Online businesses may be subject to payment of direct taxes (income tax) or indirect taxes (service and sales, customs and excise, etc) depending on the goods and services offered by the store. As a store owner, it is necessary to be aware of all these different taxes and duties and ensure that you’re paid up on all of them.

It is advisable to reach out to a tax expert to make sure the correct tax is deducted from all the products so that any issues can be avoided later on.

Taxation rules differ depending on the country where the online business resides. Tax rates can depend on the types of products, the business location, consumers’ location, and more. For example, merchants that sell e-goods to customers in the European Union should charge taxes on digital products. Store owners must abide by the taxation rules of the location their business operates from.

Taxes are manually calculated according to the Tax Settings. Taxes can be applied to all products, specific products, specific zones, or specific postal codes.

How to configure Taxes for the online store?

Taxes can be calculated manually for different regions, zones, and countries.

To configure manual taxation:

1. Choose the Tax menu.

2. Click on the Add Manual Tax button.

   

3. On the Tax Details tab, enter the Manual Tax name and description.

   

4. Click the checkbox Apply this tax to all products if this tax is to be applied to all the products in the store.

5. You can set taxes based on Specific Zone or Specific Postal Code. To set taxes based on Specific Zone, Choose a Specific Zone from the Rates per Zone drop-down.

6. Enter the Tax percentage for other areas except for the zones for which you are going to set tax.

7. Choose the Zone Name from the list and the Tax percentage.

8. You can enable/disable the tax for the current zone using the toggle against each zone. The tax can be deleted by clicking on the delete icon.

9. Click on the Zones+ button to add more zones and taxes.

10. Note: Create Zones by clicking on the Manage Zones button.

11. Finally, click Save. Tax is successfully created.

How to apply taxes to specific products?

1. In the Tax menu, search for the Tax you would like to apply to certain products.

2. Click on the edit icon against the tax. Click on the Product Details tab.

   

3. Click on the Add Product button.

4. Choose the products by checking the boxes and clicking Save.

   

5. When these products are added to the cart, the taxes are applied to the products.

Managing Zones

An admin can create a zone for which a particular tax rate may apply. A zone can be several countries, states, or regions(specified by zipcodes). For example, if the same tax rate applies to several states, the admin can create one zone consisting of these states and set up a tax rate for this zone.

To add a zone:

1. In the Tax menu, click on the Manage Zones button on the Taxes page.

2. Click on the Add Zone button.

3. Enter the Zone name.

   

4. Click on the + sign near Countries to add countries to your Zone.

5. Search for countries or click on checkboxes to choose multiple countries.

6. Similarly, you may add States, Cities and ZipPostal codes to your Zone. You can create a zone that consists of different countries, states, Zipcodes or even a combination of them.

7. Click Save.

8. Now your Zone gets added to the list where you can search, edit or even remove the zones.