Apply sales tax to your shipping zones in Shopify

If you have a Shopify store you might need to charge tax on your sales. You can set up Shopify to automatically handle the most common sales tax calculations, and you can also set up tax overrides to address unique tax laws and situations.

I’ll show you how this works if you are using a Carrier Calculated Shipping app like Addition. Watch the video or follow the guide below.

How to apply sales tax to your shipping zones in Shopify

To add a tax to a country or region, first set up the shipping zones (with rates) you need to apply tax to. Our guide Enable Australia Post retail rates in your store will help you get setup.

Once you've set up your zones in Shopify, you can apply taxes to them.

  1. From within your Shopify Admin, navigate to Settings, then Taxes.

    Here you’ll see a list of your current shipping zones you just created in Shopify, as well as other locations you have applied tax to previously. Regions not yet set up to collect tax will be tagged with 'Not collecting'.

  2. Click Set up for a region you’d like to add tax to.

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  3. Depending on the area, you will see a slightly different screen.
    The United States, Canada, the European Union, the United Kingdom, Norway, Switzerland, Australia, or New Zealand, which use registration-based taxes, will display a screen something like this one below. Click the button Collect VAT/TAX (or similar) and follow the prompts.

    tax_2.png
  4. Other countries will display a screen where tax can be added manually or you can choose to use default tax rates. Click Reset to default tax rates.

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  5. With Remove all tax overrides selected, click Reset tax rates. Shopify will then use default tax rates, unless you choose to ‘Add a tax override’.

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    In this example below you can see that 10% tax has now been applied, this is the default tax rate for Japan.

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  6. Shopify automatically saves this simple change, so the Save button is greyed out. But you will need to hit Save if you manually change the tax rate or add an override.

  7. Do this for any other zones you need to add tax to.

Include tax in the sale price or add it to the sale price

You can include tax in an item's price or add tax on top of the item's price.

  1. Navigate to Settings, Taxes.

  2. Scroll down to ‘Tax calculations’ and select or deselect 'All prices include tax’.

  3. Click Save.

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Remember it is your duty to file or remit your tax, and to make sure you are charging your customers the correct sales tax rates. Be sure to check the rules and regulations with your local tax authority or a tax accountant. Find out more about tax from Shopify Support.