Taxes

The Taxation screens decide which taxes your site charges and how much. You describe what you sell (categories), which kinds of tax exist (types), where you tax (jurisdictions) and how each tax is worked out (rules). Then you classify your products, and the checkout adds the tax to the order summary for you.

Menu	Commerce > Taxation > Categories, Types, Jurisdictions, Tables and Rules
Permission	Manage taxation
Feature	Taxation

Can't find it?

What you see depends on your role. If the menu, a button or a setting on this page is missing, ask your administrator to give you the permission listed above or to turn on the feature. Only administrators can turn features on and change site settings.

Set things up in the order below: rules point to jurisdictions, types, categories and tables, so those must exist first. Every screen is a searchable list with an Add button, and Edit and Delete on each entry. The Name of anything you create is fixed once it is saved, and must be unique.

This page covers the screens. For exactly how amounts are calculated, rounded and stored, see the Taxation technical page.

1. Create tax categories

A category groups what you sell for tax purposes, for example Electronics, Food or Tobacco. Rules can target a category, and products are classified with one.

1. Open Commerce > Taxation > Categories and click Add Tax Category.
2. Fill in the fields and click Save.

Field	What it does
Name	The label you see in lists and drop-downs. Required.
Code	The unique code rules and products use, for example ELEC. Required. Drop-downs show categories as Name (Code).
Parent code	The Code of a broader category, to organize categories in a hierarchy, for example Television under Electronics. A rule for Electronics then also taxes televisions; a rule for Television doesn't tax other electronics. Leave empty for a top-level category.
Description	Optional notes.

2. Review tax types

A tax type is a label for the kind of tax a rule produces, such as SalesTax or VAT. It groups taxes in reports and never changes the amount.

Your site starts with a list of common types: SalesTax, VAT, GST, HST, PST, QST, ExciseTax, AlcoholTax, TobaccoTax, TourismTax, LodgingTax, EnvironmentalTax, DigitalServicesTax, ImportDuty and Other. To add one, open Commerce > Taxation > Types, click Add Tax Type, enter a Name and an optional Description, and click Save. Delete the ones you never use to keep the rule editor short.

3. Create jurisdictions

A jurisdiction is a place that taxes, such as a country, a state or a city.

1. Open Commerce > Taxation > Jurisdictions and click Add Tax Jurisdiction.
2. Fill in the fields and click Save.

Field	What it does
Name	For example California. Required.
Code	A short code, for example US-CA. Required.
Level	Country, State, Province, Region, County, City, Special district or Other.
Parent jurisdiction	The larger place this one belongs to, for example United States for California. Leave at — None — for a top-level jurisdiction.
Country	The country the jurisdiction is in.
Region / County / City / Postal code	The parts of an address that fall in this jurisdiction. Fill in only what defines it; leave the rest empty.
Effective from / Effective to	Optional dates between which the jurisdiction is in use. The end cannot be before the start.

4. Create tax tables (optional)

A tax table is a list of amount ranges, each with its own rate. You need one only for the Tax table lookup, Progressive and Threshold rules. Skip this step if all your taxes are a simple percentage or a fixed amount.

1. Open Commerce > Taxation > Tables and click Add Tax Table.
2. Enter a Name and, optionally, Effective from and Effective to dates. A rule only uses the table on dates inside that window.
3. Click Add row for each range and fill it in. Use the trash button to remove a row.
4. Click Save. Rows are sorted by their minimum when saved.

Column	What it does
Minimum	Where the range starts. Cannot be negative.
Maximum	Where the range ends; it must be greater than the minimum. Leave empty on the top range only.
Rate	The rate for this range, written as a fraction: 0.2 means 20%.
Fixed amount	An amount added on top of the rate for this range.

Ranges cannot overlap, and only one row can be open-ended. A table that a rule uses cannot be deleted: the message says how many rules use it, so update or remove those rules first.

5. Create tax rules

A rule is one tax: what it applies to, and how it is worked out. Several rules can apply to the same item; for example a general sales tax and an extra tobacco tax.

1. Open Commerce > Taxation > Rules and click Add Tax Rule.
2. In Select a calculation method, click Add on the method you want. The method cannot be changed later.
3. Fill in the fields and click Save.

Calculation method	What it does	You enter
Percentage	A percentage of the price. Use it for sales tax, VAT and GST.	Rate
Fixed amount	A set amount per item line, whatever the quantity.	Fixed amount
Per unit	A set amount for every unit bought, such as an excise duty.	Fixed amount
Per weight	A set amount for every unit of weight.	Fixed amount
Per volume	A set amount for every unit of volume.	Fixed amount
Progressive	Taxes each range of a tax table on the part of the price inside it, then adds them up.	Tax table
Threshold	Charges tax only once an amount is reached, using a tax table.	Tax table
Tax table lookup	Takes the rate and fixed amount from the one table row the price falls in.	Tax table

