As you work with international customers, you should set taxes to conform with legal standards of the particular country in which your customer resides applicable legal standards. Customer & Business Manager lets you achieve this through tax zones and tax zone groups.
A tax zone defines a tax for a particular country or sub-national unit where you intend to offer your plans. For example, if you sell to the USA and the UK, create two tax zones depending on the location of your customers. However, if your business imposes the same tax for all customers, simply modify the default tax zone according to your needs.
A tax zone group links together tax zones and a plan. If your plan is associated with a tax zone group, the system will search for matches between subscriber's location and tax zones included in the group. If matches are found, the system will calculate the total tax due using values in matched tax zones.
A tax zone defines either a stackable or non-stackable tax. Stackable taxes are applied to a subscription price, while non-stackable taxes are applied to a total of the price and stackable tax values.
To calculate the total taxes due, the system uses the following algorithm:
For example, a subscription price is $100, and the matching tax zones are as follows:
Zone 1: Apply 10% stackable
Zone 2: Apply 20% stackable
Zone 3: Apply 5% non-stackable
Zone 4: Apply 10% non-stackable
Then the total taxes due is calculated in the following way:
$100 * 0.10 = $10 (for Zone 1)
($100 * 0.20 = $20 (for Zone 2)
$10 + $20 = $30 (subtotal for stackable taxes)
($100 + $30) * 0.05 = $6.5 (for Zone 3)
($100 + $30) * 0.10 = $13 (for Zone 4)
$6.5 + $13 = $19.5 (subtotal for non-stackable taxes)
$30 + $19.5 = $49.5 (total taxes due)
For details on how to create tax zones and tax zone groups, see the sections of this chapter.
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