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Thunderbolt1
Level 1

How does Quickbooks calculate VAT on invoices with a percentage discount

Hi All

 

I understand that VAT is calculated per line item for a given invoice and then is rounded to 2 decimal places and I can calculate this correctly by hand.

 

However when I add a X percent (in my case 2) discount on my invoice no matter how I calculate the VAT (so 20% of the 2% on the discount amount, or 20% of the 2% per line item pre quantity, 20% of the 2% per line item post quantity...) I cannot calculate the same number..

 

I have multiple invoices and no matter what I do some methods work for some but not for others to calculate correectly.

 

Does anyone know the correct way discount percentages are applied to invoices? Invoices are entered ex vat. 

 

Many Thanks

 

 

4 REPLIES 4
GeorgiaC
QuickBooks Team

How does Quickbooks calculate VAT on invoices with a percentage discount

Hi Thunderbolt, thanks for joining the Community.

 

In QuickBooks Online, the discount is applied to the overall invoice and the VAT is then calculated (and rounded to 2 d.p.) on each line item separately, then added together. If you'd like, you can reply below with an attachment of the invoice (covering any sensitive info) so we can provide a further breakdown on the calculation for you. 

Thunderbolt1
Level 1

How does Quickbooks calculate VAT on invoices with a percentage discount

Thank you for the reply.

 

I'd appreciate the detailed - I'm using the API to build an app to connect our systems directly to QB and we offer 2% 10 Net 30, and we thus want to state the value of the invoice with the 2% discount applied in the Customer Memo (see attached screenshot) without actually applying the 2% to the invoice. Then if people pay within the 10 days they pay the 2% value and we match it off in QB..

 

As such, I am trying to programmatically calculate the 2% value to put in the customer memo but I am a programmer not an accountant. So I need to understand the order that this is calculated and rounded.

Currently I do:

 

For each line item:

$subLineTotal += ($invoiceLineAllRetailers['ItemRate'] * $invoiceLineAllRetailers['ItemQuantity']);
$subLineTotalDiscountTax += round(($invoiceLineAllRetailers['ItemRate'] * 0.98 ) * $invoiceLineAllRetailers['ItemQuantity'] * 0.2,2);

 

Then once complete:

 

$discount = round(($subLineTotal * 0.02),2);

$total = $subLineTotal + $subLineTotalDiscountTax - $discount;

 

But on some invoices I'm a penny out.. 

 

See attached invoice from our sandbox

 

Thanks

JamesAndrewM
QuickBooks Team

How does Quickbooks calculate VAT on invoices with a percentage discount

I'm sharing some information that could help you get through this.

 

QuickBooks automatically calculates the total tax rate for each sale based on the following:

 

  • Your customer's tax-exempt status
  • Where you sell and where you ship
  • What you sell

 

Refer to this article for detailed information: Learn how QuickBooks Online calculates VAT.

 

On the other hand, since you're using API, for you to be guided more on the VAT calculation, I recommend contacting our Intuit Developer. Where you can get an answer from one of the experts, like API, developments, and other related concerns, they can provide details and ideas on the best process you can take.

 

Here's how you can reach out to them:

 

  1. Go to https://help.developer.intuit.com/s/.
  2. Choose QuickBooks Online under What do you need help with?
  3. Click Ask a Question.
  4. Log into your existing Intuit Developer Account or create a new one.
  5. Enter your concern.
  6. Tick Ask.

 

You can also visit this article for future reference: VAT Exceptions and Reports in QuickBooks Online.

 

Feel free to post here again if you have further QuickBooks-related concerns. We are available 24/7 to lend a hand with each of your queries. Stay safe!

Thunderbolt1
Level 1

How does Quickbooks calculate VAT on invoices with a percentage discount

Thanks for this response but I think I'll wait for the first employee's reply to break down the actual calculation. This is what I need and an explained example based n the provided attachment on my previous response will be very helpful. The linked articles don't explain how VAT is calculated despite the title.. 

 

I have used the ask support and they were of no help as it is not an API issue - This behavior happens in the UI of Quickbooks Online.

 

Thanks

 

 

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