Mastering Complex Taxes with Advanced Tax Settings

Selling across regions can be a challenge due to complex tax laws and regulations. Basic tax settings and third-party services often struggle to handle these complexities, including local variations and intricate calculation methods.

SHOPLINE's Advanced tax settings empower you to take control. This powerful tool lets you define tax zones, tax types, and tax calculation steps with precision. It provides detailed tax reports, categorized by time, tax rules, types, and rates, giving you a clear overview of your tax collection activities.

 

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Setting Up Custom Product Types for Advanced Tax Rates

By setting up Custom Product Types, you can easily categorize your products and assign specific tax rates based on their category. To effectively manage these categories, you have two convenient methods:

Manual Editing in SHOPLINE Admin Panel 

1. Go to Products and select the desired product to access its details page. 
2. Locate the Product type section and click + .
   
   
   
3. Select a type from the list or create a new one by entering it in the Custom product type field.
   
   
   
4. Click Update to save the changes.

Bulk Import via Local Template Upload

For managing a large number of product types, refer to the guide "Adding Products in Bulk with SHOPLINE Template" for comprehensive instructions.

Field Explanation:

Field Name	Description
Custom Product Type	A customizable label to describe your product categories. You can create these labels freely without following any predefined format.

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Enabling Advanced Tax Settings

Switching to Advanced Tax Settings

To set up or switch to Advanced tax settings for a specific country/region, follow these steps:

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. In the Tax Collection Areas section, search for the specific country/region and click the edit icon to access the settings page.
3. In the Current taxation service module, click Change the service.
   
   
   
4. In the pop-up window, select Advanced tax settings and click Complete.
   

Activating the Service

By default, the service is disabled when you first switch to Advanced tax settings. To enable the service, toggle on the Activate switch.

 

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Adding Tax Fee Description

To ensure customer transparency, it's essential to add a tax fee description when using Advanced tax settings for a specific country/region. This informs customers of applicable taxes before checkout.

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. In the Preference section, enter the Tax fee name. This name will be visible to customers at checkout.
   
    
4. Check the box for Let customers view tax breakdown details at checkout and enter a clear and concise description of the tax fee. This description will be displayed during checkout.
   
    
5. Click Update to save the changes.

 

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Adding Tax Zones and Tax Rate Rules

SHOPLINE's Advanced tax settings allow you to configure up to 200 tax zone rules based on local tax regulations.

Adding Tax Zones

Once Advanced tax settings is enabled for a country/region, you can define tax zones at the country/region level, state/province level, or postal code range level. Follow these steps to add tax zones:

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. In the Tax region and rate section, click Add tax zone and tax rate.
   
   
   
4. On the settings page, enter the Tax zone name and select the Scope of effectiveness.
   
   
   

   Notes:  You cannot add duplicate tax zones for the same country, state/province, or postal code range. When using postal code ranges, be cautious of potential duplicate configurations. If a customer's shipping address matches multiple postal codes, the tax zone with the highest matching character count will be applied (exact match > ? wildcard > * wildcard). Star (*) wildcard: Captures all digits from the specified position in the postal code to the end. For example, 335* will match all postal codes from 33500 to 33599. Question mark (?) wildcard: Captures only the digit 0-9 at the position of the question mark. For example, 335?1 will match postal codes 33501 to 33591.

5. Click Add.

 

Adding Tax Rate Rules

Once you've enabled Advanced tax settings and defined tax zones, you can add multiple tax rate rules to each zone. Each tax zone can have up to 20 tax rate rules. These rules specify the tax rates that apply within the zone. Follow these steps to add tax rate rules:

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. In the Tax region and rate section, click the edit icon for the tax zone you want to add tax rate rules for.
   
   
   
4. Click Add tax fee or Add tax rate rules.
   
   
   
5. Enter a tax rate rule name, set the priority, and configure tax rules for Basic tax rate and Custom product type tax rate.
   
   
   
6. Click Complete to save the rule.

Explanation of Rule Configuration Fields 

 

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Managing Tax Zones and Tax Rate Rules

Once you've created tax zones and tax rate rules for a country/region, you can further manage them to ensure accurate and up-to-date tax calculations.

