How can you ensure tax calculation is only based on the selling price and not on shipping charges?

Modifying the pricing algorithm to reverse the tax amount on shipping is a viable approach because it ensures that the tax calculation excludes shipping charges directly within the pricing logic. By adjusting the algorithm in this way, you are effectively telling the system to only apply tax based on the selling price and then to subtract or negate the tax component associated with the shipping charges before finalizing the transaction.

This method simplifies the tax calculation process and aligns with tax compliance requirements that often stipulate that certain charges, like shipping, may not be taxable in various jurisdictions. By proactively adjusting the tax calculation framework in the pricing algorithm, you enhance the robustness and accuracy of your financial reporting and compliance measures.

Moving the "Compute tax" step before the "Create shipping charge" step, for instance, would not resolve the underlying issue of shipping charges being included in tax calculations. Similarly, a sub-algorithm could add complexity without guaranteeing that shipping charges are entirely excluded from tax calculations. Using nested actions and Groovy scripts may offer customization, but it can also introduce additional management and potential maintenance challenges over time.