User Guide to Tax Settings

Learn more about how the Editor calculates tax on products and figure out the best way of displaying tax on your shop.


What determines the sales tax on a product?

The following information is factored into sales tax calculations:


The Editor automatically calculates tax rates based on these factors once inputted by the seller and buyer. You have the option of overriding the default tax rate and manually inputting a custom rate for a product you are selling in order to handle exceptions and exemptions. 

Note: If you specify a custom rate, remember to always check with tax authorities that you are complying with current tax regulations.


What is the best way for me to display tax to my customers?

There are a number of ways to display product prices to customers during their purchase and checkout flow. Here are the four most common scenarios:

  1. I want my customers to see prices including sales tax in my shop and I want the Editor to automatically calculate sales tax for me.
  2. I want my customers to see prices including sales tax in my shop and I want to specify a custom sales tax rate. 
  3. I want my customers to see prices excluding sales tax in my shop and I want the Editor to automatically calculate sales tax for me.
  4. I want my customers to see prices excluding sales tax in my shop and I want to specify a custom sales tax rate.


In the detailed walkthroughs of each scenario below, let’s pretend we’re selling a rubber duck.


1. I want my customers to see prices including sales tax in my shop and I want the Editor to automatically calculate sales tax for me.

How to set it up:


How it looks to your customer:


2. I want my customers to see prices including sales tax in my shop and I want to specify a custom sales tax rate.

How to set it up:


How it looks to your customer:


Note that this option doesn't take into account the location of neither the buyer nor the seller. Sales tax calculations rely entirely on the custom tax rate you've inputted. 


3. I want my customers to see prices excluding sales tax in my shop and I want the Editor to automatically calculate sales tax for me.

How to set it up:


How it looks to your customer:



4. I want my customers to see prices excluding sales tax in my shop and I want to specify a custom sales tax rate.

How to set it up:


How it looks to your customer:



Note that this option doesn't take into account the location of neither the buyer nor the seller. Sales tax calculations rely entirely on the custom tax rate you've inputted. 


Summary of all four scenarios



Skip tax

In Shop > Settings > Tax Settings, you can choose to skip tax calculations for different types of goods. If enabled, no tax will be added to the price calculations at any point in the purchase and checkout process.

Note: Remember to always check with tax authorities that you are complying with current tax regulations.


Tax on shipping

You can also add tax on shipping, which is independent of product sales tax. Head to Shop > Settings > Shipping Methods and edit your chosen shipping method by clicking the pencil icon on the right. Scroll down and expand the Advanced Settings section. In the Tax Value field, input your shipping tax rate as a whole number without the % symbol. For example, if you want to add 25% tax on shipping, type in 25. 


Remember, if you have multiple shipping methods, you'll need to set tax on each of them individually.

 

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