As a merchant, you might need to charge taxes on your sales, and report and submit those taxes to your government. Although tax laws and regulations are complex and can change often, you can set up Shopify to automatically handle most common tax scenarios. You can also set up tax overrides to address unique local tax laws and situations.
Shopify uses many default tax rates, which are updated regularly. If you use the default rates, confirm that they are current and correct for your particular circumstances. You can override them whenever necessary.
You should always check with a local tax authority to make sure that you are charging your customers the correct tax rates.
General process to set up taxes
You don't need to follow a formal list of steps to set up your taxes, but you can use this process as a guide:
If you're running an online store, then set up the countries you will be shipping to. You do this step first because the default tax rates are based on your shipping zones.
If you're using Shopify POS, then set up the tax rates based on your retail store locations. You do this step so that the default POS tax rates are based on the geographic location in which your in-person sales take place.
Set up the tax rates in the countries and regions to which you will be selling and shipping your products:
- If you're in the United States, choose automatic tax settings or manually specify the rates for state, county, and municipal taxes, including shipping taxes.
- If you're not in the United States, use the default values or specify the rates for countries and their regions. You also specify whether you will charge taxes on shipping.
If you sell digital products, then set up the taxes that apply to these items.
Override any tax rates where necessary.
As you set up taxes, you can access and review your settings on the Taxes page in your Shopify admin:
If you're on the Shopify plan or higher, a tax report is created for you in the Taxes section of your Reports page. The report shows the taxes applied and amount collected for your taxable orders.