In some situations, you may need to offer tax exemption for some customers (government agencies, resalers, b2b sales, etc) and/or products. You will need to configure the respective tax exemption rules to prevent your store from charging taxes on such customers and/or products.
This article describes how to create tax exemptions for both products and customers manually irrespectively of the tax add-on you use.
In X-Cart, automated tax exemption can be enabled using the following add-ons:
- For both customers and products: Tax Exempt Add-on
- For customers only: AvaTax Sales Tax Automation Add-on and VAT/GST Add-on
Below you will find information on:
To set up a tax-exempt option for customers manually you’ll need to:
1. Create a special membership for tax-exempt buyers and assign it to the customers that can order goods tax free. See more info on the creation of user memberships in Managing User Membership Levels.
2. Set up the store tax system based on the memberships.
No matter which add-on you are using for manual tax configuration, disable the option Use the same tax rates for all user membership levels when setting up taxes and create tax rates based on the memberships being used in the store. The tax-exempt membership needs a 0% tax rate applied.
To set up tax-exempt option for products manually you’ll need to:
1. Create and assign a special tax class for the products that can be purchased tax free - See more info on tax classes creation in the section Tax Classes.
2. Configure a zero tax rate for tax-exempt products as described in Configuring rates for tax classes.