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Editorial Team
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Asked: 2026-06-09T17:29:37+00:00

Today I was studying how Magento tax calculation works to understand the difference between

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Today I was studying how Magento tax calculation works to understand the difference between the behaviors for “Tax Calculation Method Based On“.

I traced deep into Mage_Tax_Model_Sales_Total_Quote_Tax which implements all methods in the _unitBaseCalculation, _rowBaseCalculation, _totalBaseCalculation.

I discovered that they produce exactly the same results. So why did they go through the trouble of implementing them ?

For example, unit-price calculation goes to the trouble of calculating the tax for the single unit and then dividing the discount amount by the qty (if tax applied after discount), then subtracting both, and then multiplying again by the quantity… which just introduces rounding errors.

Whereas Row Total calculation is the most intuitive one (which takes the price from the row “subtotal”) minus discount amount (if tax applied after discount).

While the third one is just an aggregation of the second, calculated at once.

This just introduces confusion and obfuscation to the tax calculation logic. Can anyone shed a light onto why this was done ?

(Rounding errors ? Backward compatibility ? Candidate for TheDailyWTF prize ?)

EDIT: For the record this is true as of Magento 1.6 and 1.7, don’t know about older versions.

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  1. Editorial Team

    I found this from: https://gist.github.com/2572772 (by Alan Storm it seems)

    This feature was probably motivated by individual local rules (or client requests) as to how taxes should be calculated, as fractional amounts could add up differently depending on when adding and rounding occurs. THat said, I haven’t run through the code to see if my guesses are right so YMMV. Other areas to consider for future research.

    How does each mode play with shopping cart price rules and store wide discounts

    For shopping cart price rules, it goes through painstaking trouble to divide the discount amount (which may not be divisible by the quote item quantity thus introducing a rounding error) so that the end result is the actually the same process, but only with different "when"s and "where"s as to rounding.

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