Creating a new tax

1. On Taxes page perform one of the following:
   • If you have not defined any taxes, the system displays the following in the center of the screen:

     

   • If you have already defined one or more taxes, the system displays a list of all created taxes and the following button in the toolbar of Payment Methods page:

     

2. Click Create a tax or Create tax respectively.
   The Create a tax page appears.
3. In the Name input field, enter a name for the tax.
   For example, enter French VAT.
4. In Based on dropdown box, select whether the tax is determined according to the shipping or the billing address.

   EXAMPLE: A customer wants the item to be shipped to California, but his billing address is in Florida. You have created a Californian tax of 10% and you have set the Based on to Shipping address. The tax you have created will be applied to this customer, if you have chosen Billing address, the tax will not be applied.

5. Select the country and the state (if required) where the product will be delivered and the tax is applied.
6. For the US, you can narrow the tax application to counties, cities, and ZIP codes.
   To do this expand Narrow location section and fill out one or more of the following:
   • City
   • County
   • ZIP / Post code or a range of codes.
   • If the client’s country and state (if any) match the tax, the system checks whether the ZIP code or the range of ZIP codes of the configured tax match the client’s address. If you have not entered a ZIP code, the system checks whether the city matches, and if you have not entered a city, the system checks whether the country matches.
     

     To display counties on the checkout page, perform procedure Configuring the Checkout widget » Step 10.

7. In Standard rate input field, enter the tax rate in percentages.
   • If you have created any tax classes, enter the rate for each tax class.
     For example, in a particular country, you can have different than the standard VAT applied to books or drugs.
   • If for a particular tax class the tax is not applied, select the respective Tax exempt checkbox.
     For example, drugs may be VAT exempt.
8. If you want the tax to also apply to the shipping price, select Apply tax to shipping checkbox.
9. Select Include in prices displayed on the site checkbox, if you want the tax to be included on the prices displayed on the website.
   For example, if an item costs 100 and the tax of 10% is not included in the displayed price, the customer will have to pay for the item 110 of which 100 for the item and 10 for the tax. If the tax is included, the customer will pay 100, of which 90.91 for the item and 9.09 for the tax.
10. When you are finished, click Create this tax.