Understanding tax rules

Sales tax is a complex subject. Taxes in your store are controlled by "Tax rules". There are several important variables that define a tax rule applied

  • Product tax class

    A product tax class is an identifier that is assigned to a product. This defines the tax class for a product. In most cases, you want to use the default “Taxable Goods” class. If you sell goods that require a different tax class you can add the classes in System > Localization > Tax Classes. For example, a product tax class can be "Taxable Goods" or "None (Tax-free)".
  • Tax rate assigned to tax class

    A tax rate is a number in percentage or absolute fixed amount, with which taxes are calculated. For example, we can set a tax rate to 8.25% for the sales tax of California. Tax Rates control which taxes are applied to specific geographic areas (Locations).
  • Location and Location's Zone

    If you want to apply specific Tax to specific State, Territories, Province you need to create Tax Rate and assign it to this State or in other words to Location Zone.

Taxes can be applied both to shipping methods and store products.

According to your country's laws, you may need to charge different taxes for different types of products. For instance, you may need to calculate sales tax differently for alcohol and non-alcohol products. By using Tax Classes you can organize your products into groups according to what sales tax rate calculation rules need to be used for them.

Note

When creating tax classes and tax rates, make sure you are adhering to the tax laws of your country and locality.

List of Taxes

System > Localization > Tax Classes

By default, AbanteCart include one Product Tax Class: Taxable Goods. If you have different Tax Rules that will apply to storefront, you will want to create a new Product Tax Class or Edit Tax Rates for "Taxable Goods" class.
When you click to edit Tax Class you will see a list of Tax Rates applied in this Tax Class.

AbanteCart Installation

Tax rates may be one of the most tedious items to manage in your ecommerce store. This is because they can wildly differ from one region to the next.

Create Locations first

If you plan to reach customers from different geo locations and would like to apply custom tax rates for each location please create required locations in System > Localization > Locations.
Locations are created to help define a geographical "location" of the earth to be used for taxation. Locations can be comprised from a single country or zone, or multiple countries and zones

Specifying the tax rate

When specifying the tax rate, you will see the following screen

AbanteCart Installation
Setting Value
Location select specific Location (New Location can be added in the System-> Localization-> Locations)
Location's zone If this rate will only apply to a specific state (or other Location Zone designation) uncheck 'all location zones' and then locate the state (or Location Zone).
(New Zones can be added in the System-> Localization-> Zones)
Description Description of the Tax Rate. You can define this as anything you like.
Tax Rate The percentage tax rate. Tax rate can be set to either PERCENTAGE or ABSOLUTE AMOUNT. You can designate this under the drop-down menu.
Tax Apply Condition Apply this tax only if, taxed amount (product, shipping, subtotal, etc.) is corresponds to condition.
Priority Set the priority of the tax rate. This will determine which tax rate will be used if tax rate location overlap other.

Test Taxes

Be sure to make test purchases with a fake customer account from each Locations to be sure tax is set up correctly! Put a product in cart, and try to change the delivery address to a different state or country.

Tax Related settings

Additional tax related settings

Default Store Tax Rate

System > Settings > Checkout
Select "Store Default Zone" to apply store address Tax rate for unknown not requested users.

Display Prices With Tax

System > Settings > Checkout.
turn it On if you are required to display prices with tax. If set to Off then taxes will only be included in the order totals on the checkout confirmation page.

Note

When Display Prices With Tax is ON Guest users with unknown shipping address will see Prices with Tax rate applied to default store address. Please check your Tax and Location settings if you setting not work for you.

Use Customer Tax Address

System > Settings > Checkout
Select customers Address to use in tax calculations. Shipping Address is recommended.

Shipping and Tax Estimate

System > Settings > Checkout.
Allow customers to get quick shipping and tax estimate in the shopping cart.

Tax Example

This will walk you through the process of how to set up sales tax. Say your want to set up Tax UK VAT zone.

  • 1

    Create Location

    Go to System > Localization > Locations > click Add buton
    Enter the Location Name "UK VAT Zone" and Description.
    Click Add Location Zone. Then select United Kingdom for the Country and select zones required VAT taxation for the Zone(s).
  • 2

    Set the tax rate

    Go to System > Localization > Taxes Classes > click Edit Tax Class > Tax Rates > click Add button.
    Enter the Tax rate Description and Tax Rate. Make sure to set the Type to Percentage and Location to "UK VAT ZONE".
    Check "all location zones"
  • 3

    Set Product Tax Class

    Change the Tax Class if needed for each product you want to apply this tax. By default all products already assigned to "Taxable Goods" class