Element type: Required

Endpoints/models used: LineItemModel

Your implementation must allow users to specify whether the total amount of a line item includes tax. You can accomplish this using the isTaxIncluded field at the line level. This flag tells AvaTax to use a product’s price as a target for the total sale. As a result, AvaTax will back the tax out of the total amount provided in the request. Consider the following scenarios:

Tax Excluded Scenario: When you sell a product for a price of €100, tax gets calculated on the amount and added to the total sale price. The local VAT rate in France is 20%, so with tax you’ll pay €120, and the merchant selling you the product will pay €20 to the tax authority on their VAT return. The result is that you get your product, the merchant gets €100, and the tax authority gets €20.

Tax Included Scenario: Now, let’s introduce the isTaxIncluded option. When you set isTaxIncluded to true, AvaTax will perform slightly different math. Instead of calculating the tax on top of the purchase amount, AvaTax calculates tax to ensure that the final amount equals €100. The result is that you still calculate the correct tax rate, but the merchant knows the revenue amount when the sale is made, with no month-end finagling. The merchant keeps €83.33 and pays €16.67 in tax - which reflects the correct tax rate of 20%.

The isTaxIncluded parameter appears in the LineItemModel. This allows you to sell a mixture of tax-included and tax-excluded lines in a single transaction.

View example

Include tax in line amounts