A Comprehensive Guide to Understanding WooCommerce Taxes, Part 2

In the previous article, we discussed half of the configuration options for tax settings in WooCommerce. Today we will complete the setup of standard rates, preferential rates, and zero rates.

Tax Types in WooCommerce

View the various tax brackets displayed next to the Tax Options tab.

Standard rate

This corresponds to the "default" tax category that WooCommerce provides to users immediately after installing this plugin.

Lower interest rates

Due to changing economic conditions, tax rates are constantly changing according to the tax policies of different countries. Therefore, they offer lower tax rates on specific items, such as goods. Grocery products. WooCommerce takes this fact into account and automatically creates this class on installation.

Zero interest rate

Similarly, some products are not taxed. Therefore, for such products, WooCommerce provides a separate category called “Zero Rate”.

Tax attribute

Clicking on any of these tax brackets will display the tax rate table. You can define tax rates in rows. Add a new row by clicking the "Insert Row" option. In each defined tax class we will see some properties which I will explain below.

Country/Region Code

The first attribute is the country code , which is a two-letter short alphabetic or numeric suffix used to represent each The geographical location of the country. In WooCommerce we will use ISO 3166-1 country codes. You can add these two-digit country codes in this field.

Obviously, it is very difficult to remember all the country codes. Therefore, you can search for them through sources such as Wikipedia or click "View Here", as shown in the image above.

Clicking View Here will direct you to Wikipedia. You'll notice that there are several columns here, but the second and third columns show the Alpha-2 codes and Alpha-3 codes that correspond to specific countries.

According to Wikipedia,

ISO 3166-1 alpha-2 – a two-letter country code, which is the most widely used of the three country codes and is most commonly used in countries where the Internett Code top-level domain (with some exceptions).

ISO 3166-1 alpha-3 – A three-letter country code that provides better visual association between the code and the country name than the alpha-2 code.

How to enter items

In order to set the country code in WooCommerce, you only need to enter the two letters of the country in the Alpha-2 code Wikipedia Column. To do this, insert a new row. Now select a code from the table shown above and enter it into the field shown. Repeat this process again to add multiple country codes. If you leave this field blank (*), the setting applies to all country codes.

State Code

The next field is for the State code, which is a list of codes and abbreviations used to represent the various political divisions that exist in different states. For example. If we search for the state code for the United States of America (or US), you will see the following results:

The above image shows how to refer to the various states in the United States and their state codes. You can add these two-digit state codes again in WooCommerce.

If you leave it blank (*), it means that the specific tax settings will apply to all state countries for that specific state.

postal code

Next you can see the Postal Code/Postal Code field which is a series of letters and/or numbers added to the end of the postal address to make it easy to Mail is categorized. Browsing through the various postal codes in various countries, you can find the following table:

If you have multiple zip codes, you can use semicolons to separate them. Wildcards can also be used to match postal codes and different number ranges.

Leave blank (*) again to indicate that the postal code applies to all countries.

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City

Online store owners can impose tax rates on some selected cities or all cities in the country. You can even add multiple cities on a line at once, separated by semicolons.

To apply this tax setting to all cities, you can leave it blank (*).

ratio%

As with countries, states, and zip codes, online store owners are not aware of all tax rates in effect around the world. Beginners can search to find tax lists for different parts of the world, for example: a list of countries by tax rates.

In the above figure, not only the tax rates of different countries are mentioned, but we also see that the tax distribution takes into account different types of taxes, such as VAT, Goods and Services Tax, etc.

In this field of the plugin you can specify the tax rate by entering a value under this option. The tax rate is entered in a format such as 10.000, which corresponds to a 10% tax rate.

Tax name

There are several types of taxes implemented based on economic design. Some of the tax names are Value Added Tax (VAT), Goods and Services Tax (GST), Sales Tax, Reduced Rates, etc.

In WooCommerce, you can enter these tax names in this field based on the country's economic policies.

priority

If you are entering multiple tax rates for a specific country, you will need to prioritize them based on their relative importance. So in the Priority field you can enter a number for each tax rate. Here, each tax rate is set with a different priority, and only one specific tax rate corresponds to a specific priority.

In the image above I have entered two different tax rates for Germany (country code DE) and I have prioritized them as numbers 1 and 2. Obviously, the 10% tax rate is preferred first, then 7%. Priority 1 is greater than 2.

complex

WooCommerce assigns a separate field to handle compound taxes. This is a special tax that is calculated and applied on top of certain basic taxes.

You could say it’s “tax on tax”. This option is available as a checkbox and if you check it, your tax settings will also include the compound tax rate.

freight

A smart business strategy is to offer free shipping. Nowadays, many online store owners claim that shipping is completely free. But there are also some store owners who prefer to add shipping costs to their stated tax rate.

So if the set tax rate applies to shipping, then you can mark this checkbox. Now the shipping charges for your products will also be taxed.

After completing this setting, click to save changes.

In my opinion, the best practice for filling out these tax rates is to leave the "State Code", "Zip Code" and "City" fields blank, i.e. (*), while you can fill in the rest as needed based on your requirements.

Import CSV

If you have these tax settings in the form of a CSV file, WooCommerce will provide you with the ability to import tax rates. With just a few clicks, you can import all of your store's content instead of adding every detail yourself. To do this, follow these steps:

• First click the "Import CSV" button
• Click"Select File"button
• Select the .csv file from your PC/Laptop Upload
• Finally click the "Upload file and import" button

Example CSV file

To help you out, WooCommerce enables you to download sample files. This way you can test your store and see these tax rate settings on the front end. When you click on the Import CSV button you will see the following screen where there is an option to "Click here to download a sample"

You can upload the sample file (save as sample_tax_rates.csv) by following the same steps mentioned above. After uploading and importing the contents of this sample file, you can see the dummy data populated across all three tax brackets, as shown in the image below.

in conclusion

This is what taxes are about. In the next tutorial I will explain how to use these tax settings and tax rates to display product prices in your online store. Until then, if you have any questions, please feel free to ask in the field below.

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