Tax Configuration

The tax system provides flexible location-based tax calculation with support for multiple tax rates, tax classes, and regional tax rules.

Overview

Tax features include:

• Tax classes - Group products by tax category (standard, reduced, zero-rated)
• Location-based rates - Different rates by country, state, city, or ZIP code
• Priority system - Control which tax rate applies when multiple match
• Tax display options - Show prices with or without tax
• Checkout tax fields - Optional company/VAT number fields
• Per-product tax - Assign different tax classes to products

Enable Tax System

Navigate to Ecommerce -> Settings -> Tax.

Toggle Enable tax to activate tax calculation.

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Once enabled, you'll see a link to Go to Taxes to manage tax classes and rates.

Tax Configuration Options

After enabling tax, configure these settings:

Display Product Price Including Taxes

When ON:

• Product prices shown include tax
• Cart/checkout shows "including tax" label
• Tax is backed out from displayed price for calculation

When OFF:

• Product prices shown exclude tax
• Tax is added to price at checkout
• More common in US/Canada

Example: Product price $100, 10% tax

• Including taxes: Shows $100 (price is $90.91 + $9.09 tax)
• Excluding taxes: Shows $100 + $10 tax = $110 total

Display Company Invoice Information Fields at Checkout

When ON:

• Checkout page shows additional fields:
  • Company name
  • Company address
  • Company tax code / VAT number
• Useful for B2B stores or EU VAT compliance

When OFF:

• Only standard customer fields shown
• Simpler checkout for B2C stores

Display Checkout Tax Information

When ON:

• Shows tax breakdown in checkout summary
• Example: "Tax (10%): $10.00"

When OFF:

• Hides detailed tax info
• Only shows final total

Display Item Tax at Checkout

When ON:

• Shows tax amount per item in cart
• Example: "Widget: $100 + $10 tax"

When OFF:

• Shows only subtotal and total tax
• Cleaner checkout display

Display Tax Description

When ON:

• Shows tax rate name/description (e.g., "VAT 20%")

When OFF:

• Shows only "Tax" label

Creating Tax Classes

Navigate to Ecommerce -> Taxes -> Tax Classes -> Create.

Tax Class Fields

• Title - Name of tax class (e.g., "Standard Rate", "Reduced Rate", "Zero Rate")
• Percentage - Default tax rate (e.g., 20 for 20%)
• Priority - Order of application when multiple taxes match (lower = higher priority)
• Status - Published or Draft

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Use descriptive titles like "Standard VAT (20%)" or "Reduced Rate (5%)" for clarity.

Common Tax Classes

Tax Class	Percentage	Use Case
Standard Rate	20%	Most products (EU VAT standard)
Reduced Rate	5%	Food, books, children's items
Zero Rate	0%	Exports, certain essentials
Luxury Rate	25%	High-value items (some countries)

Setting Default Tax Rate

Navigate to Ecommerce -> Settings -> Tax.

After creating tax classes, select a Default tax rate from the dropdown.

This tax applies to products without a specific tax class assigned.

Creating Tax Rules

Tax rules define location-based tax rates. One tax class can have multiple rules for different locations.

Navigate to Ecommerce -> Taxes -> Tax Rules -> Create.

Tax Rule Fields

• Tax class - Select which tax class this rule belongs to
• Country - Select country (or "All" for global)
• State - Select state/province (or "All")
• City - Optional city name
• ZIP code - Optional ZIP/postal code
• Percentage - Tax rate override for this location (overrides tax class default)
• Priority - Rule priority when multiple rules match (lower = higher priority)
• Status - Enable or disable this rule

Tax Rule Priority

When multiple rules match a customer's location, the system uses:

1. Most specific rule wins - City > State > Country > Global
2. Priority field - Lower number = higher priority if specificity is equal
3. First matching rule - If priority is equal

Example priority order:

1. ZIP code match (highest priority)
2. City match
3. State match
4. Country match
5. "All" global rule (lowest priority)

Example Tax Rules

US Sales Tax Example:

Tax Class: Standard Rate (0%)

Rules:

• Country: United States, State: California, Percentage: 7.25%
• Country: United States, State: Texas, Percentage: 6.25%
• Country: United States, State: New York, Percentage: 4%

EU VAT Example:

Tax Class: Standard VAT (20%)

Rules:

• Country: United Kingdom, Percentage: 20%
• Country: Germany, Percentage: 19%
• Country: France, Percentage: 20%
• Country: Spain, Percentage: 21%

City-Specific Tax:

Tax Class: Local Tax (5%)

Rules:

• Country: USA, State: Colorado, City: Denver, Percentage: 8.81%
• Country: USA, State: Colorado, Percentage: 2.9% (state base rate)

Assigning Tax to Products

When creating or editing a product:

Navigate to Products -> Create or Edit -> Pricing section.

Select Tax class from dropdown.

If no tax class is selected, the default tax rate applies.

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Use bulk actions to assign tax classes to multiple products at once from the products table.

How Tax is Calculated

At Checkout

1. System detects customer location from:

   • Billing address (primary)
   • Shipping address (fallback)
   • Default country (if no address)

2. For each item:

   • Get product's tax class (or default)
   • Find matching tax rule for customer location
   • Apply tax percentage to item price

3. Calculate totals:

   • Subtotal (before tax)
   • Tax amount (per item or total)
   • Shipping (may be taxed based on settings)
   • Grand total

Tax on Discounts

Taxes are calculated after discounts are applied:

Example: Product $100, 10% discount, 10% tax

1. Original price: $100
2. After discount: $90
3. Tax (10% of $90): $9
4. Total: $99

Tax on Shipping

Shipping can be taxed based on:

• Shipping origin location
• Destination location
• Custom rules per shipping method

Configure in Ecommerce -> Settings -> Shipping.

