Katamaze Documentation

Credit & Taxes

By default, WHMCS doesn't charge sales taxes for Add Funds invoices. In many countries this is considered illegal since it constitutes tax evasion. Billing Extension can handle this issue both when customers add funds and when they use it.

Let's suppose the client adds 100 EUR funds and that tax rate is 11%.

  • Subtotal: 200 EUR
  • Tax 11%: 22 EUR
  • Total Due: 222 EUR

As you can see the module recalculates invoice totals to include taxes so the client gets 200 EUR of credit after paying 222 EUR.

Now let's see what happens when a client uses his credit to pay an invoice like this:

  • Subtotal: 100 EUR
  • Tax 11%: 11 EUR
  • Total Due: 111 EUR

Since taxes have been paid on "add funds", they are not due twice.

Payment Credit applied Result
0 € 100 € Invoice marked as Paid
100 EUR deducted from client's balance
No tax due
0 € 111 € Invoice marked as Paid
111 EUR deducted from client's balance
11 EUR added back to client's balance
No tax due
0 € 105 € Invoice marked as Paid
105 EUR deducted from client's balance
5 EUR added back to client's balance
No tax due
0 € 40 € Invoice still Unpaid
40 EUR deducted from client's balance
Taxes recalculated on 60 € (6.6 €)
New Total Due 66.6 €
111 € 0 € Invoice marked as Paid
111 EUR payment (11 € tax)
50 € 61 € Invoice marked as Paid
50 EUR payment (4.96 € tax*)
61 EUR deducted from client's balance
6.04 EUR added back to client's balance
50 € 0 € Invoice still Unpaid
50 EUR payment
No recalculation needed

 * In this case tax is rounded intentionally at 4.96 instead of 4.95. In fact, 50 minus 11% (50 / 1.11) is equal to 45.045(...) This is commonly rounded to 45.05 however this value would lead to a due tax of 4.9555 (commonly rounded to 4.96). This would lead to a total of 50.01 €. Moreover, you are not allowed to round down taxes (tax evasion). For example, a tax of 0.005 cannot be rounded to zero but it must be 0.01. In conclusion the module fixes the whole issue by rounding up tax value.

Attachments
There are no attachments for this article.
Comments
There are no comments for this article. Be the first to post a comment.
Full Name
Email Address
Security Code Security Code
Related Articles RSS Feed
Credit notes, reverse invoices, invoices and proformas
Viewed 2998 times since Wed, Feb 3, 2016
Tips and tricks of Billing Extension
Viewed 1091 times since Wed, Mar 2, 2016
Simplified Invoicing
Viewed 1262 times since Wed, Feb 3, 2016
Overpayments: Mode 1, Mode 2
Viewed 1135 times since Thu, Mar 3, 2016
VIES support for WHMCS
Viewed 1027 times since Sun, Apr 3, 2016
Invoice overpayments
Viewed 470 times since Mon, Sep 4, 2017
General Settings
Viewed 1653 times since Tue, Feb 2, 2016
Module upgrade
Viewed 1375 times since Mon, Mar 21, 2016
Toggle Invoicing
Viewed 1135 times since Sat, Apr 15, 2017
Introduction to multi-brand billing
Viewed 1438 times since Mon, May 9, 2016