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Ecwid Ecommerce Glossary

Sales Tax

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What is sales tax?

A sales tax is a tax paid to a government for the sales of products and services. Usually, a sales tax is levied at the point of sale, collected by the retailer, and passed on to the government. 

A business is liable for sales taxes in a given jurisdiction if it has a nexus there. A nexus is defined as a physical presence. However, it is not limited to having a brick-and-mortar store, an office, or a warehouse. Having an employee or an affiliate in a state can also constitute a nexus. 

Conventional sales taxes are charged to the end-user of a product or service. 
In some countries, value-added tax (VAT) schemes have been adopted. It charges a percentage of the value added at every level of production of a product. In other words, VAT is a tax on the company’s gross margins, rather than the end consumer.

There are different accounting tools for e-commerce stores you can use to create sales tax reports and file sales taxes. 

Here’s how to set up taxes (sales taxes, VAT, GST, etc) in your Ecwid store.

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