A Complete Guidelines In Canadian Tax Configuration For Magento 2

In this article, we will describe a tutorial on setting up GST tax rates for Canada and PST tax rates for Saskatchewan, with tax rules that calculate and display the two tax rates. You can follow these steps from this tutorial, make sure to follow the tax rates and regulations for your tax jurisdictions. When setting up taxes, set the store scope to apply the configuration to all applicable stores and websites.

  • Fixed product tax is included for material goods as a product attribute.
  • In Quebec, PST is referred to as TVQ. If you want to set up a rate for Quebec, remember to use TVQ as the identifier.

Step 1: Complete Tax Calculation Settings

On admin sidebar, click System > Configuration. On the left of the panel, under Sales, click Tax. Open each section and follow these settings:

Tax Calculation Settings

FIELD RECOMMENDED SETTING
Tax Calculation Method Based On Total
Tax Calculation Based On Shipping Address
Catalog Prices Excluding Tax
Shipping Prices Excluding Tax
Apply Customer Tax After Discount
Apply Discount on Prices Excluding Tax
Apply Tax On Custom Price (if available)

Tax Classes

FIELD RECOMMENDED SETTING
Tax Class for Shipping Shipping (shipping is taxed)

Default Tax Destination Calculation

FIELD RECOMMENDED SETTING
Default Country Canada
Default State (as appropriate)
Default Postal Code * (asterisk)

Shopping Cart Display Settings

FIELD RECOMMENDED SETTING
Include Tax in Grand Total Yes
Display Full Tax Summary Yes
Display Zero in Tax Subtotal Yes

Fixed Product Taxes

FIELD RECOMMENDED SETTING
Enable FPT Yes
All FPT Display Settings Including FPT and FPT description
Apply Discounts to FPT No
Apply Tax to FPT Yes
Include FPT in Subtotal No

Step 2: Set Up Canadian Goods & Services Tax (GST)

To print the GST number on invoices and other sales documents, add it to the name of the applicable tax rates. The GST will display as part of the GST amount on any order summary.

Manage Tax Zones & Rates

FIELD RECOMMENDED SETTING
Tax Identifier Canada-GST
Country Canada
State * (asterisk)
Zip/Post is Range No
Zip/Post Code * (asterisk)
Rate Percent 5.0000

Step 3: Set Up Canadian Provincial Sales Tax (PST)

Set up another tax rate for the relevant province.

Tax Rate Information

FIELD RECOMMENDED SETTING
Tax Identifier Canada-SK-PST
Country Canada
State Saskatchewan
Zip/Post is Range No
Zip/Post Code * (asterisk)
Rate Percent 5.0000

Step 4: Create a GST Tax Rule

To correctly display the calculated tax as separate line items for GST and PST and to avoid compounding the tax, you must set different priorities for each rule, and tick the “Calculate off subtotal only” checkbox. Each tax displays as a separate line item, but the tax amounts are not compounded.

Tax Rule Information

FIELD RECOMMENDED SETTING
Name Retail-Canada-GST
Customer Tax Class Retail Customer
Product Tax Class Taxable Goods

Shipping

Tax Rate Canada-GST
Priority 0
Calculate off subtotal only Select this checkbox.
Sort Order 0

Step 5: Create a PST Tax Rule for Saskatchewan

For this tax rule, set the priority to 0 and tick the “Calculate off subtotal only” checkbox. Each tax displays as a separate line item, but the tax amounts are not compounded.

Tax Rule Information

FIELD RECOMMENDED SETTING
Name Retail-Canada-PST
Customer Tax Class Retail Customer
Product Tax Class Taxable Goods

Shipping

Tax Rate Canada-SK-PT
Priority 1
Calculate off subtotal only Select this checkbox.
Sort Order 0

Step 6: Save and Test the Results

  1. Click Save Config button after completed.
  2. Return to your storefront, and create a sample order to test the results.

A Complete Guidelines In US Tax Configuration For Magento 2 Store

Store administrators can use these recommended settings for most tax configurations for stores within the United States.

Tax Classes

TAX CLASS RECOMMENDED SETTING
Tax Class for Shipping None

Calculation Settings

CALCULATION RECOMMENDED SETTING
Tax Calculation Method Based On Total
Tax Calculation Based On Shipping Origin
Catalog Prices Excluding Tax
Shipping Prices Excluding Tax
Apply Customer Tax After Discount
Apply Discount on Prices Excluding Tax

Default Tax Destination Calculation

SETTING RECOMMENDED SETTING
Default Country United States
Default State State where business is located.
Default Post Code The postal code that is used in your tax zones.

