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How to apply tax to your shipping zones in Shopify

Learn about tax and how to apply it to your sales.

If you have a Shopify store you might need to charge tax on your sales. You can set up Shopify to automatically handle the most common sales tax calculations, and you can also set up tax overrides to address unique tax laws and situations.

I’ll show you how this works if you are using a Carrier Calculated Shipping app like Australia Post Shipping. Watch the video or follow the guide below.

How to apply tax to your shipping zones in Shopify

To add a tax to a country or region, first set up the zones you need to apply tax to. 

  • From your Shopify dashboard, navigate to Settings, and Shipping and delivery.

  • Click Manage rates on the shipping profile you wish to edit. Here you will see any zones you have already created.

  • Add any zones not listed that you need to collect tax for. To add a zone click Create shipping zone

  • Give your zone a name, and select the regions to be included in the zone.

  • Add rates to your zone. Select our app as the carrier, and select the shipping services required.

  • Click Done.

  • Create any other zones you need to add tax to.

  • Click Save.

Once you've set up your zones, you can apply taxes to them

  • Navigate to Settings, then Taxes.

    Here you’ll see a list of your current shipping zones you just created in Shopify, as well as other locations you have applied tax to previously.

  • Click Set up for a region you’d like to add tax to. Regions not yet set up will be tagged with 'Not collecting'.

  • By default, no tax is collected, so click Reset to default tax rates.

  • With Remove all tax overrides selected, click Reset tax rates. Shopify will then use default tax rates, unless you choose to ‘Add a tax override’.

In this example below you can see that 20% tax has now been applied, this is the default tax rate for the UK.

  • Shopify automatically saves this simple change, so the Save button is greyed out. But you will need to hit Save if you manually change the tax rate or add an override.

  • Do this for any other zones you need to add tax to.

Display sales tax in your display price

In some countries it’s your legal obligation to include sales tax in the displayed prices for most types of merchandise, so it’s best practice to always display it. To enable this feature:

  • Navigate to Settings, Taxes.

  • Scroll down to ‘Tax calculations’ and select 'Show all prices with tax included’.

  • Click Save.

Remember it is your duty to file or remit your tax, and to make sure you are charging your customers the correct sales tax rates. Be sure to check the rules and regulations with your local tax authority or a tax accountant. Find out more about tax from Shopify Support.

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