As a SHOPLINE merchant, complying with local sales tax regulations is crucial. This involves collecting taxes from your customers and reporting them to the government. SHOPLINE allows you to set manual tax rates, which your store will then automatically collect at checkout. However, it's important to note that SHOPLINE doesn't handle tax filings or payments. We recommend consulting with tax experts or local authorities to understand the applicable tax laws in your target markets. This will ensure accurate tax application, reporting, and payment.

Tax laws are complex and frequently change. For more accurate tax calculations, compliance, and potentially filing assistance, consider integrating third-party tax calculation services.

Before configuring taxes, confirm:

If your sales regions require consumption tax from customers.
If your products are taxable (e.g., digital products in the EU).
If shipping fees are taxable in your sales regions.

Transparency is key. Clearly outline the tax collection rules in your shopping instructions and product descriptions. Additionally, include a clear explanation of any taxes on shipping fees in your shipping plan. This ensures customers have a complete understanding of these details before checkout.

Setting Up Tax Collection in SHOPLINE
Assigning Taxes to Products
Configuring Tax Collection Areas
Configuring Tax-Inclusive Pricing
Setting Basic Tax Rate
Collecting Duties
Using Third-Party Tax Calculation Services
Viewing Tax Reports
Setting Up Tax Exemptions for Customers
Setting Up Tax Exemptions for B2B Customers

Setting Up Tax Collection in SHOPLINE

SHOPLINE offers flexible control over tax collection, allowing you to tailor it to your sales policies. If a product requires tax collection, ensure the necessary configurations are enabled:

Tax Collection on Products: Charge consumption tax for taxable items.
Tax Collection Areas: Define the regions where you need to collect taxes.
Tax Rates: Set basic rates or integrate with a third-party service for automatic calculations.

Note: To collect duties, enable the Collect duty at checkout option and set the applicable duty rate.

Assigning Taxes to Products

When creating or editing a product in your SHOPLINE admin panel, you can specify whether it requires tax collection at checkout.

From your SHOPLINE admin panel, go to Products. Click on Add product or select the product you want to set tax for to access its product details page.
Under Price settings, ensure that Tax required is checked, as it is selected by default.
Click Update to save the changes.

Configuring Tax Collection Areas

SHOPLINE allows you to define specific countries or regions where you need to collect sales tax. This ensures that the correct tax rate is applied to products and shipping fees based on the customer's shipping address at checkout.

Enabling Tax Collection for Specific Areas

Enabling tax collection for a country or region ensures that taxes are applied to products and shipping fees for orders with matching shipping addresses.

To enable tax collection for a specific area, go to Settings > Taxes and Fees. Then, find the desired country or region and toggle the switch to enable tax collection.
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Filtering Tax Collection Areas

On the Tax Settings page, you can quickly filter tax collection areas by using the search box.
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Adding Tax Collection Areas

SHOPLINE automatically generates tax collection areas based on the delivery regions set in your store settings.

You can also add additional tax collection areas by going to Settings > Taxes and Fees > Create shipping region > Shipping and Delivery.
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Note: Removing a country or region from your delivery settings won't remove it from the tax collection area list. You can choose to keep it for future use or manually delete it.

Deleting Tax Collection Areas

To permanently remove tax configuration data for a specific country or region, click the Delete icon next to that location in the Tax Collection Areas section.
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Note: Deleted data cannot be recovered. When you re-add the region, the default tax configuration will apply.

Configuring Tax-Inclusive Pricing

SHOPLINE offers the option to simplify your checkout process by including taxes directly in your product prices. This means customers will see the final price upfront, including any applicable taxes.

Note: Tax-inclusive pricing is not suitable if you need to exempt specific customers from taxes. In that case, keep your product prices exclusive of tax.

Enabling Tax-Inclusive Pricing

From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
In the Tax collection method section, select the All prices include tax option.
Click Update to save the settings.

Understanding Tax Calculations

For example, let's consider a product priced at USD 100 with a tax rate of 10%.

Tax-Inclusive Price Calculation: If the price includes taxes, the product portion is USD 90.91, and the tax portion is USD 9.09, calculated as Tax = (Tax Rate × Price) / (1 + Tax Rate). Therefore, the total payable at checkout is USD 100.
Tax-Exclusive Price Calculation: If the price does not include taxes, the product is USD 100, with an additional tax fee of USD 10. Thus, the total payment at checkout is USD 110.

Setting Basic Tax Rate

When the tax collection switch is enabled for a specific country or region, the system automatically applies the consumption tax. To ensure accurate tax collection at checkout, follow these steps to set tax rates:

From your SHOPLINE admin panel, go to Settings > Taxes and Fees.
In the Tax Collection Areas section, locate the desired country/region and click the pencil icon to access its tax rate configuration page.
In the Tax calculation service section, Basic sales tax and duty is the default selection. You can set the Basic tax rate for the specific country or region.
After configuring any tax settings, click Update to save the changes.

Tax rate across the territory

The system automatically retrieves tax rates stored within the system. You can edit the tax rate percentage by entering the desired rate.
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This tax rate has the lowest priority and is used to calculate taxes when no state tax rates, custom tax rates, or zip code group tax rates are set.

State Tax Rate

The State taxes module is available for some countries or regions, allowing you to set tax rates at the state or provincial level.

This tax rate takes priority over the tax rate across the territory. For example, if you set the overall tax rate for the United States to 8% and the specific tax rate for Tennessee to 10%, a shipping address in Tennessee, United States, will incur a tax rate of 10% at checkout, while a shipping address in California, United States, will incur a tax rate of 8%.

