Sales Tax (US): A destination-based consumption tax with layered rates combining state + county + city + special district taxes. Total rates range from 0% (5 states have no sales tax) to over 10% in some California and Louisiana localities. Exemptions vary by state: groceries, prescription drugs, and clothing (below certain thresholds in NY/NJ/PA) are often exempt or reduced. Origin-based states (like Texas for intrastate) use seller location for rate determination.

VAT (EU/UK): A multi-stage value-added tax collected at each production stage but borne by the final consumer. Prices are typically VAT-inclusive (gross pricing). Standard rates range from 17% (Luxembourg) to 27% (Hungary), with reduced rates (5-15%) for essentials like food, books, and children's items. Reverse charge shifts VAT liability to the buyer in B2B cross-border transactions within the EU. Zero-rated goods (exports, certain food) carry 0% VAT but sellers can reclaim input VAT; exempt goods (financial services, medical) also have 0% but input VAT cannot be reclaimed.

GST (Global): VAT-style consumption tax used in Canada, Australia, India, Singapore, and 160+ countries. Mechanics mirror VAT—multi-stage, destination-based, with standard/reduced/zero rates. Australia's GST is 10%; Canada combines federal GST (5%) with provincial PST/HST; India uses tiered rates (0%, 5%, 12%, 18%, 28%). Registration thresholds vary (e.g., CAD $30,000 in Canada, AUD $75,000 in Australia).

Nexus & Establishment: US economic nexus requires registration when sales exceed state thresholds ($100,000 revenue OR 200 transactions in most states post-Wayfair). EU fixed establishment triggers VAT registration. Marketplace facilitator laws (Amazon, eBay, Etsy) shift collection responsibility to platforms in most US states and under EU's OSS/IOSS (One-Stop Shop for services, Import One-Stop Shop for goods under €150).

B2B vs B2C: B2B transactions often use reverse charge (EU VAT, some GST), require VAT ID validation, and need detailed invoices with tax breakdowns. B2C transactions include tax in the price (EU/most GST) or add at checkout (US), and receipts show simpler totals.

Step 1: Select your Region & Tax Type: United States (sales tax), EU/UK (VAT), or Global GST. This determines available input fields and calculation logic.

Step 2: Choose currency (USD, EUR, GBP, etc.), price mode (Net = tax-exclusive, Gross = tax-inclusive), quantity, discount percentage, shipping cost, and rounding rule (item-level rounds each line, receipt-level rounds the final total). Price mode determines whether your input is before or after tax.

Step 3 (US): Pick your state and enable destination-based calculation if applicable (customer's location). The calculator applies state + county + city + special district rates automatically. For origin-based states or intrastate shipments, use your business location.

Step 3 (EU/UK): Select the customer's country, toggle reverse charge for B2B intra-EU sales (VAT ID required), and indicate if using OSS (One-Stop Shop for distance sales) or IOSS (Import One-Stop Shop for imports ≤€150). Standard VAT rates apply unless reduced/zero rate items selected.

Step 3 (Global): Choose the country and rate class (standard, reduced, zero). The calculator uses current GST/VAT rates for that jurisdiction.

Step 4: Click "Calculate Tax" to see tax amount, effective rate, and invoice-ready totals: Net (before tax), Tax, Gross (total). For reverse charge scenarios, tax is due by the customer, not remitted by you.

Step 5: Adjust inputs like price mode, rounding, or location to match your cart/invoice engine. Test with real scenarios to ensure your system matches the calculator's logic.

Collect the right evidence: Store billing + shipping addresses, VAT IDs for B2B validation (use EU VIES system), IP addresses, geolocation data, and payment method country for OSS/IOSS compliance. Evidence must prove customer location for destination-based tax.

Register where required: US economic nexus thresholds ($100,000 revenue OR 200 transactions in most states), EU OSS registration for distance sales above €10,000/year, UK VAT MTD (Making Tax Digital) for £85,000+ turnover, and marketplace facilitator rules (Amazon, eBay handle collection in many jurisdictions). Registration timelines: US (immediate after threshold), EU OSS (register in one member state), UK MTD (quarterly digital filing).

Use item tax codes: Apply correct product tax classifications: groceries (often exempt or reduced), books (zero-rated in UK, reduced in EU), clothing thresholds (NY exempts < $110, PA < $175), SaaS/digital services (typically standard rate, special B2B reverse charge in EU), and reduced rates for children's items, healthcare, education. Misclassification triggers audit risk.

Display clarity: Show whether prices are tax-inclusive (EU/UK standard, customer sees total upfront) or tax-exclusive (common in US B2B, tax added at checkout). Indicate "VAT incl." or "plus tax" to avoid confusion. B2B invoices must show net, VAT amount, and gross separately.

Rounding consistency: Choose item-level (round tax on each line item, common in retail POS) or receipt-level (round final tax total, common in invoicing). Stay consistent across systems to match accounting records. US states have specific rounding rules (e.g., round to nearest penny, some allow bracketed rates).

Keep audit logs: Record tax rate used, source (state website, EU VAT rate database), timestamp, and location evidence for every transaction. Retain for statute of limitations: 3-7 years (US states), 4-10 years (EU VAT), 5+ years (global GST). Automated tax solutions (Avalara, TaxJar, Quaderno) maintain audit trails.