Configure Manual Taxes by Region with Tax Zones

What’s New?

Businesses can now create Tax Zones, under Manual Taxes, to organize and apply user-defined tax rates based on a customer's country or state. This provides greater control for businesses that need different manual tax setups across the regions they sell in, while keeping tax configuration easier to understand and maintain.

Create Geographic Tax Zones

• Create zones by grouping specific countries and states together.
• Give each zone a recognizable name based on the region or tax setup it represents.
• A country or state can belong to only one Manual Tax Zone at a time, preventing overlapping tax configurations.

Example: Create a Canada Tax Zone containing the relevant Canadian regions and associate the manual tax rates you want customers in that zone to be charged.

Steps:

• Attach your existing user-defined tax rates to any zone as required.
• Add up to 10 tax rates per zone.
• Add or remove rates as your tax configuration changes.
• When a tax rate is attached to both - product and zone, it applies on the checkout i.e. an intersection of the 2 apply.
• For a tax rate to be applied, it should be attached to the product as well as the zone.
• For any region not defined in any zone, all rates attached to the product will apply without filters.
• If a zone has no tax rates associated with it, customers in that zone will not be charged any taxes.
• Existing tax rates attached to products will have the same behavior if no zones are defined without impacting current set-up.
• Automatic Taxes continue to take priority and manual tax rates & associated zone rules will apply only if automatic tax is OFF or unavailable.
• Deleting a tax rate from a zone only removes it from that zone and does not delete the primary rate.

How does manual tax zone work in conjunction with automatic taxes if both are configured?

• Manual Tax Zones also work alongside Automatic Taxes without requiring you to choose one system exclusively with manual taxes acting as a fallback and automatic taxes taking priority.
• Automatic Taxes take precedence whenever they are available for the applicable country and product combination.
• Manual tax rates associated with a zone apply when Automatic Taxes are disabled or unavailable for that combination.
• This makes Tax Zones particularly useful for configuring regional tax rates while retaining manual taxes as a fallback alongside Automatic Taxes.

A Clearer Tax Experience

• Tax settings are now organized into dedicated areas for:
• Display settings - Tax Inclusive / Exclusive – configure the default behavior for whether product prices include or exclude taxes.
• Automatic Taxes - configure automatic tax categories and nexus.
• Manual Taxes - create and manage manual tax rates and organize them into geographic Tax Zones, if required.

Where Can I Find This?

Go to: Payments → Settings → Taxes → Manual Taxes

From here, you can:

• Create and manage manual tax rates
• Create Tax Zones
• Select the countries/states belonging to each zone
• Associate existing manual tax rates with a zone
• Review and update the rates configured for each zone

What’s Next?

We’ll continue expanding Manual Taxes to support more flexible regional tax configurations and make it easier for businesses with complex tax requirements to control how manual taxes are applied across different geographies.

Visuals

Landing Page

Create Tax Zone

Tax Zone without Tax Rates

Attach Tax Rate

Add more Tax Zones

Tax Zone with Tax Rates

Delete Tax Zone