Field	What it does
Name	Identifies the rule in the admin. Required and unique.
Enabled	A disabled rule is never applied. The list marks it Disabled.
Priority	The order rules are worked out in. Lower numbers go first.
Tax type	The kind of tax, from your tax types. Required.
Display name	What buyers see on the order summary, invoices and receipts, for example CA sales tax. Empty uses the rule Name.
Tax code	Optional code for your own records.
Jurisdiction	The jurisdiction the rule belongs to, or Any jurisdiction.
Category	The category the rule applies to, or Any category for everything. A rule also applies to items whose Tax classification is this category.
Customer type	Any customer, Consumer (B2C) or Business (B2B).
Minimum amount / Maximum amount	Optional. The rule applies only when the amount is at least the minimum and below the maximum.
Amounts compared with	What the minimum and maximum are compared with: Each item (the default), each item's taxable amount; or The whole order, what the order's items come to before tax, shipping left out. The whole order suits an import duty charged only on orders above a value.
Tax is included in the item price	Tick when your prices already include this tax, so it is worked out of the price instead of added on top.
Tax is compound (calculated on top of other taxes)	Tick when this tax is charged on the price plus the taxes worked out before it.
Reverse charge (the customer accounts for the tax)	For a business buyer, the tax is not charged; a zero line marked as reverse charge is shown instead. Other buyers are charged as usual.
Applies to shipping charges	Tick to tax shipping charges too.
Effective from / Effective to	Optional dates between which the rule is used. The end cannot be before the start.
Rate	Percentage only. Written as a fraction: 0.0725 means 7.25%.
Fixed amount	Fixed amount, per-unit, per-weight and per-volume rules only.
Tax table	Table-based rules only. Required for them.

The list shows each rule's tax type, method, rate or amount, and priority.

Jurisdictions at checkout

A rule tied to a Jurisdiction only charges buyers whose address is in that jurisdiction. The checkout taxes an order where it ships to, or, when nothing ships, where the buyer is billed. Until the buyer has given an address, only rules set to Any jurisdiction apply. See the Taxation technical page.

Where you sell from

Some taxes are charged where the seller is rather than where the buyer is. Under Settings > Commerce > Tax origin, enter your store's Country, State or province and, if your taxes depend on them, county, city and postal code. Leave the country blank when every tax you collect is based on where the buyer is.

Customers you mark Exempt from tax under Customers pay no tax when they check out signed in.

6. Classify your products

Rules only apply to items that carry the Taxation part. Add it to each content type you sell, usually the same type that has the Product part (see Products and Currencies).

Menu	Content > Content Definition > Content Types
Permission	Edit content types
Feature	Taxation

Can't find it?

What you see depends on your role. If the menu, a button or a setting on this page is missing, ask your administrator to give you the permission listed above or to turn on the feature. Only administrators can turn features on and change site settings.

1. Open Content > Content Definition > Content Types and edit the content type.
2. Click Add Parts, tick Taxation, and save.
3. Click Edit next to the Taxation part, set the options below, and save.

Field	What it does
Default tax category	The category new items of this type start with.
Default tax classification	An optional, more specific category new items start with, for example Television under Electronics.
Allow editors to override the classification	Ticked (the default): editors can pick a different category on each item. Cleared: every item always uses the defaults above.

Create your categories first: these drop-downs only list existing categories, plus None.

On each item, the Taxation part shows:

Field	What it does
Taxable	Ticked by default. Clear it for an item that is never taxed.
Tax category	The item's category. Shown only when editors may override the classification.
Tax classification	An optional, more specific category. Shown only when editors may override the classification.
External tax code	Optional. A code used by an outside tax service.

Classify many products at once with a taxonomy

Instead of setting a category on every item, you can set it once on a taxonomy term and tag products with the term. This needs the Taxonomies feature.

1. Create a taxonomy, for example Product categories, with terms such as Electronics and Tobacco.
2. Add the Taxation part to the taxonomy's term content type, and set the Tax category on each term.
3. Add a taxonomy field that uses this taxonomy to your product content type, and tag each product with its term.
4. On the products, leave Tax category at None. New items start with the content type's Default tax category, so set that default to None too.

A product with no category of its own takes the category of its tagged term. A category set on the product itself always wins.

Example: sales tax plus a tobacco tax

1. Categories: add Electronics (code ELEC) and Tobacco (code TOBACCO).
2. Jurisdictions: add California, level State, country United States, region CA.
3. Rules: add a Percentage rule CA sales tax with Tax type SalesTax, Jurisdiction California, Category Any category, Rate 0.075. Add a second Percentage rule CA tobacco tax with Tax type TobaccoTax, Category Tobacco (TOBACCO), Rate 0.3.
4. Products: classify televisions as Electronics and cigarettes as Tobacco.

For a buyer in California, a television is charged 7.5%. A pack of cigarettes matches both rules and is charged 7.5% plus 30%. Each tax shows as its own line in the buyer's order summary. A buyer outside California pays only the tobacco tax, which has no jurisdiction. The sales tax needs the buyer's address, which the checkout only knows when your developer supplies it.

