The tax profiles section allows you to group one or more tax rates. The tax rates can be customized to calculate the taxes based on the billing address (customer) or shipping or the store's address.
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In most countries, tax is collected based on the billing address. In a few rare cases, we may need to collect tax based on shipping address.
This guide will explain the tax profile feature using examples.
Example 4.3. A simple tax profile example
This example assumes that you have your store in Texas, USA. You want to charge 12.5% tax for the customers from Texas and no tax for all others
Follow these steps to configure the tax
Go to Store Profiles and create a store profile, if you have NOT created any.
Set the Default Country to USA and the Default Zone to Texas
Go to Geozones and create a Geozone.
Name this geozone as Default Geozone (you can name it differently too. This is just for the example).
In the country/zone mapping area (see screenshot), choose the Country as United States and the Zone - Texas. Click Add country/zone button
Go to Tax Rates and Click New to create one
Name : VAT (you can give any name here)
Tax Percent 12.5
Geozone Default Geozone
The tax rate screen should look like the following screenshot
Go to Tax Profiles and Click new to create a new tax profile
Tax Profile Name : Default Tax Profile (you can give any name here)
Click SAVE (NOTE: Not save and close)
Now you get the Tax Rates mapping area, where you can assign a tax rate to an address type
Tax Rates : In this dropdown, you can see the tax rate created by you in the previous step - VAT 12.5%
Select VAT 12.5 % and then select the address type as Billing
Click save and close.
Enable the tax profile. See the screenshot below
Publish the tax profile in the Setup->tax profiles screen after creating it. See the screenshot below
You are done!
The tax profile must be added to each product individually in order to apply tax rates for a purchase. Refer the product creation section of this guide for more information