All the settings to keep things sweet with the taxman.
Setting up tax is one of the first things you'll want to configure and definitely needs finalised before you start selling.
You must consider for yourself the most appropriate way to configure the tax settings for your business or organisation. We recommend that you obtain professional, specific advise on taxation matters. No instructions or examples in this article should be considered as advise or a recommendation .
Enabling Taxes
To access the tax settings screens, they first need to be enabled.
- Go to: Settings > General.
- Select the Enable Taxes and Tax Calculations checkbox.
- Save changes.
Configuring Tax Options
To start configuring taxes:
Go to: Settings > Tax. This tab is only visible if taxes are enabled.
The Tax tab displays several options that can be set to suit your needs — settings you choose are based on the tax jurisdiction under which your store is located.
Prices Entered With Tax
This option is perhaps the most important when managing taxes in your shop, as it determines how you input product prices later on.
- “Yes, I will enter prices inclusive of tax” means that all catalogue prices are input using your shop's base tax rate.
For example, in the UK you would input prices inclusive of the 20% tax rate e.g. You enter a product price of £9.99 that includes £1.67 tax. A customer in the UK would pay £9.99 as defined, and a customer in the US would only pay £8.32.
- “No, I will enter prices exclusive of tax” would mean that your catalogue prices need to be tax exclusive.
Using the example from above, a UK shop would enter £8.32 at the product price. For a VAT regiatered seller, a tax of 20% would be applied on top of this during checkout making the amount payable £9.99.
The tax calculation for tax-inclusive prices is:
tax_amount = price - ( price / ( ( tax_rate_% / 100 ) + 1 ) )
The tax calculation for tax-exclusive prices is:
tax_amount = price * ( tax_rate_% / 100 )
Calculate Tax Based On
This setting determines which address is used for tax calculations.
- Customer billing address
- Customer shipping address (default) - Note that PayFor Courses does not support sale sof physical products.
- Shop base address
If you use shop base address, taxes are always based on your store location and not your customer’s location.
Shipping Tax Class
Not applicable to PayForCourses
Rounding
If you enable Rounding tax at subtotal level, instead of per line, the rounding is done at the Subtotal level.
Additional Tax Classes
Tax Classes are assigned to your products. In most cases, you want to use the default Standard class. If you sell goods that require a different tax class (e.g Tax, exempt zero-rated products) you can add the classes here. To get started, Standard, Reduced Rate and Zero Rate tax classes are included.
Each class is listed at the top of the tax settings page – click a class to view tax rates assigned to the class.
Display Prices in the Shop
This option determines how prices are displayed in your shop/catalogue. Choose from inclusive/exclusive tax display.
Display Prices During Cart and Checkout
This option determines how prices are displayed in your cart and checkout pages – it works independently of your catalogue prices. Choose from inclusive/exclusive tax display.
Note: The address field needs to be filled in to get tax calculations if you have a tax table that distinguishes between locations.
Price Display Suffix
Allows you to change display to: “Prices include __% tax/VAT” or anything appropriate for your shop. You can use these two placeholders if you want to have text before and after the price:
- {price_including_tax}
- {price_excluding_tax}
For example: “Price incl. VAT: {price_including_tax}” will display as: “Price incl. VAT: £15” (if that is the price, of course). So, if you’ve set the taxes to display excluding tax, you could add in small print what the tax inclusive of tax will look like:
Display Tax Totals
Setting up tax rates
Tax classes are displayed at the top of the tax screen. Click one to view tax rates for the class.
In the tax rates table, you can define tax rates (one per row). Click Insert Row to get started.
Each tax rate has these attributes:
- Country Code – 2 digit country code for the rate. Leave blank (*) to apply to all countries.
- State Code – Not applicable for PayForCourses.
- ZIP/Postcode – Enter postcodes for the rate. You may separate multiple values with a semi-colon (;), use wildcards to match several postcodes (e.g. PE* would match all postcodes starting with PE), and use numeric ranges (e.g. 2000-3000). Leave blank (*) to apply to all postcodes.
- City – Semi-colon separated list of cities for the rate. Leave blank (*) to apply to all cities.
- Rate % – Enter the tax rate, for example, 20.000 for a tax rate of 20%.
- Tax Name – Name your tax, e.g. VAT
- Priority – Choose a priority for this tax rate. Only 1 matching rate per priority will be used. To define multiple tax rates for a single area you need to specify a different priority per rate.
- Compound – If this rate is compound (applied on top of all prior taxes) check this box.
- Shipping – Not applicable to PayForCourses.
Tax rate examples
Here is an example of a tax setup for a UK store — 20% for UK customers only.
Importing and exporting rates
There are Import CSV and Export CSV buttons below the table with the rates. You can use them to import and export tax rates to and from a CSV file.
The CSV file for importing requires 10 columns;
country code, state code, postcodes, cities, rate, tax name, priority, compound, shipping, tax class
Leave tax class blank for standard rates.
Deleting tax rates
If you incorrectly added tax rates or the CSV import has incorrectly added tax lines, this information needs to be deleted.
To delete:
- Go to: Settings > Tax > Your Tax Rates (Standard, Reduced Rate, Zero Rate)
- Select the incorrect lines by clicking on them. They are highlighted in yellow.
- Select Remove Selected Rows. This deletes the highlighted row(s).
- Save changes.
Viewing tax reports
Tax reporting can be found in Reports > Taxes > Taxes by Date > Year. This report allows you view taxes for the year.
FAQ
Why do prices change when “Prices Include Tax”?
If you are entering prices including tax, you should be aware that this price might change based on the country in which your customer is located.
For example, your store is in the UK, so you create one tax rate for GB of 20%.
- You create a product with a tax inclusive price of £120.
- Customers in the UK will pay £120 (£100 + £20 VAT).
- Customers outside the UK will pay £100 because you do not have any tax rates set up for any other country.
OR
Your store is in the UK, so you create one tax rate for GB of 20%, a tax rate for France of 19% and Norway at 25%.
- You create a product with a tax inclusive price of £120.
- Customers in the UK will pay £120 (£100 + £20 VAT).
- Customers in France will pay £119 (£100 + £19 Tax).
- Customers in Norway will pay £125 (£100 + £25 Tax).
- Customers outside the UK, France or Norway will only pay £100 because you do not have any tax rates set up for any other countries.
This is explained in more detail here.
When some users visit my shop, taxes are not shown.
Since taxes are based on customer location in most setups, things like geolocation can make taxes hidden until the user checks out and inputs their real address.
To prevent this, go to Settings > General > Default Customer Location to disable Geolocate and set to the Shop Base Address.
