While Shopp is designed with flexibility in mind, it is ultimately your responsibility to know how applicable tax law affects your e-commerce site, and to determine if Shopp’s tax features will work for you.
When Shopp tax calculations are enabled, Shopp will take into account the most appropriate tax rate for the products, shipping methods, customer accounts, and the physical location of your customers. The tax totals appearing in the shopping cart give a summary of the total tax that will be applied on the order. Many countries have specific requirements about the presentation of tax information on e-commerce sites. If the normal tax summary information in the your shopping cart is insufficient for your needs, ask your developer for help in customizing your site’s tax presentation.
In addition, when items in the shopping cart, or the whole shopping cart, have promotional discounts applied, the tax and discount totals will both reflect this. It’s important to understand how taxes and discounts are applied in Shopp, and how this will be presented in your store.
Per Item Tax
To be useable in all sales tax jurisdictions, Shopp calculates tax on each item in the cart. Some shopping carts attempt to apply a single tax only after the subtotal of the items the cart, however this is a problem in general for some merchants.
For instance, countries that use a VAT (Value Added Tax) may use a listed product price that includes a fixed sales tax amount for each product. Also, some merchants are required to apply multiple different tax rates, depending on the product or product category, special tax exceptions, tax rates that vary for customer-types, or even customer tax-exemptions.
Due to staggering complexity in tax behavior worldwide, sales tax will require care to implement on your store, and occasionally a “best try” strategy will be the only choice.
When enabled, the estimated shipping cost can be taxed, typically at the most general rate for the current customer’s location.
To enable taxes on shipping costs:
For VAT merchants, note that the shipping subtotal does not include tax. Additional tax applied to shipping will affect the tax subtotal only.
- Login to the WordPress Admin, and navigate to Shopp → Setup → Taxes.
- If tax calculation is enabled, the tax settings page will be located in the Settings submenu.
- Locate and check the Tax Shipping box.
- Click the Save Changes button.
Shopping cart discounts in Shopp include these types:
- Discounts applied to shopping cart subtotal.
- Discounts applied to an item.
Because tax is calculated per-item, as described above, it is necessary to understand how discounts will affect tax calculation.
Discounts to the Cart Subtotal
When a discount is applied to the cart subtotal, the tax calculation has already been applied, and is reflected in the tax subtotal. Therefore, a discount applying to the cart subtotal will occur after tax. For instance, if the cart subtotal is $100, and $15 is the tax subtotal, a cart-wide discount of 10% will yield a total of $105 ($100 subtotal – $10 discount + $15 tax on the original $100).
Discounts to a Cart Item
When tax is applied to a specific item, the discount is removed from the taxable item unit price, before tax is applied. For example, if an item has a unit price of $10 (pre-tax) and is taxed at 10%, and a 10% item discount is applied, it will make the taxable unit price of the item $9 ($10 pre-tax unit price – $1 discount), and a resulting unit tax of $0.90. Each item will then have a total cost of $9.90, including tax.
Note that when an item has an add-on, a cart item discount is applied proportionally to the base item and each add-on, before the tax is applied. This is particularly important when applying a flat discount to an item with add-ons.