# Product tax types

There are two types of tax generally used in every type of business 

1. Inclusive TAX
2. Exclusive TAX

### 1. Inclusive TAX

Tax-inclusive means that tax is included in the displayed retail price of the item.

The customer pays the price they see, and the TAX is calculated and deducted from that amount.

**Advantages**:

1. **Customer Clarity**: Customers see the final price upfront, which can simplify their purchasing decision.
2. **Simplicity**: Reduces confusion for customers as they know exactly how much they will pay.
3. **Perceived Value**: This can create a perception of better value, as customers are not surprised by additional charges at checkout.

{% hint style="info" %}
**When to Use**:

* When targeting individual consumers who prefer to see the total cost upfront.
* For retail environments where clear pricing is essential to avoid customer frustration.
  {% endhint %}

### 2. Exclusive TAX

Tax-exclusive means that tax is added on top of the retail price at the time of the sale.

The TAX is added at the point of sale, so the customer sees the base price and then the TAX as an additional charge.

**Advantages**:

1. **Transparency**: Customers see the base price and the TAX separately, which can be useful for business customers who can reclaim the TAX.
2. **Competitive Pricing**: Displaying lower base prices can make your products appear cheaper compared to competitors using inclusive pricing.
3. **Business Clients**: Easier for business customers who are TAX-registered and need to see the TAX component for their accounting and reclaim purposes.

{% hint style="info" %}
**When to Use**:

* When targeting business customers who prefer to see TAX itemized separately.
* In markets where customers are used to seeing prices excluding TAX.
  {% endhint %}


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