Before you configure VAT / GST using the Value Added Tax / Goods and Services Tax add-on:
Ensure that each product in your store falling under taxation has a tax class assigned. You can create custom tax classes or use the "Default tax class" pre-configured for products. See:
Ensure that you configure all necessary address zones in your online store. You will need these zones to use different provincial tax rates based on the customer address. See:
If you need different provincial tax rates for different customer membership levels, ensure that you have set up the necessary user membership levels. See:
To configure a VAT / GST taxation in your store, complete the following steps:
Open the VAT/GST tab in the Taxes section of your store's Admin area (Store Setup > Taxes) .
Configure the tax options in the Common Tax Settings section:
Tax title: Use this field to enter a name describing the type of tax applied to orders in your store. This name will be displayed on your store's checkout and your customers' invoices. By default, the tax title is VAT, but you can change it to GST or any other name you require.
Use the same tax rates for all user membership levels: Specify whether tax calculation rules for the tax you are configuring should be the same for all your customers, irrespective of their membership, or differ depending on the users' membership. If the rules need to be the same for all your buyers, enable this option by selecting the respective check box. If tax rates require recalculation for different membership levels, leave this check box unselected.
Address for VAT/GST calculation: Use this select box to specify the address type for the VAT/GST calculation. The available options here are Shipping address and Billing address. The address type you select here will determine the customer's zone applicable for taxation.
The VAT inclusive prices as defined in the product details are intended for: Specify the address zone (or the address zone and the membership) for which prices will display as VAT/GST- inclusive in the storefront. Customers whose location and membership level match those specified here will see the storefront prices just as defined in the product details in the Admin area. For customers with a location and a membership level different from those specified here, the storefront will display product prices recalculated based on the VAT rate applicable to the respective area and membership level.
Suppose you have already configured the catalog prices and want them to become a basis of a VAT-inclusive tax calculation for all possible locations. In that case, set the "The VAT inclusive prices as defined in the product details are intended for" option to "All addresses (default zone)" or any tax zone with a zero tax rate applied. See more details in VAT-Inclusive Prices.
The field for selecting memberships becomes available in this section only when the option "Use the same tax rates for all user membership levels" is disabled:
Display prices in the catalog, including VAT/GST: Use this setting to specify whether the product prices in your store's catalog (on the storefront) should be displayed with VAT/GST included or not.
This setting affects only the way the prices are displayed on the storefront.
If the "Display prices in the catalog including VAT/GST" setting is set to OFF, and the prices in the database do not include VAT, then the storefront prices will match the database prices for all the zones if the "The VAT inclusive prices as defined in the product details are intended for" setting is defined as "All addresses (zone default)" or any zone with a zero tax rate.
If the "Display prices in the catalog including VAT/GST" setting is set to OFF, and the prices in the database are set including VAT, then the storefront prices (e.g., at checkout) will be automatically recalculated by subtracting the VAT amount set for the location defined in the "The VAT inclusive prices as defined in the product details are intended for" setting from the prices in the database and will be labeled (if enabled) as VAT-exclusive on the catalog pages for all customers with the VAT rates set for their locations. Customers with no VAT rates charged for their area will see the recalculated price not labeled. The VAT rates will be added to the product cost at checkout for all customers with the VAT rates set for their locations. The customers with no VAT rates set will see the recalculated price with no VAT applied at checkout and will buy the product at this recalculated cost.
If the setting "Display prices in the catalog including VAT/GST" is set to ON, and the prices in the database do not include VAT, the display prices will have to be calculated by adding the VAT amount (according to the VAT rate for the zone) to the price in the database. For zones with a zero VAT rate, the storefront price will be the same as the price in the database (Adding "zero" VAT to the price in the database). For zones with a non-zero VAT rate, the storefront price will be calculated as the price in the database plus a non-zero VAT amount calculated based on the VAT rate for the zone.
If the "Display prices in the catalog including VAT/GST" setting is set to ON, and the prices in the database are set including VAT for a specific zone (for example, VAT for Germany), the display prices for that zone (Germany) will be the same as the prices in the database (the way we specified them - with German VAT included); the display prices for other zones where VAT needs to be applied (using a different VAT rate) will be calculated by subtracting the German VAT from the price in the database and adding the VAT amount we require for the respective zone.
Display "inc/ex VAT" labels next to prices: Use this setting to specify whether you want the "inc VAT" or "ex VAT" labels displayed next to product prices in the storefront depending on whether the "Display prices in the catalog including VAT/GST" option is enabled or not.
"Never" means that the labels will not be used in the catalog.
Note that if you choose not to use the labels, you will still have to find a way to place information about whether the store prices include taxes somewhere on the catalog pages, as it must be made clear to your customers.
"On product details pages only" means that the labels will be used only for the prices displayed on the pages showing detailed product info and not used on any other pages.
"On all catalog pages" means that the labels will be used everywhere in the catalog where product prices are shown.
EU VAT Number Validation API key (vatlayer.com): If you use vatlayer.com VAT number validation for VAT exempt customers, specify your API key in this field as described in Configuring VAT Exemption.
Merchant Tax Number: Specify your tax identification number in this field. This value will display on the invoices of orders with VAT applied.
If you need to change the phrase wording (e.g., to "VAT ID" or "ABN"), follow the "Rename label" link below the field name to do it.
Set up the VAT/GST tax rates you require as described in Setting up VAT / GST Tax Rates.
Make sure you enabled the VAT/GST tax calculation in the store. You can control it by the "Tax enabled/Tax disabled" button to the right of the "Tax title" field.
Click the Save changes button at the bottom of the page to save the changes.