You can define tax settings under Settings and Taxes.
Taxes are added to orders when customer shipping address matches the defined tax zones. Customers outside of these tax zones are not taxed. Tax zones are also based on the shipping zones that you have defined under Shipping.
Remember! Tax zones are created based on the Shipping Zones. You cannot directly add tax zones.
Modifying a tax zone
To edit the settings under a tax zone, click on the Destination (which represents the country). Certain countries will have sub-regions (which represents states and provinces).
Each country can have its own national tax rate. For each region (state/province), a separate tax rate can be added. The regional tax rate can:
- Be added to the national (federal) tax rate
- Be used instead of the national (federal) tax rate
- Compounded on top of the national (federal) tax rate
Compounding of tax rates are used for jurisdictions like Quebec, Canada. Check with your local tax authorities for information on how to set your taxes for your business.
United States Tax Nexus
Special tax considerations need to be given for United States’ Tax nexus if you’re fulfilling your shipments from the US.
If the tax zone you’re modifying is the United States, you will see the option to Calculate taxes automatically. Once enabled, you can click on Add Physical Business Location.
Tax nexus calculations are state specific and may differ in regards to how the taxes are calculated. For example, some states require taxes be collected based on the state that is originating the package, while others base it on the destination. Again, please check with your local tax authorities to clarify.
Note: Cartfunnel’s tax database is automatically updated to include the latest tax rates.
Cartfunnel will automatically calculate the taxes for your US based locations during the web checkout process for your customers when US automatic tax calculations are enabled.