax-inclusive scenarios.