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I'm trying to apply a discount to product price using product pricing rule. It worked perfectly for product prices that do not include tax. However, when I tested with product with prices that include tax, the prices shown on the checkout page were not correct. Apparently, the tax was also applied to the discount amount, overstating the tax amount.
The rule I used a simple 'subtract an amount from the unit price' and the tax was of VAT type with 10% rate.
Product A: $12 (tax included)
Discount: $1 (applied through rule)
Price of Product A after discount: $11
Tax rate: 10%
On checkout page:
Product A Qty=1: $11
Subtotal: $9.91 -> Subtotal should be $10
VAT: $1.09 -> Tax should be $1
Order total: $11
Is this by design, or am I missing something?