diff --git a/app/Helpers/Invoice/InvoiceItemCalc.php b/app/Helpers/Invoice/InvoiceItemCalc.php
index a6db15615c97..b03df9fca1a0 100644
--- a/app/Helpers/Invoice/InvoiceItemCalc.php
+++ b/app/Helpers/Invoice/InvoiceItemCalc.php
@@ -52,14 +52,21 @@ class InvoiceItemCalc
 
 		if($tax_rate1 != 0)
 		{
-			$item_tax += $this->formatValue(($this->getLineTotal() * $tax_rate1/100) , $this->precision);
+			if($this->inclusive_tax)
+				$item_tax += $this->formatValue(($this->getLineTotal() - ($this->getLineTotal() / (1+$tax_rate1/100))) , $this->precision);
+			else
+				$item_tax += $this->formatValue(($this->getLineTotal() * $tax_rate1/100), $this->precision);
 		}
 
 		$tax_rate2 = $this->formatValue($this->item->tax_rate2, $this->precision);
 
 		if($tax_rate2 != 0)
 		{
-			$item_tax += $this->formatValue(($this->getLineTotal() * $tax_rate2/100) , $this->precision);
+			if($this->inclusive_tax)
+				$item_tax += $this->formatValue(($this->getLineTotal() - ($this->getLineTotal() / (1+$tax_rate2/100))) , $this->precision);
+			else
+				$item_tax += $this->formatValue(($this->getLineTotal() * $tax_rate2/100), $this->precision);
+
 		}
 
 		$this->setTotalTaxes($item_tax);
diff --git a/tests/Unit/InvoiceItemTest.php b/tests/Unit/InvoiceItemTest.php
index b4c9e6552ad5..17d08a341846 100644
--- a/tests/Unit/InvoiceItemTest.php
+++ b/tests/Unit/InvoiceItemTest.php
@@ -26,7 +26,7 @@ class InvoiceItemTest extends TestCase
 		$item->cost =10;
 		$item->is_amount_discount = true;
 
-		$inclusive_tax = true
+		$inclusive_tax = true;
 
 		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
 		$item_calc->process();
@@ -42,7 +42,7 @@ class InvoiceItemTest extends TestCase
 		$item->is_amount_discount = true;
 		$item->discount = 2;
 
-		$inclusive_tax = true
+		$inclusive_tax = true;
 
 		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
 		$item_calc->process();
@@ -58,7 +58,7 @@ class InvoiceItemTest extends TestCase
 		$item->is_amount_discount = true;
 		$item->discount = 2.521254522145214511;
 
-		$inclusive_tax = true
+		$inclusive_tax = true;
 
 		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
 		$item_calc->process();
@@ -66,36 +66,76 @@ class InvoiceItemTest extends TestCase
 		$this->assertEquals($item_calc->getLineTotal(), 7.48);
 	}
 
-	public function testInvoiceItemTotalSimpleWithDiscountWithPrecision()
+	public function testInvoiceItemTotalSimpleWithDiscountWithPrecisionWithSingleInclusiveTax()
 	{
 		$item = InvoiceItemFactory::create();
 		$item->qty = 1;
 		$item->cost =10;
 		$item->is_amount_discount = true;
 		$item->discount = 2.521254522145214511;
+		$item->tax_rate1 = 10;
 
-		$inclusive_tax = true
+		$inclusive_tax = true;
 
 		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
 		$item_calc->process();
 
-		$this->assertEquals($item_calc->getLineTotal(), 7.48);
+		$this->assertEquals($item_calc->getTotalTaxes(), 0.68);
 	}
 
-	public function testInvoiceItemTotalSimpleWithDiscountWithPrecisionWithSingleTax()
+	public function testInvoiceItemTotalSimpleWithDiscountWithPrecisionWithSingleExclusiveTax()
 	{
 		$item = InvoiceItemFactory::create();
 		$item->qty = 1;
 		$item->cost =10;
 		$item->is_amount_discount = true;
 		$item->discount = 2.521254522145214511;
+		$item->tax_rate1 = 10;
 
-		$inclusive_tax = true
+		$inclusive_tax = false;
 
 		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
 		$item_calc->process();
 
-		$this->assertEquals($item_calc->getLineTotal(), 7.48);
+		$this->assertEquals($item_calc->getTotalTaxes(), 0.75);
+	}
+
+	public function testInvoiceItemTotalSimpleWithDiscountWithPrecisionWithDoubleInclusiveTax()
+	{
+		$item = InvoiceItemFactory::create();
+		$item->qty = 1;
+		$item->cost =10;
+		$item->is_amount_discount = true;
+		$item->discount = 2.521254522145214511;
+		$item->tax_rate1 = 10;
+		$item->tax_rate2 = 17.5;
+
+		$inclusive_tax = true;
+
+		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
+		$item_calc->process();
+
+		$this->assertEquals($item_calc->getTotalTaxes(), 1.79);
+	}
+
+	public function testInvoiceItemTotalSimpleWithDiscountWithPrecisionWithDoubleExclusiveTax()
+	{
+		$item = InvoiceItemFactory::create();
+		$item->qty = 1;
+		$item->cost =10;
+		$item->is_amount_discount = true;
+		$item->discount = 2.521254522145214511;
+		$item->tax_rate1 = 10;
+		$item->tax_rate2 = 17.5;
+
+		$inclusive_tax = false;
+
+		$item_calc = new InvoiceItemCalc($item, 2, $inclusive_tax);
+		$item_calc->process();
+
+		$this->assertEquals($item_calc->getTotalTaxes(), 2.06);
 	}
 
 }
+
+