Taxation calculates tax on a line-by-line basis. The tax for each line item is calculated to two decimal places and then summed together as the total tax.

This means that in some scenarios the basic taxation calculation may differ slightly than if you were to apply the tax directly to the subtotal.

When values need to be rounded to two decimal places, the taxation modules uses the banking rounding standard which rounds half to even. For example, a value of 7.355 would round to 7.36. A value of 7.365 would round also to 7.36.

Line items with multiple quantities or usage have the tax calculated on the total value. 5 units at a unit price of 7.35 would equal 36.75 which would be used to calculate the tax for that item.

# Example

The screenshot below shows an example of this scenario using a tax rate of 7%.

In this case we are charging the customer for four products each with a unit price of $17.50.

The tax for each one of these line items can be calculated as* $17.50 * 0.07 = $1.225*, which Stax Bill interprets as $1.22.

Adding the tax for each line item we get our total of $4.88. ($1.22 * 4 = $4.88)

Note how if we were to apply this tax directly to the subtotal it would have been calculated as $4.90 (*$70.00 * 0.07 = $4.90*)