What Difference does the Tax Inclusive / Tax Exclusive Setting make?

Users can choose to make Expenses, Invoices. Estimates and Credit Notes inclusive or exclusive of tax.

The tables below display how Discount, amount before tax, tax amount and total amount are effected based on this tax setting, as well as the calculations used to come up with the amounts.

Sample Data Used

Quantity (Qty) = 1

Unit Price = $100 USD

Discount % = 5%

Tax % = 10%

Tax Exclusive

Tax Exclusive means tax is applied on top of the unit price.

FieldAmountFormula
Discount Amount (5%)5(Discount %) x (Unit Price x Qty)
Amount Before Tax95Qty x (Unit Price – Discount Amount)
Tax Amount (10%)9.5Qty x ((Unit Price -Discount Amount) x (Tax %))
Total Amount104.5Tax amount + Amount before tax

Tax Inclusive

Tax Inclusive means the unit price includes tax.

FieldAmountFormula
Discount Amount (5%)5(Discount %) x (Unit Price) x Qty
Amount Before Tax86.36Qty x ((Unit Price – Discount Amount) / (1+ Tax %))
Tax Amount (10%)8.64Qty x [(Unit Price – Discount Amount) – (Unit Price – Discount Amount / (1+ Tax %))]
Total Amount95Tax amount + Amount before tax

Do you need any further help understanding how Tax being inclusive or exclusive effects your financial transactions? Contact our support team via chat or email.