Managing Tax Zones

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. In the Tax region and rate section, you can perform the following actions for each created tax zone:
   

• • Enable/Disable: Toggle the switch on/off to enable or disable the tax zone.
  • Edit: Click the Edit icon to enter the tax zone editing page and make adjustments.
  • Delete: Click the Delete icon to remove the tax zone.

Managing Tax Rate Rules

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. Identify the tax zone for which you want to edit rules and click the Edit icon to enter the settings page.
   
   
   
4. In the Tax rate rules section, you can perform the following actions for each created rule:
   

• • Enable/Disable: Toggle the switch on/off to enable or disable the tax rate rule.
  • Edit: Click the Edit icon to enter the tax zone editing page and make adjustments to the rule.
  • Copy: Click the Copy icon to duplicate the rule.
  • Delete: Click the Delete icon to remove the rule.

5. Click Update to save the changes.

 

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Importing Tax Regions and Rates in Bulk

While setting up tax zones and tax rates individually is manageable for a few regions, bulk importing with a CSV file becomes significantly more efficient when dealing with a large number of regions. Follow these steps to import tax regions and rates in bulk:

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. In the Tax region and rate section, click Import.
   
   
   
4. In the pop-up window, click Tax region and rate to download the template.
   
    
5. Fill in the template with the required information.
6. Upload the file and click Import.

Template Field Explanation

 

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Understanding Tax Calculation Priority

The tax calculation process involves several steps to determine the applicable taxes and their corresponding amounts for an order. The priority rules ensure that taxes are applied in a consistent and accurate manner.

 

Step 1: Determine Tax Applicability

This step verifies if a product is taxable and if a matching tax rule exists for the order's destination.

• Tax Checkbox: If the Tax required checkbox is not selected on the product details page, that product will not be subject to tax calculations.
• Tax Zone Matching: If no matching tax zone is found for the order's shipping destination, taxes will not be calculated.
• Tax Rate Rule Matching: If no matching tax rate rule is found for the tax zone, taxes will not be calculated.

Step 2: Determine Tax-Included or Tax-Exclusive Price

The tax calculation formula depends on whether the product price includes tax (tax-inclusive) or not (tax-exclusive).

• Tax-Included Price: If the product price is tax-inclusive, the tax calculation formula is: Tax = Σ((Tax Rate × Price × Quantity) / (1 + Tax Rate))
• Tax-Exclusive Price: If the product price is tax-exclusive, the tax calculation formula is: Tax = Σ(Price × Quantity × Tax Rate)

Step 3: Apply Priority Rules

The tax calculation process considers the priority numbers assigned to tax rate rules. Lower priority numbers indicate higher priority. When multiple tax rate rules apply, they are applied in order of priority.

Step 4: Calculate Tax for Each Rule

For each matching tax rate rule, the tax amount is calculated based on the configured tax rates, product prices, and quantities.

Step 5: Sum Up Total Tax

Finally, the tax amounts calculated for all applicable tax rate rules are added together to determine the total tax for the order.

 

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Viewing and Exporting Tax Reports

Tax reports allow you to analyze tax data for your store's operations in countries/regions configured with Advanced tax settings. To view and export tax data, follow these steps

1. From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
2. Locate the specific country/region in the Tax Collection Areas section and click the edit icon to access the settings page.
3. In the Current taxation service module, locate Tax report and click View.
   
   
   
4. On the Tax report page, you can view the following report details:
   

• • Filter Conditions: 
    • Display By: Choose between Display by day or Display by month.
    • Date Range: Select a date range up to 1 year in the past.
  • Report Fields: The report displays data based on the selected Display By option. Here's an explanation of each field:
    • Tax name: Name of the tax rate rule.
    • Tax rate: Tax rate applied during tax calculation.
    • Custom product type: Tax calculation type, including basic tax rate and custom product type tax rate.
    • Number of orders: Order quantity associated with the tax name, tax rate, and type within the time range.
    • Total tax amount: Total tax amount for the tax name, tax rate, and type within the time range, converted to the store's currency.

5. To export the tax report for further analysis or record-keeping, click Export tax report.