diff --git a/classes/cart.class.php b/classes/cart.class.php
index bf3b09c635b..fed4ea2a827 100644
--- a/classes/cart.class.php
+++ b/classes/cart.class.php
@@ -345,24 +345,14 @@ class woocommerce_cart {
 					
 						$rate = $_tax->get_rate( $_product->get_tax_class() );
 						
-						if (get_option('woocommerce_prices_include_tax')=='yes') :
-						
-							$tax_amount = $_tax->calc_tax( $_product->get_price(), $rate, true ) * $values['quantity'];
-							
-						else :
-						
-							$tax_amount = $_tax->calc_tax( $_product->get_price(), $rate, false ) * $values['quantity'];
-							
-						endif;
+						$tax_amount = $_tax->calc_tax( $_product->get_price(), $rate, true ) * $values['quantity'];
 						
+						/**
+						 * Checkout calculations when customer is OUTSIDE the shop base country and price INCLUDE tax
+						 */
 						if (get_option('woocommerce_prices_include_tax')=='yes' && $woocommerce->customer->is_customer_outside_base() && defined('WOOCOMMERCE_CHECKOUT') && WOOCOMMERCE_CHECKOUT ) :
-							
-							/**
-							 * Our prices include tax so we need to take the base tax rate into consideration of our shop's country
-							 *
-							 * Lets get the base rate first
-							 */
-							$base_rate = $_tax->get_shop_base_rate( $_product->get_tax_class() );
+							// Get the base rate first
+							$base_rate = $_tax->get_shop_base_rate( $_product->tax_class );
 							
 							// Calc tax for base country
 							$base_tax_amount = $_tax->calc_tax( $_product->get_price(), $base_rate, true);
@@ -374,6 +364,20 @@ class woocommerce_cart {
 							// Finally, update $total_item_price to reflect tax amounts
 							$total_item_price = ($total_item_price - ($base_tax_amount * $values['quantity']) + $tax_amount);
 							
+						/**
+						 * Checkout calculations when customer is INSIDE the shop base country and price INCLUDE tax
+						 */
+						elseif (get_option('woocommerce_prices_include_tax')=='yes' && $_product->get_tax_class() !== $_product->tax_class) :
+							
+							// Calc tax for original rate
+							$original_tax_amount = $_tax->calc_tax( $_product->get_price(), $_tax->get_rate( $_product->tax_class ), true);
+							
+							// Now calc tax for new rate (which now excludes tax)
+							$tax_amount = $_tax->calc_tax( ( $_product->get_price() - $original_tax_amount ), $rate, false );
+							$tax_amount = $tax_amount * $values['quantity'];
+							
+							$total_item_price = ($total_item_price - ($original_tax_amount * $values['quantity']) + $tax_amount);
+							
 						endif;
 
 					endif;
diff --git a/classes/product.class.php b/classes/product.class.php
index b04df42c057..2eda09e9000 100644
--- a/classes/product.class.php
+++ b/classes/product.class.php
@@ -429,7 +429,7 @@ class woocommerce_product {
 		return $this->price;
 	}
 	
-	/** Returns the price (excluding tax) */
+	/** Returns the price (excluding tax) - ignores tax_class filters since the price may *include* tax and thus needs subtracting */
 	function get_price_excluding_tax() {
 		
 		$price = $this->price;
@@ -472,7 +472,7 @@ class woocommerce_product {
 		if ( $this->is_taxable() && get_option('woocommerce_calc_taxes')=='yes') :
 			
 			$_tax = &new woocommerce_tax();
-			$rate = $_tax->get_shop_base_rate( $this->get_tax_class() );
+			$rate = $_tax->get_shop_base_rate( $this->tax_class ); // Get tax class directly - ignore filters
 			
 			return $rate;
 			
diff --git a/classes/tax.class.php b/classes/tax.class.php
index 3adc947f8b9..0f23d904079 100644
--- a/classes/tax.class.php
+++ b/classes/tax.class.php
@@ -110,6 +110,8 @@ class woocommerce_tax {
 	function get_rate( $tax_class = '' ) {
 		global $woocommerce;
 		
+		$tax_class = sanitize_title($tax_class);
+		
 		/* Checkout uses customer location, otherwise use store base rate */
 		if ( defined('WOOCOMMERCE_CHECKOUT') && WOOCOMMERCE_CHECKOUT ) :