Tax Display Examples

Example 1: US Store (Tax Excluded)

Settings:

• Display product price including taxes: OFF
• Display checkout tax information: ON

Customer sees:

• Product page: $100
• Cart: $100 + Tax $10 = $110
• Checkout: "Tax (10%): $10.00"

Example 2: EU Store (Tax Included)

Settings:

• Display product price including taxes: ON
• Display checkout tax information: ON

Customer sees:

• Product page: $120 (includes $20 tax)
• Cart: $120 (Tax included: $20)
• Checkout: "Total inc. VAT (20%): $120"

Example 3: B2B Store with VAT

Settings:

• Display company invoice fields: ON
• Display item tax at checkout: ON

Customer sees:

• Checkout: Company name, VAT number fields
• Cart: Each item shows "Price: $100 + Tax: $10"
• If VAT number valid: Tax may be zero (reverse charge)

Managing Taxes

Editing Tax Classes

Navigate to Ecommerce -> Taxes -> Tax Classes.

Click Edit on any tax class to modify:

• Title
• Percentage (affects products without specific rules)
• Priority
• Status

WARNING

Changing tax percentage affects all products using that tax class immediately.

Editing Tax Rules

Navigate to Ecommerce -> Taxes -> Tax Rules.

Click Edit to modify location rules or rates.

Changes apply to all future orders immediately.

Deleting Taxes

Deleting a tax class:

• Removes all associated rules
• Detaches from all products
• Products revert to default tax rate
• Does NOT affect past orders

Deleting a tax rule:

• Only affects that specific location rule
• Other rules for same tax class remain active
• Does NOT affect past orders

Common Tax Scenarios

Scenario 1: US Multi-State Sales Tax

Setup:

1. Create tax class: "Standard Sales Tax" (0% default)
2. Create rules for each state with nexus
3. Set "Display including taxes" to OFF

Scenario 2: EU VAT with Reverse Charge

Setup:

1. Create tax class: "Standard VAT" (20%)
2. Create rules for each EU country
3. Enable "Display company invoice fields"
4. Use custom hook to check VAT number and apply reverse charge

Scenario 3: Canada GST + PST

Setup:

1. Create tax class: "GST" (5%)
2. Create tax class: "PST" (varies by province)
3. Create rules for each province
4. Both taxes apply separately to same items

Scenario 4: No Tax (Export Store)

Setup:

1. Create tax class: "Zero Rate" (0%)
2. Assign to all products
3. Or don't enable tax system at all

Tax Reports

To view tax collected:

Navigate to Ecommerce -> Reports -> Tax.

Reports show:

• Total tax collected by period
• Tax breakdown by rate
• Tax by location
• Tax by product

Export to CSV for accounting software integration.

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The Tax Collection Summary Card widget on the dashboard shows quick tax stats.

Troubleshooting

Tax not calculating at checkout

1. Tax system enabled? - Check Settings -> Tax
2. Tax rule exists? - Create rule matching customer location
3. Tax class assigned? - Product needs tax class or default rate set
4. Customer location? - Verify billing/shipping address is complete

Wrong tax rate applied

1. Check tax rules - Verify location match is correct
2. Check priority - Lower priority may be overriding
3. Check specificity - More specific rule (city) overrides general (country)

Tax showing when it shouldn't

1. Check default tax rate - May be applying to products without specific class
2. Check "All" rules - Global rules apply to all locations
3. Verify product tax class - May have wrong class assigned

Prices look wrong

1. Check "Display including taxes" setting
2. Verify tax percentage - Decimal vs percentage (20 = 20%, not 0.20)
3. Check discount interaction - Tax calculates after discount

Best Practices

1. Use descriptive names - "VAT 20% (UK)" better than "Tax 1"

2. Set default rate - Ensures all products are taxed even without assignment

3. Test with customer accounts - Verify rates apply correctly by location

4. Keep rules organized - Use priority field to control complex scenarios

5. Document your setup - Note which products use which tax class

6. Regular audits - Review rates quarterly to ensure compliance

7. Consider nexus rules - Only charge tax where legally required

8. Use zero rate explicitly - Don't leave products without tax class if they should be zero

Frequently Asked Questions

Can I charge multiple taxes on one product (e.g., GST + PST)?

Yes, create multiple tax classes and assign both to the product. The system calculates each separately.

Do I need to charge tax on shipping?

Depends on local laws. Configure in Settings -> Shipping to tax shipping fees.

How do I handle tax-exempt customers?

Create a "Tax Exempt" customer group or use custom code to check customer tax status and override rate.

Can I have different tax rates for different product types?

Yes, create multiple tax classes (e.g., "Food Tax", "Clothing Tax") and assign to products.

What if customer enters wrong location?

Tax calculates based on entered address. If customer corrects address at checkout, tax recalculates automatically.

Do discounts affect tax?

Yes, tax is calculated on discounted price, not original price.

Can I exclude certain products from tax?

Yes, assign them to a "Zero Rate" tax class with 0% rate.

How do I export tax data for accounting?

Use Ecommerce -> Reports -> Tax and export to CSV.

What's the difference between tax class and tax rule?

• Tax class - Category of tax (e.g., "Standard VAT")
• Tax rule - Location-specific rate for that class (e.g., "20% in UK")

Can I set tax based on customer's country but not state?

Yes, create rules with Country set but State = "All". This applies to all states in that country.