What Pepper calculates and what you set up

You choose the tax treatment and whether a price includes tax. Pepper calculates the line's net amount, tax and total from those choices.

For: owners and bookkeepers who check sales document amounts. What you need: the price, quantity and tax treatment for each line.

Choose what the price includes

Different lines can use different price bases. Each line keeps its own choice.

Changing the basis keeps the digits you entered. It changes what those digits mean. Check the preview before saving.

For example, 100.00 EUR at 20% tax produces these different amounts:

The percentages in these examples are chosen inputs. A currency or country does not select a tax treatment.

Supply the tax treatment

Choose a manual rate, choose no tax, or select your configured rules for the line. Manage tax rates explains these choices.

A tax class is a name you give a category of goods or services. Your configured rules match the class and the tax context you enter.

The context starts from the customer's billing address. Review it before using a rule. Pepper does not decide where tax legally applies.

A rule selects one rate or no tax. If no rule matches, Pepper refuses that selection. Equal winning rules also require correction.

Choose a manual rate, or correct the rules and select them again. Pepper keeps the other line input while you correct the tax choice.

You decide whether a zero rate, exemption or reverse charge applies. Pepper does not check tax registers or file returns.

Check a tax-exclusive line

Northwind Studio enters 15.00 GBP, quantity 2.5 and a 20% rate, with no discount:

1. Multiply 15.00 GBP by 2.5. The amount before discount is 37.50 GBP.
2. Subtract the discount of 0.00 GBP. Net is 37.50 GBP.
3. Calculate 20% of net. Tax is 7.50 GBP.
4. Add net and tax. Total is 45.00 GBP.

For a tax-exclusive line, a 10% discount reduces the net amount before Pepper calculates tax.

Check a tax-inclusive line

Northwind Studio enters 121.00 EUR, quantity 1 and a 21% rate. The line has a 10% discount:

1. Multiply 121.00 EUR by 1. The entered amount is 121.00 EUR.
2. Calculate the entered discount. It is 12.10 EUR.
3. Subtract 12.10 EUR. The total after discount is 108.90 EUR.
4. Divide 108.90 EUR by 1.21. Net is 90.00 EUR.
5. Subtract net from 108.90 EUR. Tax is 18.90 EUR.

Before discount, net was 100.00 EUR. The document's net discount is therefore 10.00 EUR. The entered discount remains 12.10 EUR, including tax.

The totals subtract the net discount once. They do not subtract the entered tax-inclusive discount from net again.

For a unit price of 15.00 GBP including 20% tax, quantity 2.5 gives a total of 37.50 GBP. Net is 31.25 GBP and tax is 6.25 GBP.

Understand rounding

Pepper calculates with exact amounts in the currency's smallest unit. It rounds each line with half-up rounding: an exact half rounds up.

It first rounds price times quantity. It then rounds a percentage discount. A fixed discount is the amount you enter.

For prices without tax, Pepper rounds the tax on net. For prices including tax, it rounds net within the total. Tax is the remaining amount.

Document totals add the saved line amounts. Pepper does not calculate one tax percentage over the combined document.

A small discount can reduce tax alone:

Here the net discount is 0.00 USD. The 0.01 USD entered discount reduces tax by 0.01 USD.

JPY has no decimal places, EUR, GBP and USD have 2, and BHD has 3. Amount entry follows the document currency.

Pepper refuses a fixed discount above the line amount. It also refuses negative amounts and values above its storage limit.

In a 2-decimal currency, the largest stored amount is 92,233,720,368,547,758.07. A larger intermediate amount is also refused.

Keep a saved tax choice

Saving a draft keeps each line's selected rate, category, exemption wording, price basis and rule evidence. Later catalog changes leave those saved choices unchanged.

Editing quantity, description, price or discount keeps the saved tax choice. Select a rate or configured rule again when you want current settings.

Documents saved with the earlier tax policy keep tax-exclusive meaning. Their existing amounts do not acquire a new price basis.

When you issue a document, Pepper calculates from its saved tax choices. It compares the result with the totals you reviewed.

If a reviewed input changes, Pepper refuses the issue. Nothing receives a number. Reopen the draft, check the lines and prepare the issue again.

Related pages

• Manage tax rates
• Create an invoice
• Record purchases