To add a tax rate for a specific area, click Add a shipping zone and provide necessary information.
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Setting Tax Rates for Product Categories

If your products are subject to different tax rate rules in different countries or regions, customize tax rates for specific product categories in the Custom tax rate section. These rates can apply nationally or within specific states or provinces.

These tax rates for product categories override state or nationwide tax rates. For instance, if you've set a tax rate of 8% for the entire United States, 10% for Tennessee, and 12% for the ice maker category within Tennessee, the system will apply a 12% tax rate if a customer provides a shipping address in Tennessee, USA, and purchases a small domestic ice maker from that category. Conversely, if a customer provides a shipping address in California, USA, and buys the same product, the system will apply an 8% tax rate.

To add a tax rate for a specific product collection, follow these steps:

Click Add custom tax rates in the Custom tax rate module.
In the pop-up window, select Product categories, choose the desired category, and specify the applicable region and tax rates.
Click Confirm.

Note: While you can associate a product with multiple categories in SHOPLINE, avoid assigning a product to categories with different tax configurations. In such cases, the system will prioritize the first category you set to determine the applicable tax rate.

Setting Tax Rates for Shipping Fees

When you choose a country or region for tax collection, SHOPLINE automatically applies the corresponding tax rate to shipping fees, prioritizing state tax rates over nationwide ones. To customize tax rates for shipping fees:

Click Add custom tax rates in the Custom tax rate module.
Select Shipping fee in the pop-up window and specify the region and tax rates.
Click Confirm.

Note: To exempt shipping fees from taxes, set the freight tax rate to 0% in the Custom tax rate module for the specific country or region.

Collecting Duties

For international sales complying with local duty regulations, you can opt to collect duties at checkout. To streamline the process and avoid surprises for customers, it's advisable to collect duties under a Delivered Duty Paid (DDP) status. Here's how to set up duty collection:

Go to Settings > Taxes and Fees in your SHOPLINE admin panel.
In the Tax Collection Areas section, find the country or region you're targeting and click the pencil icon to access its tax rate configuration.
Locate the Duty section, enable Collect duty at checkout, and input the duty name and rate. We suggest enabling the Allow customers to view duty description at checkout option and providing corresponding descriptions for the collected duties.
Click Update to save your changes.

Duty and Consumption Tax Calculation

In some cases, you might need to collect both duties and consumption taxes from customers. SHOPLINE uses different calculation methods for tax-inclusive and tax-exclusive prices:

Tax-Exclusive Price Calculation:
1. First, calculate the duty: Duty = Duty Rate × Price.
2. Then, calculate the consumption tax: Tax = Tax Rate x (Price + Duty)

Tax-Inclusive Price Calculation:
1. First, calculate the consumption tax: Tax = (Tax Rate × Price) / (1 + Tax Rate).
2. Then, calculate the duty: Duty = [Duty Rate × (Price - Tax)] / (1 + Duty Rate).

International Trade Terms:

Delivered Duty Paid (DDP): The seller is responsible for all import costs (such as duties, import duties, agent fees, advance payment, and service fees) incurred during cross-border shipment. You can collect these fees during the checkout process. This option provides a clear final price for customers and avoids delivery delays.
Delivered at Place (DAP) / Delivered Duty Unpaid (DDU): The seller only ships the product, and the customer is responsible for any import costs upon delivery. If duties are not paid in advance, some carriers may impose additional charges to cover the cost of duties upon delivery. Therefore, using the DAP term may result in extra charges for customers.

Using Third-Party Tax Calculation Services

SHOPLINE provides built-in tax calculation capabilities: Basic Sales Tax and Duty. However, if you prefer, you can opt to use a third-party tax calculation service by following these steps:

Go to Settings > Taxes and Fees in your SHOPLINE admin panel.
In the Tax Collection Areas section, locate the desired country or region and click the pencil icon to access its tax rate settings.
In the Tax Calculation Service area, click Change the service.
In the pop-up window, select the specific tax service you want to integrate with SHOPLINE.
Enter your account credentials for the chosen third-party tax service to complete the verification process.

Once successfully integrated, this service will be used to calculate taxes for the specific country or region.

Note: SHOPLINE prioritizes stability and will default back to Basic Sales Tax and Duty if any issues arise with the third-party service.

Viewing Tax Reports

Understanding your tax obligations is crucial for any business. SHOPLINE provides valuable tax reports within the Sales module, allowing you to analyze collected commodity tax, freight tax, and duties.

From your SHOPLINE admin panel, go to Analytics > Reports. Within the Sales module, select the desired report that aligns with your needs.
In the report, you'll find data fields related to tax rates. Click Edit to add additional tax metrics if needed.

Additionally, you can export reports for data tracking or further analysis.

Setting Up Tax Exemptions for Customers

SHOPLINE allows you to designate specific customers as tax-exempt for all or specific areas, eliminating their need to pay taxes at checkout. Here's a breakdown of the process:

Notes:

Tax-exempt customers must use the same email address associated with their account during checkout to qualify for the exemption.
If you set a product price that already includes taxes and a customer is tax-exempt, they will still be charged the full price at checkout.

Go to Customers in your SHOPLINE admin panel. Locate the customer you want to designate as tax-exempt and click their name.
In the Tax free settings module, click Manage.
In the pop-up window, check the box next to Tax free and choose the tax exemption scope:

- Tax free for all regions: This exempts the customer from taxes regardless of their shipping address.
- Specify tax-free areas: If tax exemption applies only to specific regions, select them. Click Add tax-free area to add additional regions.

Click Save to confirm the changes.

Setting Up Tax Exemptions for B2B Customers

SHOPLINE allows you to designate companies as tax-exempt for your B2B transactions. This ensures they won't be charged taxes at checkout if their shipping address falls within the specified tax-exempt regions.