Setting up Tax Rates
In Settings > Taxes, you can pre-define different tax rates to be used for your receipts, invoices, and credit notes.
For each tax rate, you can enter the following information:
- Tax class: To which type of good/services are you applying this tax rate? Choose between eservice, ebook, and standard. (Use “standard” for all non-digital items, such as physical goods, or services provided in person).
- Country: Choose the country, or countries, in which you will be charging this tax rate.
- Postal code: If the tax rate you’re setting up only applies to certain zip codes within a country, you can enter these here. You may use regular expressions to match several postcodes (e.g. ^(G|H|J) would match all postcodes starting with G, H, or J). Leave blank (*) to apply to all postcodes.
- Name: You can give your new tax rate a name, e.g. VAT.
- Value: Enter the percentage of your tax rate; e.g. 20 for a rate of 20%. If needed, you can enter up to three digits after the decimal point, such as 15.5 for a rate of 15.5%, or 9.975 for a rate of 9.975%.
- Priority: Choose a priority for this tax rate. You can define as many priorities as you like, but only a maximum of two priorities can be applied to each invoice. If you want to define multiple tax rates for the same area, you need to specify a different priority for each individual rate.
- Notes: Enter any additional text you want to show up on your invoice when this tax is applied.
Let’s have a look at how this works. Let’s set up a tax rate for UK store, charging 20% for UK customers.
For customers from Canada, the store uses different tax rates. There is a 5% tax rate for all Canadian provinces except Quebec, which has both a 5% GST rate and a 9.975% QST rate. Using priorities — priority 1 for the 5% GST rate and priority 2 9.975% QST rate — you can "layer" these rates and apply both of them to your invoice subtotal.