Tax Settings
Calculate, collect, and report on sales tax
As a merchant, you may need to calculate and charge sales taxes on your orders. Configuring your store to automatically handle most common sales tax calculations will provide you with the reports needed for accounting and tax remittance.
In addition to the built-in sales tax features, 29 Next supports Avalara AvaTax and TaxJar as installable Apps for automated tax calculation and reporting.
There are two core concepts to understand when configuring taxes for your store, Tax Classes and Tax Rates.
Tax Rates calculate tax on orders based on the customer’s billing or shipping addresses in your taxable jurisdictions.
Tax Classes allow for the segregation of products into different taxable categories, so that different tax rates can be applied on various products within a customer’s order.
Access the Settings > Tax Settings menu to enable sales tax options, to suit your business needs based on your tax obligations.
This option determines how prices are presented to your customers, and thus how tax amounts will be calculated for orders.
Prices that are
inclusive of tax means that the price displayed to the customer includes tax, and tax amounts will be included in the order totals.<tax calculation example>
Tax Amount = stock price - (stock price / (( tax% / 100) +1))
price_incl_tax = stock price
price_excl_tax = stock price - tax
For example, if the stock price is $100.00 and the Tax Rate is set at 20%, the tax amount will be $16.67. So the price inclusive of tax will be $100.00 and the price excluding tax will be $83.33
Prices that are
exclusive of tax means that the price displayed to the customer excludes tax, and tax amounts will be applied as an additional charge to the order.<tax calculation example>
Tax Amount = (stock price * tax)% / 100
price_incl_tax = stock price + tax
price_excl_tax = stock price
For example, if the stock price is $100.00 and the Tax Rate is set at 20%, the tax amount will be $20.00. So the price inclusive of tax will be $120.00 and the price excluding tax will be $100.00
To set up a Tax Rate, navigate to Settings > Tax where you’ll find the list of all configured Tax Rates in your store.
When setting up a rate, follow the options to configure which Products (Tax Class) and Orders it should apply to.
- Tax Class - Apply this tax rate to Stock Records within this Tax Class.
- Name - Internal name used for administrative and reporting purposes.
- Country - Order address country to apply tax rate.
- Postcode - Order address postcode(s) to apply tax rate
- State/Province - Order address state(s)/province(s) for which to apply the tax rate
- City - Order address city to apply the tax rate
- Rate % - Tax rate percentage to apply to the order items.
- Display Name - Name of the tax shown to customers, ie VAT, GST, or Sales Tax.
- Priority - Priority for this tax rate to be applied in cases of conflict between multiple tax rates matching.
- Compound - Allow this tax rate to combine with other tax rates, such as state and local taxes.
- Shipping - Apply the tax rate to shipping fees.
Tax Classes provide a method to categorize your products according to their tax classifications. This allows you to create multiple Tax Rates configured to match customers' address parameters with the appropriate tax rates they should be charged.
- Name - Name used internally to identify the Tax Class for administrative and reporting purposes.
- Description - Description of the Tax Class.
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