Tax is worked out from the client's billing address when an invoice is generated. Decide inclusive or exclusive first: changing it later changes every price.
- Switch tax on
Settings › Tax Configuration › General Settings: turn on Tax Support, enter your tax or VAT number (printed on invoices) and choose exclusive or inclusive.
- Add the rules
On Tax Rules press Add New Tax Rule: the country, the state (or leave it empty for the whole country), the name printed on the invoice and the rate. Level 2 is a second tax applied alongside the first.
- Set up VAT if you need it
On VAT Settings set your home country, decide whether VAT is always charged at home, and turn on VAT number validation if you zero-rate business clients in other countries. Auto Configure creates the standard rates; check each against the published rate.
- Tax the products
A rule applies only to products with Charge tax for this product switched on. A new product is untaxed until you set it.
- Check a real invoice
Create a test client in each place you have a rule for, generate an invoice and read the tax line, name as well as amount.
The rule you forgot
A client in a place with no rule is charged no tax, silently. Test one on purpose.
Compound tax applies level 2 to the total after level 1. Use it only where the law works that way.
Full guide
The complete reference is Configure tax in the WBAMS documentation.