Tax on Tax

[wangui1981]

I'm trying to set up tax calculation in AP.Here is the set up if i have 116 i need 16% then get the net of that.Then calculate 5% of the remainder.Now am supposed to get for the first tax class of 16% =16 then of 5% get 5 if it is tax inclusive.however it gives me in the 16% tax class 16 but in the 5% tax class 5.80. i have tried to check in the sample co.no help.Any one who knows how to go about it?

 

[ettienne]

Your math does not add up.

If you start with 100 and add 5% you get 105.
Take 105 and add 16% you get 121.80

So is the 5% tax inclusive or not?
Is the 16% on top of the 5%, or on the original 100?

 

[wangui1981]

The 16% is tax inclusive on the 116.the 5% is tax exclusive.
Therefore 16% is on the original 100

 

[ettienne]

If you start with 100 how do you get to the total including tax?

 

[wangui1981]

If you work from 100 then get 16% then it becomes tax exclusive.You then work 5% of 100.If you have sample company can you have a look at california and state tax set up.

 

[ettienne]

100 x 16% = 16.00
100 x 5% = 5.00
So your total taxes are 21.00
So your total including tax is 121.00

How do you get to 116.00?

BTW if I setup 2 tax authorities with 16% and 5% and use 121.00 as my tax inclusive amount then I get the correct result in AP.