How do I correctly set up international tax rates for my online store?

Accounting & Taxes

Topic summary

Korean Shopify store owner asks whether to charge South Korea’s 10% VAT to all international customers and why prices drop for buyers outside Korea.

Key clarification: VAT (value‑added tax) is national. Charge Korean VAT (10%) only on domestic sales; exports should not include Korean VAT. For some destinations you may need to charge local VAT/GST (goods and services tax) if/when you register there. Shopify removes Korean VAT for non‑Korean orders, which explains the lower price; market‑specific pricing can keep display prices consistent but doesn’t change tax rules.

EU option: Seller can register for IOSS (Import One‑Stop Shop) to collect EU VAT at checkout and remit it to the EU, not Korea.

Open questions raised: Whether Shopify will automatically apply correct taxes across American countries, and whether setting only the 10% Korean VAT is legally sufficient when selling to the Americas. These points were not conclusively answered.

Status and suggested actions: Configure 10% VAT for Korea only; do not charge Korean VAT on exports. Evaluate and register for destination tax schemes as needed (e.g., EU IOSS; local rules in the Americas). Consider market‑based pricing to maintain consistent retail prices.

Summarized with AI on January 7. AI used: gpt-5.
2

Hi AmoIrand

VAT is indirect tax and it is always national (i.e. it exists on sales and purchases within the country) Korean VAT is arranged the same way. If you sell to Korea you charge VAT on all the sales (10 percent standard rate , 0 reduced rate) . When you sell abroad you should not charge Koren VAT, but in some cases may charge destination country VAT or GST (it is always based on registration for tax schemes in these countries) . Shopify follows that logic- if you do not tax your sales in other countries , then sales to these countries will be without Korean VAT and the price “drops”. There are ways to increase the retail price for different markets so the nominal price is the same as in Korea but it is not about taxation actually - the rule is still the same : you collect and pay Korean VAT only in Korea. If you decide to start selling to the EU we can register you for IOSS special scheme and set up your store to collect EU VAT. In this case you will be collecting EU taxes , but they will be paid to the EU not to Korea :slightly_smiling_face: