Wix Stores: About Tax Collection
3 min read
Wix is in the process of rolling out new tax settings. To learn if you have the new settings and to access articles on how to set it up, click here.
Wondering how to set up tax collection correctly for your online store? You're not alone.
Whether it's called sales tax, value added tax (VAT) or something else, the idea is the same. When a customer buys a product - if needed - the merchant collects sales tax. They must then pass the sales tax they collected on to the local tax authority.
We suggest you take the time to figure out which tax rules apply to your particular store. That way you won't tax your customers unnecessarily or fail to collect taxes from those you are supposed to collect from.
- Different tax rules apply in different regions. Consult with an accountant or with your local tax authority for specific information relevant for your store.
- If you previously set up tax (and shipping) in a merchant account (e.g. in PayPal), remove these settings before starting.
Step 1 | Figure out who you need to collect tax from
In most cases, you're required to collect taxes from:
- Customers in your region: This means customers located in a region where you have a physical presence, including where you have:
- A business registered with tax authorities
- A physical store
- An office
- An employee
- Customers in locations where you passed a minimum threshold: In some places, merchants are required to collect tax in a region if they exceed a certain threshold of sales (in money or in the number of transactions).
In most cases, if you only have an online store with no other physical location, you'll only need to collect taxes from your region (e.g. your U.S. state, your own country or state, province, etc.)
- Check with your local tax authority or accountant to find out who you are required to collect sales tax from.
- Tax regulations change from time to time. Make sure to check for updates.
Step 2 | Select manual or automatic tax
Wix offers two methods of tax collection. You can set tax rates manually or automate tax collection using Avalara.
Automatic tax collection with Avalara
Automatic tax calculation is offered through Avalara, which calculates tax based on up-to-date tax rules. When rates change, it updates automatically.
You can also use Avalara to sell products that are taxed at different rates. For example, if the general tax rate in your region in 10% but children's clothes are tax-free, you can set up 2 tax groups, the default 10% group and the children's clothes tax group with a 0% rate. Learn more about tax groups.
Manual tax collection
With manual calculation, you select the region or regions where you want to collect tax and manually enter the relevant tax rates. If the rates changes, it's up to you to update it.
- Learn how to set up manual tax calculation.
Step 3 | Include tax in the product price or add it at checkout
In some countries, such as the US, price tags show only the price of the product itself - the tax is added during checkout. In other countries, the product price already includes tax.
- Learn how to select whether you want to include tax in your price.
Want to learn more?
Check out the full Wix Learn course on getting started with Wix eCommerce. Skip to the fifth video to learn more about setting up tax collection.
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