Tax Inclusive Pricing and How Kintsugi Calculates It

Updated 5 days ago

If you sell in markets where VAT or GST is baked into the shelf price, the amount on your invoice already contains tax. Kintsugi can separate that gross amount into a pre-tax base and calculated tax, so tax is never added on top of a price that already includes it.

Quick Summary

A tax inclusive amount already contains tax. A tax exclusive amount does not, and tax is added on top
When a line item is marked tax inclusive, Kintsugi backs the tax out of the gross amount instead of adding tax again
The pre-tax base and the calculated tax always add back up to the gross amount you submitted
Lines that are not marked tax inclusive keep the standard tax exclusive calculation

Tax Inclusive vs. Tax Exclusive

	Tax inclusive	Tax exclusive
What the line amount represents	The full price, tax included	The price before tax
How Kintsugi calculates	Separates the gross amount into a base and tax	Calculates tax and adds it to the amount
Typical use	VAT and GST markets where displayed prices include tax	US-style pricing where tax is added at checkout
How Kintsugi knows	The line is marked tax inclusive in the request	Default behavior when the line is not marked

Here is a worked example. You submit a gross line amount of 118 in a jurisdiction with an 18% VAT rate, such as Guinea's standard rate. Kintsugi calculates a pre-tax base of 100 and tax of 18. The base of 100 plus tax of 18 reconciles to the 118 you submitted.

The same principle covers percentage rates, flat surcharges, and rate structures that combine a percentage with a flat amount. When several jurisdictions apply to one line, rounding is allocated so the line still adds up to the gross amount.

Estimates, Credit Notes, and Exemptions

Real-time tax estimates follow the same reverse calculation when the estimate line is marked tax inclusive, so an estimate and the final calculation stay consistent. Credit notes use the same calculation path with negative amounts. When an exemption applies to a specific rate, that rate is excluded from the calculation while the exemption reason is still recorded.

What Kintsugi Does Automatically vs. What You Do

Kintsugi handles:

Separating the gross amount into a pre-tax base and calculated tax
Reconciling the base and tax back to the gross amount, including rounding across jurisdictions
Applying the correct rate structure, including percentage, flat, and combined rates
Excluding exempt rates from the calculation when an exemption applies

You handle:

Confirming that the price you send genuinely includes tax
Marking each applicable line as tax inclusive in the request
Sending the gross amount, tax included, as the line amount

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