How to manage Value-Added Tax (VAT)?

Value-added taxation is based on consumption rather than income. In contrast to a progressive income tax, which levies more taxes on the wealth, the VAT is charged equally on every purchase. More than 160 countries use a VAT system. It is most commonly found in the European Union.

In Marketcube Tax plays an important role, An operator can charge and set up tax on commission and vendor-managed shipping.

In terms of tax on commission, tax can be charged on operator commission and will be deducted from the vendor payout amount. Commission rate is the amount you, the marketplace operator, get paid for each sale in your marketplace. For instance, if you were to sell an item for $10 and your commission rate was set to 20%, then you would earn $2 and your vendor would earn $8. 

In terms of tax on vendor-managed shipping, the Operator can set whether the shipping price is tax inclusive or tax exclusive. If shipping is exclusive of tax then the tax can be charged on shipping.

In this article, you will learn how to manage the Tax on Commission and Vendor-managed Shipping in Marketcube.

Steps to set up the Tax on Commission.

1. Log into your Marketcube account >> Click on the  'Settings Icon'.

2. Before setting up the Taxes make sure that you have set up your Commission. Once done, click on  'Taxes' and then>> Click on 'Manage Taxes'.

3. Go to Tax on Operator Commission and enter the value in % And Save.

Now, Let's see how the calculation looks when an order comes. e.g. order number #1002. The price of the product is 12, the commission set up by the operator is 10% along with VAT on commission of 10%.

Here are how the calculations are shown in the payments section and the invoice of the order.

Steps to set up the Tax on Vendor Managed Shipping.

1. Log into your Marketcube account >> Click on the  'Settings Icon'.

2. Before setting up the Taxes make sure that you have set up vendor-managed shipping. Once done, click on  'Taxes' and then>> Click on 'Manage Taxes'.

3. Go to Tax on Shipping and select Tax exclusive if you wish to set up the Tax on Shipping. 

Note: If you are already charging the tax in Shipping charges then you can select Shipping Inclusive.

4. After selecting the Tax exclusive enter the value in % And Save.

Now, Let's see how the calculation appears when an order is made. e.g. order number #1003. The price of the product is 20, the commission set up by the operator is 10% along with VAT on Commission of 10%.

The vendor-managed shipping set up by the operator is 15 along with VAT on Shipping of 10%. 

Here are how the calculations are shown in the payments section and the invoice of the order.

Got more questions? Use the chat on your right or emailsupport@marketcube.ioto get in touch.