How to handle taxes for extra fees?

How to handle taxes for extra fees?

Enabling taxes for extra fees

If you'd like to apply tax to your extra charges, you'll need to prepare your settings first. It needs to be done in two separate places.

Default Magento settings

Step 1. Navigate to Stores → Taxes → Tax Zones and Rates and add a rate you'd like to apply to your fees:



Step 2. Go to Magento Admin Panel → Stores → Taxes → Tax Rules, add a new rule, and make sure you've added the correct rate you've just created, along with additional tax settings:


      
If your fees have the same tax settings/rates as your products already have, or if corresponding settings have already been created, this point can be skipped.

Extension settings 

Navigate to Stores → Configuration → Amasty Extensions → Extra Fee → Calculation & Tax tabs and select how taxes will be applied to your fees:



⇾ Apply Tax Class to Extra Fees. If you want your extra fees to be taxable, please switch this setting to Yes.
⇾ Use Fee's Tax Class Instead of Product's Tax Class for Percent Fees. By default, if you have percentage fees in your store and tax is applied to them, fees will have the same tax class as products in your cart. If you'd like to set a tax class for your fees that will be different from product tax class, please switch this setting to Yes.
⇾ Tax Class. This setting determines the tax class for all your fees.

Tax display settings

At Stores → Configuration → Amasty Extensions → Extra Fee → Tax tab there are two settings that allow you to configure tax display settings:



⇾ Display Prices at Shopping Cart. Here you can determine storefront display settings for your fees in cart and during checkout.
⇾ Display Prices at Orders, Invoices, Credit Memos. This setting is responsible for fee display in documents.

Both display settings have three identical options to select from. Let's check what they look like on the example of a fixed $5 fee that has 10% tax applied to it.

Excluding Tax

The fee of $5 itself is displayed without tax in the Additional Fees section, and 10% tax of $0.50 that is added to it is defined separately in tax breakdown:



Including Tax

Tax is both added to fee value in the Additional Fees section and is visible under tax breakdown:


Including and Excluding Tax

For maximal clarity, a full breakdown is provided, $5 fee before tax application, the 10% tax of $0.50, and $5.50 fee after tax application:


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