Price Display Settings

SETTING RECOMMENDED SETTING
Display Product Prices in Catalog Excluding Tax
Display Shipping Prices Excluding Tax

Shopping Cart Display Settings

SETTING RECOMMENDED SETTING
Display Prices Excluding Tax
Display Subtotal Excluding Tax
Display Shipping Amount Excluding Tax
Display Gift Wrapping Prices Excluding Tax
Display Printed Card Prices Excluding Tax
Include Tax in Grand Total Yes
Display Full Tax Summary Yes
Display Zero Tax Subtotal Yes

Orders, Invoices, Credit Memos, Display Settings

SETTING RECOMMENDED SETTING
Display Prices Excluding Tax
Display Subtotal Excluding Tax
Display Shipping Amount Excluding Tax
Include Tax in Grand Total Yes
Display Full Tax Summary Yes
Display Zero Tax Subtotal Yes

Fixed Product Taxes

SETTING RECOMMENDED SETTING
Enable FPT No, except in California.

Complete Guidelines Of International Tax For Magento 2 Store

U.S. Tax Configuration

TAX OPTION RECOMMENDED SETTING
Load catalog prices Excluding tax
FPT No, because FPT is not taxed.
Tax based on Shipping origin
Tax Calculation On the total
Tax shipping available No
How To Apply Discount Before tax
Comment All tax zones are the same priority; ideally, a zone for state and one or more zones for zip code lookup.

UK B2C Tax Configuration

TAX OPTION RECOMMENDED SETTING
Load catalog prices Excluding tax
FPT Yes, including FPT and description
Tax based on Shipping address
Tax Calculation On the total
Tax shipping available Yes
How To Apply Discount Before tax, discount on prices, including tax.
Comment For merchants marking up supplier invoices (including VAT).

U.K. B2B Tax Configuration

TAX OPTION RECOMMENDED SETTING
Load catalog prices Excluding tax
FPT Yes, including FPT and description
Tax based on Shipping address
Tax Calculation On item
Tax shipping available Yes
How To Apply Discount Before tax, discount on prices, including tax.
Comment For B2B merchants to provide more straightforward VAT supply chain considerations. Tax calculation on the row is also valid; however, check with your taxing jurisdiction. Setup accepts a merchant is in the supply chain and that other vendors use goods sold for VAT rebates and so on. This makes it easy to recognize tax by item for faster rebate generation. Note that some jurisdictions require different rounding strategies not currently supported by Magento and that not all authorities allow item or row level tax.

Canada Tax Configuration

TAX OPTION RECOMMENDED SETTING
Load catalog prices Excluding tax
FPT Yes, including FPT, description, and apply the tax to FPT.
Tax based on Shipping origin
Tax Calculation On the total
Tax shipping available Yes
How To Apply Discount Before tax
Comment Merchants located in a GST/PST province (Montreal) should generate one tax rule and show a combined tax amount.

If you have any questions, make sure to consult a qualified tax authority. For information about the tax requirements of specific provinces, see the following:

Revenu Québec

Government of Saskatchewan

Manitoba Information for Vendors

A Quick Reference To Tax In Magento 2 Platform Store

Some tax settings have a choice of options that decide how to calculate the tax and display to the customer. For further information, please visit International Tax Guidelines.

Tax Calculation Methods

This method options include Unit Price, Row Total, and Total.

Tax Configuration Options

SETTING CALCULATION AND DISPLAY
Unit Price Magento calculates the tax for each item and shows prices tax-inclusive. To calculate the tax total, Magento rounds the tax for each item and then adds them together.
Row Total Magento calculates the tax for each line. To calculate the tax total, Magento rounds the tax for each line item and then adds them together.
Total For each item, Magento calculates the tax and adds those tax values to calculate the total unrounded tax amount for the order. Magento then applies the specified rounding mode to the total tax to decide the total tax for the order.

Catalog Prices With or Without Tax

The possible display fields vary depending on the method of calculation and whether the catalog prices include or exclude taxes. Display fields have two-decimal precision in regular computations. Some blends of price settings display prices that both include and exclude tax. When both of them appear on the same line item, it can be confusing to customers and activates a warning.

