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 WooCommerce Taxes: A Complete Guide

So you are setting up a WooCommerce store, one of the important steps is to work out taxes. It is not an easy thing to calculate Taxes with precision as calculating them accurately is a complicated process, but WooCommerce aims to provide setup as straightforward as possible to make it all easy. Let’s see how to set-up taxes on your online store. Let’s get started with Woocommerce taxes!

ENABLING TAXES

Step-1: To enable taxes you need to go to the WooCommerce General settings tab.

Step-2: Click on the Enable Taxes and Tax Calculations checkbox as shown below.

enable-taxes

Step-3: Save these Changes and you are done with enabling the taxes.

TAX OPTIONS CONFIGURATION

Let’s start configuring the taxes for that you need to go to WooCommerce, then settings and Tax as shown below:

configuring-taxes

After this, the tax tab will display several options that you can choose accordingly to where your store is located and save these changes.

woo-tax-options

Various tax options are:

PRICES ENTERED WITH TAX

There are two options available which determine how you input your product prices. The options are:

  • Yes, I will enter prices inclusive of tax which means that all the product prices need to be tax inclusive.
  • No, I will enter prices exclusive of tax which means that your prices are tax exclusive.

Prices-entered-with-tax

Next option is the calculation of tax

CALCULATION OF TAXES BASED ON

There are three options available when you scroll down

  • Customer shipping address
  • Customer billing address(by default)
  • Stop base address

calculation-of-tax-bases-on

Let’s move further to the next option which is

SHIPPING TAX CLASS

The shipping tax class basically depends upon the items in the cart. For instance, if you have a reduced rate item you can use reduced rate else you can choose a different tax class. There is various tax option in shipping tax class and you can use the appropriate one.

shipping-tax-class

Next Option is

ROUNDING

You just need to tick the checkbox if you want to determine tax rounding in the cart.

rounding

After rounding there is another configuration option which is

ADDITIONAL TAX CLASSES

There is a standard tax class but you can create more according to your requirements. And these tax classes are assigned to your products and are displayed at the top of the tax setting page.

To create a new tax class, you need to enter the name of the tax class in one line and other tax class name in the next line.

adding-additional-tax-class

Now, this tax class ‘My Tax Class’ will be displayed on the top of the tax page as shown in the picture below:

taxclass-displayed

After this step, you are able to set a rate for the newly created ‘ My Tax Class’ tax class. You just have to click on the tax class name and fill out the required data.

setting-tax-rates

DISPLAY PRICES: DURING CART AND CHECKOUT

There are two options in displaying prices which are Display Prices in the Shop and Display Prices During Cart and Checkout and you have the option to choose according to your preference either choose ‘Including tax’ or ‘Excluding tax’ and it works independently of product prices.

Display-prices

PRICE DISPLAY SUFFIX

After the price of every product, a text is displayed in this you have the option to set your price display as exclusive or inclusive of tax using either of the two of these options that are – ‘price_including _tax’ or ‘price_excluding_tax’, for instance, price incld. VAT $10.

price-display-suffix

DISPLAY TOTAL TAX

Finally, the last step is to choose how you want to display text to the customer either ‘As a single total’ or ‘Itemized’ during the checkout.

display-tax-total

Hence, we are done with basic WooCommerce Tax settings and Let’s move further!

SETTING UP TAX RATES

You can set up tax rates on your store after configuring the tax options. Tax classes are displayed at the top of the tax screen as mentioned earlier you just need to click one to view and set up the tax rates.

setting-up-tax-rate-0

Each tax rate has these attributes:

  • Country Code – These are the 2 digit country code for the rate like for the United States of America the alpha 2 code is ‘US’ and leave blank (*) to apply to all countries. Use ISO 3166-1 alpha-2 codes for a particular country.
  • State Code – These are the 2 digit state code for the rate and Leave blank (*) to apply to all states. Find state codes at  i18n/states/COUNTRYCODE.php. And For the US, use a 2 digit code-AL, CA etc.
  • ZIP/Postcode – These are the ZIP/Postcodes for the rate and  Leave blank (*) to apply to all postcodes. You can separate multiple values with a semi-colon (;) and you should use numeric ranges (e.g. 3000…4000).
  • City – List of cities for the rate can be separated using a semi-colon and leave blank (*) to apply to all cities.
  • Rate % – Enter the tax rate like  40.000 for a tax rate of 40%.
  • Tax Name – Name your tax that is applied to the product like GST or VAT.
  • Priority – For a particular tax rate choose a priority. One Should use 1 matching rate per priority and in case of more than one tax rates for a single area, you should specify different priorities per rate.
  • Compound – If this rate is compound you should select the checkbox.
  • Shipping – If this rate is also applied to the shipping then select the checkbox.

setting-tax-rate-for-us

And after filling these fields save the changes. The tax rate settings are done and the checkout will be like:

checkout

EXPORTING AND IMPORTING TAX RATES

There is an option to import and export tax rates using a CSV file and this file importing requires 10 columns namely country code, state code, postcodes, cities, rate, tax name, priority, compound, shipping, tax class. To import the tax rate just click on the Import CSV button and choose the file and leave tax class blank for standard rates.

import-tax-rates

and click on the link us_tax_rates to download a tax rate CSV to import for the United State.

DELETING TAX RATES

In case if tax rates are added incorrectly or the date from the CSV file has imported incorrectly then tax rate deletion is a must.

To delete tax rate you need to go to WooCommerce > Settings > Tax > Your Tax Rates and you will see that the incorrect lines are highlighted in yellowish colour then select those highlighted rows and delete them by clicking on Remove Selected row(s). And don’t forget to save the changes.

delete-tax-rate

You can also delete all the tax rates at once select WooCommerce > Status > Tools and move down to the option Delete WooCommerce tax rates then click the delete tax rate button and you are done!

delete-tax-rate-all

VIEWING TAX REPORTS

You can view reports either via Taxes by dates or by taxes by code

For viewing taxes for the year go to WooCommerce > Reports > Taxes > Taxes by date > Year.

view-tax

For viewing taxes by code you need to go to WooCommerce > Reports > Taxes > Taxes by code as shown in the figure:

taxes-by-code

FINAL WORDS

The tax settings are not very complex but you can always take help from a professional if you are selling in multiple locations and having difficulties understanding the rules and we really hope that this article will help you out with WooCommerce tax settings.  For further queries, please don’t hesitate to contact us.

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