Should I charge tax to my customers?

Depending on the type of your business and the applicable laws to your country, you may be legally required to charge sales tax from the products you are selling.

⚠️ We recommend that you seek professional help from a tax adviser or an accountant.

Nevertheless, with Checkout X, we aim to help you set up taxes on your Store as simple as possible.

How to set up tax and tax rates in Checkout X

Start adding your tax rates

  • Go to Checkout X > Configuration > Taxes
  • Click on Add a Tax Rate
  • Enter the Tax name you want to display on the checkout page
  • Enter the Tax rate you want to apply
  • Click on Save Tax Rate πŸ‘‡

⚠️ Please note that, by default, all countries are added on the same tax regime. You will need to add multiple tax rates with corresponding countries to apply different tax rates.

Charge tax to customers in specific countries only

  • Go to Checkout X > Configuration > Taxes
  • Scroll down to Tax Rates Section
  • Click on the Tax Rate name you want to amend
  • On the Applicable countries section click on the Edit Countries button
  • Select all countries you want to apply the selected tax rate
  • Click on the Update button
  • Click on the Save Tax Rate πŸ‘‡

⚠️ Don’t forget to Save the Tax Rate after you modify the country list otherwise you will lose your modifications.

Manage your Tax Preferences

Depending on your local or national tax regulations, you may need to include taxes in the displayed prices. Therefore, selecting the correct options in the Tax Preferences section is vital to determine how taxes are displayed on your checkout and your customer invoices.

To include or exclude taxes in displayed prices

  • Go to Checkout X > Configuration > Taxes
  • To exclude taxes, select My taxes are not included in the product prices option on the Tax Preferences section
  • To include taxes, select My taxes are already included in the product prices option on the Tax Preferences section
  • Click on the Save Tax Preferences button to make changes effective πŸ‘‡

The difference between prices inclusive or exclusive of taxes

For example, your store is based in France and your business is TVA registered and you are selling a product with a price of €12.00.

Then you should charge 20% tax to your customers in France and 0% tax to customers in the USA.

The table below shows how much a customer from France and a customer from the USA will pay when tax is either included or excluded in the price on checkout.

Taxes are not included in the product prices

If you set up your product prices without including tax and you want to calculate and include them on checkout, then select this option. When this option is selected, taxes will be calculated on top of the order subtotal during checkout.

Considering the same example given in the previous section, assume that you have a product with a price of €12.00 (exclusive of tax).

  • A tax of 20% is applied on top of this during checkout making the total amount €14.40 for a customer in France
  • On the other hand, another customer from the USA will only pay €12.00 for the same product without any taxes. πŸ‘‡

Taxes are included in the product prices

You might choose to include taxes in the product prices. In this case, both customers will pay the same price of €12.00.

However, the customer from France pays €10.00 for the product plus €2.00 tax, whereas the customer from the US pays €12.00 for the product.

πŸ‘ The advantage of having taxes included in the price is that all customers see the final price

⚠️ Please note that unlike in the US, in the EU, all product prices must be shown with the sales tax included (VAT, or TVA in France). Yet, it must be called out separately on the invoice.

Charge taxes on shipping rates

In some countries, you are also required to charge tax on your shipping rates. You can enable this option following the step given below

  • Go to Checkout X > Configuration > Taxes
  • On the Tax Preferences section check the Do you want to charge taxes also on shipping rates? checkbox
  • Click on the Save Tax Preferences πŸ‘‡

⚠️ Please note that any changes in tax settings in Checkout X only applies to newly created orders and invoices. Your existing orders and invoices will remain unchanged.

Remove tax rates

To remove tax rates from your checkout page, simply follow the steps below;

  • Go to Checkout X > Configuration > Taxes
  • Scroll down to Tax Rates Section
  • Click on the Tax Rate name you want to delete
  • Click on the Delete Tax Rate button
  • And click OK to confirm you want to delete the tax rate πŸ‘‡

How taxes are calculated in Checkout X

Here we explain how taxes are calculated in Checkout X in different scenarios.

Tax exclusive prices

If taxes are not included in the product price, the tax calculation is as follows

tax = price * ( tax rate / 100 )

Tax inclusive prices

If taxes are already included in the product price, tax is calculated as below

tax = price - ( price / (1 + ( tax rate / 100 )))

Shipping Rates

Taxes on shipping rates work in the same way of product prices.

When you select to charge taxes on shipping rates and taxes are not included in the prices then the same tax rate is applied on the shipping rate, i.e a shipping charge of €5.00 (excluding tax) attracts a tax of €1.00 (with 20% tax rate).

Therefore, the shipping cost becomes €6.00 ( €5.00 + €1.00 tax)

Similarly, if you select to charge taxes on shipping rates and taxes are included in the prices then a shipping charge of €5.00 consists of €4.17 + €0.83 tax.

❓ FAQ ❓

πŸ™‹ Are tax rates synced or imported to Checkout X automatically from my e-commerce platform when installing Checkout X?

No, Checkout X does not import or synchronize your existing tax rates from your e-commerce platform. You need to set up your tax rates in Checkout X from scratch.

πŸ™‹ Can I set different tax rates for different products?

Unfortunately, you can not assign different tax rates to different products

πŸ™‹ How can I set different tax rates for different states or provinces within the same country?

At the moment, Checkout X only supports a flat tax rate per country. State or province-specific tax rates within the same country can not be defined.

πŸ™‹ When some users visit my store, taxes are not shown

Taxes are displayed based on the customer’s billing address, more specifically it is based on his/her country. If you set up your tax rates only to cover a number of specific countries, then customers outside of your selected countries will not see any tax added on the checkout.

πŸ™‹ I have set up tax rates in Checkout X but products are still not shown on the checkout page with taxes

You need to specify the products you want to charge tax on your store from your e-commerce platform.

  • If your e-commerce platform is Shopify, go to Shopify Admin > Products and select the product you want to charge tax
  • Scroll down to Pricing section
  • Check the Charge tax on this product option
  • Don’t forget to Save your changes πŸ‘‡

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