SETTING CALCULATION AND DISPLAY
Excluding Tax Using this setting, the base item price is used as it is entered and the tax calculation methods are applied.
Including Tax Using this setting, the base item price excluding tax is calculated first. This value is used as the base price, and the tax calculation methods are applied.

If you load prices with more than two precision numbers, Magento rounds all prices to two numbers automatically to ensure that a consistent price is presented to buyers.

Shipping Prices With or Without Tax

Tax Configuration Options

SETTING DISPLAY CALCULATION
Excluding Tax Appears without tax. Normal calculation. Shipping is included in cart total, typically displayed as a separate item.
Including Tax Can be tax inclusive, or tax can be displayed separately. Shipping is treated as another item in cart with taxes, using the same calculations.

Tax Amounts as Line Items

Store administrators must set different priorities for the related tax rules to display two different tax amounts as separate line items, such as GST and PST for Canadian stores. However, taxes with different priorities would automatically be compounded in previous tax calculations. Store administrator can set different priorities, and also select the Calculate off subtotal only checkbox to correctly display separate tax amounts without an incorrect compounding of the tax amounts. This produces correctly calculated tax amounts that appear as different line items.

How To Configure VAT ID Validation In Magento 2

There are two main steps to configure VAT ID Validation in Magento 2: First, set up the customer groups and create the related tax classes, rates, and rules. Then, enable VAT ID validation for the store, and complete the configuration.

Example: Minimal Tax Rules Required for VAT ID Validation

TAX RULE #1
Customer Tax Class Customer tax classes must include:

A class for domestic customers

A class for customers with invalid VAT ID

A class for customers, for whom VAT ID validation failed

Product Tax Class Product tax classes must include a class for products of all types, except bundle and virtual.
Tax Rate The tax rate must include the VAT rate of the merchant’s country.

 

TAX RULE #2
Customer Tax Class A class for intra-union customers.
Product Tax Class A class for all types of products, except virtual.
Tax Rate VAT rates for all EU countries, except merchant’s country. Currently, this rate is 0%.

 

TAX RULE #3 (REQUIRED FOR VIRTUAL AND DOWNLOADABLE PRODUCTS)
Customer Tax Class Customer tax classes must include:

A class for domestic customers

A class for customers with invalid VAT ID

A class for customers, for whom VAT ID validation failed

Product Tax Class A class for virtual products.
Tax Rate VAT rate of the merchant’s country.

 

TAX RULE #4 (REQUIRED FOR VIRTUAL AND DOWNLOADABLE PRODUCTS)
Customer Tax Class A class for intra-union customers.
Product Tax Class A class for virtual products.
Tax Rate VAT rates for all EU countries, except merchant’s country. Currently, this rate is 0%.

Step 1: Create VAT-Related Customer Groups

According to VAT ID validation results, VAT ID Validation automatically assigns one of the four default customer groups to customers:

  • Intra-EU
  • Domestic
  • Invalid VAT ID
  • Validation error

Store administrators can use existing group or create new customer group for VAT ID validation if they comply with business logic. When configuring VAT ID Validation, each of the formed customer groups must be assigned as a default for customers with appropriate VAT ID validation results.

Step 2: Create VAT-Related Classes, Rates, and Rules

Three entities define each tax rule:

  • Tax Rates.
  • Product Tax Classes.
  • Customer Tax Classes.

You have to create the tax rules that need to use VAT ID Validation effectively.

  • Include tax rates and tax classes in tax rules.
  • Assign tax classes to customer groups.

Step 3: Enable and Configure VAT ID Validation

On the admin sidebar click Stores. Click Configuration. Set Store View. On the left of the panel, under Customers, click Customer Configuration. Open the Create New Account Options tab.

Set Enable Automatic Assignment to Customer Group to “Yes.” Then complete the following fields as needed and click Save Config.

  • Default Group
  • Default Value for Disable Automatic Group Changes Based on VAT ID
  • Show VAT Number on Storefront

 VAT ID Validation In Magento 2

The grayed out part is not related to VAT Validation

Step 4: Set Your VAT ID and Location Country

In Configuration panel, click General, open the Store Information. Select Country, enter the VAT Number and click Validate VAT Number. The result will appear quickly. Click Save Config.

Step 5: Verify the List of EU Member Countries

In General configuration section, open Countries Options tab.

VAT ID Validation In Magento 2

Verify that each member of the EU is selected in European Union Countries: uncheck the Use system value checkbox, hold Ctrl and click each state that you want to add or remove. Click Save Config.