About tax settings
So that users can understand the exact price that they'll have to pay for a product, you may need to submit the taxes that you collect. Because tax can be a complex subject, you have several different options for submitting tax.
This article helps you choose the correct option or combination of options. Learn more about how to set up tax settings (US only).
Submit taxes correctly for your target country
Depending on your target country, you need to follow different requirements when submitting tax information.
- Submit tax rates for products that are targeted at the US. For the US, include tax through the account tax settings or through the
tax[tax] attribute. If you can't provide accurate tax rates, provide an overestimate of the average tax rate that you would charge users visiting your site from Google Shopping. If you submit an amount that's lower than what you actually charge users, your products could be disapproved. To understand what tax rate you should charge, consult your tax adviser.
- Use the same tax rate in your product data as on your checkout pages. While the tax rate might vary depending on the product or the user's location, use the Merchant Center tax settings to make sure that users always see the same amount that you charge. Learn more about landing page requirements.
- Don't include any taxes, such as value-added tax (VAT), sales tax or import tax, either in the
price [price]or the
tax [tax]attribute when targeting Canada.
- Display applicable taxes on your checkout pages, so that users can accurately understand the entire cost of your product. Learn more about landing page requirements
- Don't use the
- Include only value-added tax (VAT) by adding it to the
- Display tax on your landing page in 1 of 3 ways:
- Display the total price including any VAT.
- Display the net price without VAT, and explain that taxes are excluded from the displayed price.
- Display the net price without VAT and list VAT separately.
Argentina, Australia, Austria, Belgium, Brazil, Chile, Colombia, Czechia, Denmark, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Turkey, United Arab Emirates, United Kingdom
- Don't use the
- Include only value-added tax (VAT) or Goods and Services Tax (GST) by adding it to the
Determine where you have nexus (US only)
In the US, tax rates vary based on the buyer's or seller's location, such as state, county and city. Each state or local tax authority will have its own rules, which will affect how much tax you should collect depending on where your business has nexus.
Having nexus within a state generally means that you have a sufficient physical presence. For example, you might have nexus within a state if you have offices, employees, property or independent contractors in the state. Each state has its own rules on what activities trigger nexus.
Consult your tax adviser to understand where you have nexus.
Understand how states charge taxes (US only)
To understand which tax settings to use, you'll want to know if the states you have nexus in charge tax based on origin or destination:
- Origin-based states charge tax based on the seller's location within the state. In Merchant Center, you can enter a manual rate for all sales made to a state, which is an option you may want to consider for these states.
- Destination-based states charge tax based on the destination of the buyer within the state. In Merchant Center, you can select the destination-based option, which is an option that you may want to consider for these states. In addition, if you sell products in a home rule state, selecting destination-based tax allows you to manually configure tax rates for specific cities and counties.
Consult your tax adviser to understand how taxes are collected for a specific state.
Types of tax settings (US only)
The easiest way to set up tax is to use the tax settings in Merchant Center, where you can set up tax rates for each state. You can also override taxes for each product by specifying it in your product data. Whichever method you choose, you'll need to match the rate that you collect on sales.
When setting up rates, you have several options. Depending on your goals, you'll probably want to use a combination of these options. Consult your tax adviser to understand what tax rate you should charge. Learn more about how to set up tax settings.
|Your goal||You may want to consider this tax setting|
|Don't collect any taxes in the US||Configure no nexus for all states|
|Don't collect tax in a specific state||None; only add rates for states where you charge tax. You don't need to add a rate of 0.|
|Collect a specific rate for an origin-based state||Manual|
|Collect a variety of rates for a destination-based state||Destination-based|
|Collect a variety of rates for a state based on city or county nexus.||Destination-based, with home rule state nexus configured at city and county level|
|Collect tax on delivery||Apply tax on delivery|
|Collect a non-standard tax rate for a product or exempt a product from tax||The
How the destination-based option works (US only)
When using account tax settings, you can use the destination-based option to automatically determine an appropriate rate. The rate is calculated based on the user's location using third-party data. For home rule states, you can select the cities and counties in which you have nexus. For non-home rule states, it will automatically assume that you have nexus in each tax authority in the state.
While the Google-determined rate is an easy option to set up, bear in mind that it's not a good fit for all situations:
- Tax rates are destination based, not origin based. The destination-based option is based on the user's location, so use this method for destination-based states. For origin-based states, you may want to consider using the manual option or overriding tax settings with the
- Tax exemptions and reduced rates aren't supported. If your product is tax exempt or has a special tax rate, you can't specify that using the destination-based option. Instead, override
tax[tax] settings with the tax attribute.
Consult your tax adviser to understand what tax rate you should charge.
Tax on delivery (US only)
When using the Google-determined rate, you can specify (for each state) if tax should be applied to delivery cost. If yes, then Google will calculate tax for both the product price and the delivery cost. The tax that users see will be the sum of those costs.
Consult your tax adviser to understand whether taxes should be collected for delivery in a specific state.