Setting up taxes is one of the first tasks you want to perform when setting up a store.
Taxes can be a complex matter, but Netbrite aims to make setup as straightforward as possible. To get started, go to: Commerce > Settings > Tax.
The tax tab displays several options that can be configured to suit your needs — settings you choose are based on the tax jurisdiction under which your store is located.
Define whether to enable tax calculation. If taxes are disabled, ignore the rest of the options on the page as they will have no effect.
Prices Entered With Tax
This option is perhaps the most important when managing taxes in your store, as it determines how you input product prices later on.
“Yes, I will enter prices inclusive of tax” means that all catalog prices are input using your store’s base tax rate.
For example, in the UK you would input prices inclusive of the 20% tax rate e.g. You enter a product price of £9.99 that includes £1.67 tax. A customer in the UK would pay £9.99 as defined, and a customer in the US would only pay £8.32.
“No, I will enter prices exclusive of tax” would mean that your catalog prices need to be tax exclusive.
Using the example from above, a UK shop would enter 8.32 at the product price. A tax of 20% would be applied on top of this during checkout making the amount payable £9.99.
The tax calculation for tax-inclusive prices is:
tax_amount = price - ( price / ( ( tax_rate_% / 100 ) + 1 ) )
The tax calculation for tax-exclusive prices is:
tax_amount = price * ( tax_rate_% / 100 )
Calculate Tax Based On
- Customer billing address
- Customer shipping address (default), which is found under the General tab
- Store base address
Shipping Tax Class
In most setups, shipping tax class is inherited from the item being shipped, e.g., Shipping a reduced rate item such as baby clothes would also use a reduced rate.
If this is not the case in your jurisdiction, choose a different tax class.
Round tax at subtotal level, instead of per line
If rounding is done last in your tax jurisdiction (when the subtotal is calculated), enable this option.
Additional Tax Classes
Tax Classes are assigned to your products. In most cases, you want to use the default “standard” class. If you sell goods that require a different tax class (i.e., Tax, except zero-rated products) you can add the classes here. To get started, we include Standard, Reduced Rate and Zero Rate tax classes.
Each class is listed at the top of the tax settings page – click a class to view tax rates assigned to the class.
Display prices during cart/checkout
This option determines how prices are displayed in your cart and checkout pages – it works independently of your catalog prices. Choose from inclusive/exclusive tax display.
*Note that the address field needs to be filled in to get tax calculations if you have a tax table that distinguishes between locations.
Price display suffix
Allows you to change display to: Prices include __% tax/VAT or anything appropriate for your store.