The Tax Settings section is designed to provide comprehensive and flexible options for businesses, ensuring compliance with legal standards and helping to maintain accurate financial records. Here’s a detailed breakdown of the settings available in this section:
Prices Entered With Tax:
- This setting determines how prices are input into your system:
- Yes, I will enter prices inclusive of tax: Select this option if you prefer to list prices that already include tax. This means the displayed prices will reflect the total cost to the customer.
- No, I will enter prices exclusive of tax: Choose this option if you want to list prices without tax. This approach requires you to calculate and add tax separately during checkout. It’s essential to note that changing this setting will not automatically update existing product prices.
Calculate Tax Based On:
- This option dictates how taxes are calculated:
- Customer shipping address: Selecting this option means that taxes will be calculated based on the shipping address provided by the customer. This is useful for varying tax rates across different regions.
- Shipping tax class: This allows you to control which tax class applies to shipping. You can leave this setting as is to have shipping tax determined by the items in the cart.
Shipping Tax Class Based On Cart Items:
- This option allows you to optionally set the tax class for shipping based on the cart items themselves. This means that if the cart contains items with different tax classes, the shipping tax will reflect the applicable class based on those items.
Rounding:
- This setting allows you to round tax amounts at the subtotal level, rather than rounding per line item. This can simplify calculations and provide more straightforward totals.
Additional Tax Classes:
- If you have specific tax rates that differ from the standard rate, you can list additional tax classes here (one per line, e.g., “Reduced Rates”). These will be added to the default “Standard Rate.”
Display Prices in the Shop:
- Choose how prices are displayed in your online store:
- Excluding tax: If selected, prices will be shown without tax. Customers will see the base price and will be informed of the applicable tax at checkout.
Display Prices During Cart and Checkout:
- You can again select whether to display prices excluding tax during the cart and checkout processes. Consistency in pricing display is essential for customer clarity.
Price Display Suffix:
- Define a text suffix to display after your product prices. For example, you can use “inc. VAT” to clarify that the price includes VAT. You can also use variables like
{price_including_tax}or{price_excluding_tax}to dynamically show the appropriate price.
Display Tax Totals:
- You have the option to display tax totals in a way that is itemized, which breaks down the tax charged for each item in the cart. This transparency helps customers understand their total charges.
These tax settings are crucial for maintaining compliance with local tax regulations and ensuring that your customers receive clear and accurate pricing information. Business owners should carefully review these options to configure them according to their business practices and the regions in which they operate.