Prices that include tax

In many countries the price a shopper sees already includes VAT. To sell that way to some countries, add them to a market with Prices include tax on. At checkout, the tax your rules give is then taken out of the prices instead of added on top, so the shopper pays the price they saw.

Taxes on the order

The checkout's order summary shows each tax once for each rate, whatever the items it was charged on, such as VAT 19% and VAT 7%. A tax that was taken out of the prices says so: VAT 19% (included).

An order keeps the taxes it was charged: their names, types, places, rates, what they were charged on and the amounts. Reports, such as the VAT one-stop shop (OSS) report, add them up, and apps see them through the headless API.

EU VAT standard rates

The EU VAT standard rates recipe sets up VAT for the European Union in one step. It adds the 27 EU member states as jurisdictions (level Country), and a Percentage rule for each, with Tax type VAT, Display name VAT, the country's standard rate, and Applies to shipping charges ticked.

1. Open Configuration > Recipes.
2. Find EU VAT standard rates and click Run.
3. Open Commerce > Taxation > Rules to see the rules, named after their countries, such as Germany VAT.

Check the rates

VAT rates change. Check each country's rate before you sell there, and add reduced rates for the products they apply to, such as books or food, as rules for those categories.

Running the recipe again puts its jurisdictions and rules back as the recipe has them, so a rate you changed is set back.

Import duty

Some countries charge import duty on goods brought in from abroad, often only on orders above a value. Charge it at checkout, so the buyer pays nothing on delivery:

1. Add a jurisdiction for the destination country, such as Canada (level Country, country Canada), if you don't have one.
2. Add a Percentage rule with Tax type ImportDuty, Display name Import duty, the country's Jurisdiction and its Rate.
3. Set Minimum amount to the value duty starts at, such as 150, and Amounts compared with to The whole order.

An order to that country whose items come to 150 or more, before tax and without shipping, is charged the duty, on its own line in the order summary. A smaller order isn't. Leave Applies to shipping charges clear unless the country charges duty on shipping too.

Sites set up before import duty was added get the ImportDuty tax type when they're updated.

VAT one-stop shop (OSS) report

Sellers in the EU who sell to buyers in other EU countries declare the VAT on those sales in one return, the one-stop shop (OSS). The VAT one-stop shop (OSS) report gives its figures.

Menu	Reports > Commerce > VAT one-stop shop (OSS)
Permission	Manage orders
Feature	Orders and Reports

Can't find it?

What you see depends on your role. If the menu, a button or a setting on this page is missing, ask your administrator to give you the permission listed above or to turn on the feature. Only administrators can turn features on and change site settings.

1. Set your store's country under Settings > Commerce > Tax origin (see Where you sell from).
2. Open the report and choose the quarter's first and last day as the period. Click Show.

For the orders paid in the period, the report adds up the VAT charged on orders to EU countries other than your own, by the country they went to (the shipping address, or the billing address when nothing shipped) and the rate. For each currency you sold in it shows the VAT due, the number of countries, and a table with each country and rate: the orders, the Taxable amount and the VAT, with a total. A refund takes its share of the order's VAT off.

Only taxes whose Tax type is VAT are counted. Orders to your own country, and to countries outside the EU, are left out. No order paid in the period was charged VAT in another EU country. means there's nothing to declare.

TaxJar

For sales tax in the United States, where rates change by state, county and city, TaxJar can work out the tax instead of your own rules. You need a TaxJar account.

Menu	Settings > Commerce > TaxJar
Permission	Manage taxation
Feature	TaxJar

Can't find it?

What you see depends on your role. If the menu, a button or a setting on this page is missing, ask your administrator to give you the permission listed above or to turn on the feature. Only administrators can turn features on and change site settings.

1. In TaxJar, get an API token under Account > TaxJar API.
2. Open Settings > Commerce > TaxJar, fill in the fields (below), and save.

Field	What it does
TaxJar API token	Your TaxJar token. Once saved it's never shown again; leave it blank to keep it, or enter a new one to replace it. Without a token, your own tax rules work out tax.
Remove the token	Shown once a token is saved. Stops using TaxJar: your own tax rules work out tax again.
Countries	The two-letter codes of the countries TaxJar works tax out for, separated by commas. It starts with US.
Sandbox	For a sandbox token from TaxJar, while you try it out.

Saving restarts your site, so the new settings are used at once. This takes a moment.

For an order to one of those countries, with prices that don't include tax, TaxJar works out the tax on each item and on shipping from your store's address (Settings > Commerce > Tax origin) and the address the order goes to. The order summary shows it as Sales tax (VAT for a country other than the United States), with the combined rate of the places that tax the address. Your own rules aren't used for that order. Orders to other countries, and orders in a market whose prices include tax, use your own rules.

If TaxJar can't be reached, or can't work out the tax, your own tax rules work it out instead, so the sale goes on, and the problem is written to the site's log. Customers marked Exempt from tax are sent to TaxJar as exempt.