PREREQUISITES:
Before you configure VAT / GST using the Value Added Tax / Goods and Services Tax add-on:

  1. Ensure the add-on Value Added Tax / Goods and Services Tax is installed and enabled.

  2. 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:

  3. Ensure that you configure all necessary address zones in your online store. You will need these zones to configure different provincial tax rates based on the customer address. See:

  4. 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:

  1. Open the VAT/GST tab in the Taxes section of your store's Admin area

    • X-Cart 5.4.x - Store Setup > Taxes

    • X-Cart 5.5.x - Store > Taxes

  2. Configure the tax options in the Common Tax Settings section:

    • Tax enabled: Turn the toggle on to enable the tax in the storefront.

    • 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 customer 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 are the same for all 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 the Shipping address and Billing address. The address type you select here will determine the customer's zone applicable for taxation.

    • The VAT inclusive prices 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. The rest of the customers will see the 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.


      NOTE: 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:


    • Enable EU import subtotal thresholds: Enable this toggle if you need to charge different VAT rates depending on the order total. When enabled, this setting adds the "Minimum subtotal" and "Maximum subtotal" fields to the VAT rate configuration table and disables the "Display prices in the catalog, including VAT/GST" option.

    • 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.


      NOTE: This setting only affects how the prices are displayed on the storefront.


      • Suppose the "Display prices in the catalog including VAT/GST" toggle is OFF, and the prices in the database do not include VAT. In that case, 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.

      • Suppose the "Display prices in the catalog including VAT/GST" toggle is OFF, and the prices in the database include VAT. In this case, 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. Your online store will also add a VAT-exclusive label for prices 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. X-Cart will add the VAT rates to the product cost at checkout for all customers with the VAT rates set for their locations. The customers with no VAT rates will see the recalculated price with no VAT applied at checkout and will buy the product at this recalculated cost.

      • Suppose the "Display prices in the catalog including VAT/GST" toggle is ON, and the prices in the database do not include VAT. In that case, your online store will add the VAT amount according to the zone's VAT rate 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.

      • Suppose the "Display prices in the catalog including VAT/GST" toggle is ON, and the prices in the database include VAT for a specific zone (e.g., Germany). In that case, the zone's display prices will be the same as those in the database (the way we specified them - with German VAT included). At the same time, 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: 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 on the catalog pages, as it must be 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 on any other pages.

      • "On all catalog pages" means that the labels will be used everywhere in the catalog where product prices are shown.

    • VAT validation service: Select the preferred VAT validation service from the dropdown.

    • EU VAT Number Validation API key: If you use 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.


      NOTE: 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.


    • HMRC Client ID: Specify your HMRC unique identifier.

    • HMRC Client Secret: Specify your HMRC password.


    NOTE: Your online store will use one of the following VAT validation algorithms depending on the settings you configured:

    • If you configure your store to use the VatSense API key, your online store will process all VAT validation requests via VatSense.

    • If you configure your store to use the Vatlayer API key, your online store will process the VAT validation requests for customers from the EU via Vatlayer and the UK - via HMRC.

    • If you have not specified any API key, your online store will process the VAT validation requests for customers from the EU via the free VIES API service.

    • If you have not specified any API key, your online store will process the VAT validation requests for customers from the UK via the free HMRC API service.


  3. Set up the VAT/GST tax rates you require as described in Setting up VAT / GST Tax Rates.

  4. Make sure you enable 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.

  5. Click the Save changes button at the bottom of the page to save the changes.

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