Why Do I Have Tax Fees In My Disbursements?

Note: This FAQ is specific to Shopify Merchants

When you run an online store, you're often required to collect sales tax from customers who reside in the same state or region as your business. These taxes are then remitted to the appropriate tax authorities. Shopify provides these tools to help you manage sales taxes effectively and might have been enabled automatically.

To make sure that you don't get charged for Tax Fees in your disbursements unintentionally, make sure to review your Shopify Tax settings.

Remove location-based tax rates

1. From your Shopify admin, go to Settings > Taxes and Duties.
2. In the Tax Regions section, click the name of the country.
3. In the Base taxes section, make sure the tax rate is set to 0.
4. Click Save.

*Considerations for including or excluding tax based on your customer's country

Before you enable Include or exclude tax based on your customer's country, review the following considerations.

• Including or excluding tax based on your customer's country or region isn't supported in the following cases:
  • Stores on the Shopify Plus plan that use Avalara AvaTax.
  • Stores that use third-party apps that offer post-purchase upselling.
  • Accelerated payment methods, such as Google Pay or Apple Pay, are supported for merchants using Shopify Payments only. Accelerated payment methods aren't supported for merchants using other payment gateways.
  • Dynamic checkout buttons aren't supported for use with including or excluding tax based on your customer's country. If you want to include or exclude tax in your prices based on your customer's location, then disable your dynamic checkout buttons.
• Your home tax rate is determined by your store's address. This might affect your tax overrides. For example, if you have an override for a product that has a 10% tax rate, but your store's home tax rate is higher, then the higher home tax rate will be deducted from these products when shipping internationally. This might affect your margins. If you want to prevent such items from shipping internationally, use shipping profiles.
• Your home tax rate is used to calculate the price at checkout. This might cause inaccuracies if you have fulfillment locations in regions with different tax rates.
• After you activate the Include or exclude tax based on your customer's country setting, prices are displayed correctly at checkout. However, the product pages or the cart don't display the prices correctly unless either of the following is true:
  • You sell in multiple currencies and use Shopify payments. In this case, prices are displayed correctly at checkout, on the product pages, and in the cart.
  • Customers make their purchases using an address that is located in a region that is eligible for price adjustment, have cookies enabled, haven't cleared their browser cache, and aren't visiting the store using incognito mode. In this case, prices are displayed correctly at checkout, on the product pages, and in the cart in subsequent visits to the store.

Exclude taxes on product prices, shipping rates, and digital goods

1. From your Shopify admin, go to Settings > Taxes and Duties.
2. Uncheck All prices include tax, Charge tax on shipping rates, Charge VAT on digital goods.
3. Click Save.

There you have it, tax fees should now be excluded from your disbursements.