For users from the US, Canada, Australia and Europe we calculates the tax rates automatically based on the store and customer's location. On the checkout the customer will be charged a proper tax rate according to country and regional tax rules.
Tax laws are constantly changing. Country, state or even city government may apply new tax rates that a business owner is expected to keep up with. Online store will stay up to date on the tax law.
1. Enter your actual company address in your Control Panel → Settings → General page. This address is needed to calculate and apply the right rate to the order on the checkout.
2. Enable automatic taxes in your Control Panel → Settings → Taxes page:
Once enabled, the automatic tax rate will determine a precise tax rate at checkout depending on where you and your customer are located. The tool knows the tax rules in your country, state and even county and city and applies them properly to each order:
- Whether you’re located in a region with origin-based or destination-based tax schema
- Whether shipping cost or discounts are taxable
- Whether you should charge tax in another state or country not
The tax rate is calculated with a zip code accuracy. If your customer provides zip+4, it will be calculated with even higher precision. In some states (and the number of such states is growing), the tax is calculated with a street address level precision.