Tax Profile Example 2: Different tax rates for different zones

Example 4.4. A detailed example of tax profiles: Different tax rates for different zones

[Important]Important

This example assumes that your store is in Texas, USA.

You want to charge 12.5% tax for the customers from Texas, 17.5 % for customers from other states of United States and 20 percent for Europe customers

Follow these steps to configure the tax

  1. Make sure that you have set the Default Country to USA and the Default Zone to Texas in store profiles area

    1. Go to Geozones and create a Geozone.

      Name this geozone as Default Geozone (you can name it differently too. This is just for the example).

      Click SAVE

      In the country/zone mapping area (see screenshot), choose the Country as United States and the Zone - Texas. Click Add country/zone button

      Geozone
    2. Create one more geozone.

      Name this as Other States of USA (you can name it differently too. This is just for the example).

      Click SAVE

      In the country/zone mapping area, add all states in USA except the Texas. (see screenshot)

      Geozones
    3. Create another geozone.

      Name this as Europe (you can name it differently too. This is just for the example).

      Click SAVE

      In the country/zone mapping area, add the European countries.

      [Important]Important

      When you add a country, make sure that the Zones dropdown list is set to All Zones. If you select All zones, then the tax will be applied to all customers coming from that country.

      For this example, we have added five countries - UK, France, Germany, Italy, Netherlands (see screenshot)

      you can add more if you wanted

      Geozones
    1. Go to Tax Rates and Click New to create one

      Name : VAT (you can give any name here)

      Tax Percent 12.5

      Geozone Default Geozone

      Status Published

      The tax rate screen should look like the following screenshot

    2. Create one more tax rate and set Tax percent to 17.5 and choose the geozone - Other States of USA

    3. Create another tax rate and set Tax percent to 20 and choose the geozone - Europe

  2. Go to Tax Profiles and Click new to create a new tax profile

    Tax Profile Name : Default Tax Profile (you can give any name here)

    Click SAVE (NOTE: Not save and close)

    Now you get the Tax Rates mapping area, where you can assign a tax rate to an address type

    Tax Rates : In this dropdown, you can see the tax rates created by you in the previous steps - VAT 12.5%, VAT 17.5% and VAT 20%

    Select VAT 12.5 % and then select the address type as Billing

    Select VAT 17.5 % and then select the address type as Billing

    Select VAT 20 % and then select the address type as Billing

    Click save and close.

    Now we have mapped all the three tax rates we created to the tax profile. The tax profile screen should look like the screenshot given below

    Tax profile
  3. Enable the tax profile. See the screenshot below

    [Important]Important

    Publish this tax profile in the Setup->tax profiles screen. See the screenshot below

    Tax profile
  4. Now, customers coming from Texas will be charged 12.5 % tax

    Customers from other states of USA will be charged with 17.5 % tax

    Customers from Europe will be charged with 20 % tax

    [Important]Important

    The tax profile must be added to each product individually in order to apply tax rates for a purchase. Refer the creating a product section of this guide for more information