Support Center

Taxes

Last Updated: Sep 12, 2016 10:24PM EDT
You can setup your store to automatically calculate tax rates for different regions, zones, countries.

How to create a new tax rate

 
This video shows you how easy it is to configure sales tax in your store.

For example you need to create 5% tax for California.

  • Open your control panel.
  • Go to the System Settings → Zones page. Press the "New Zone" button.
  • Change the name of the created destination zone. Then click on the "Add state..." button and add the necessary state (e.g. "United States: California"). Save the changes.
  • Go to the System Settings → Taxes page.
  • Press the "New Tax" button.
  • Enter your tax name and define the other settings
  • Click on the "New Rate" button. Select the zone created earlier and enter the tax rate(for example 5%). Save the changes.
  • If you have many destination zones, repeat step #7 for each of them.
  • If you want to set up the same rate for several different states, you can create a zone consisting of these states and set up tax rate for this zone.
  • There is also a pre-defined zone named "Other zones" that defines tax for locations matching no zone mentioned in the rate list.

Show detailed taxes

If you have several taxes, your store will show all of them itemized on the product page, cart page, and in order invoices. You should enable setting "Show detailed taxes everywhere in store" in your control panel → System Settings → General →Migrations.

FAQ

Tax isn't calculated, if I use PayPal Express Checkout

Most likely your "Zone defines by" tax option is set to "Billing address".

Unfortunately, PayPal does not return customer's billing state code, only the country code. That is why we were unable to calculate the tax, if it's based on the billing address.

Please change the "Zone defines by" option to "Shipping address", it will fix the issue.

I cannot turn off tax for a product

Most likely you have the "Enabled for all products" tax option enabled.

How to remove the "This price includes taxes" text from product details

If you have the "Include tax in product prices" option enabled, but don't want to show the "This price includes taxes" text in product details, just disable the "Show included taxes on product details page" option on theSystem Settings → Taxes page.

How to add tax percentage to invoice?

If you want to add tax percentage to your invoices, you can add it to the name of your tax here: Control Panel → System Settings → Taxes page.
For example, if you have 10% tax, at your invoices it may look like this: 10% Tax: $1,5
Note: a new tax name will be applied only to orders placed after editing.

I am from EU. How can I set up my store to comply EU business regulations?

EU countries like German and Italy have certain regulations that impose rules on businesses and require specific display of product prices and sales taxes. We made it possible for EU stores to get their stores fully complied with these regulations. Please refer to this article for detailed information: EU laws: setup

How to set up tax rate for certain state or city?

Tax calculation algorithm determines which tax to apply by looking through the configured tax rate list, top-down. When it finds a matching zone, it stops and applies the corresponding tax rate. So you can define tax rate for particular state(s) or cities (using zip codes), then add a rate for "USA" at the bottom of the list. In this case, USA rate will be applied to all states except the states configured explicitly.

Tax Calculation in the US

In the US the merchant must pay the taxes to the states where they have any connections (nexus).

Example 1: You reside in Ohio and sell to all the states, and your office, staff, warehouse, etc are located in Ohio. In this case you must pay the Sales Tax only in Ohio. In all the other states you sell to, it is the customer who is responsible for paying the tax - and it is called "Use Tax", not "Sales Tax".

Example 2: You are a resident of Ohio and your office is in Ohio, but you also have a warehouse in Washington and a lawyer in New-York. In this case you must pay the Sales Tax in all these three states as you have 'nexus' there. The rates will depend on the customers’ location. The Sales Tax for all other states will be zero-rate for you.

What is considered to be “nexus” is set by the State Government. 

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