International Tax Settings

Accounting & Taxes

Topic summary

A merchant is trying to configure Shopify to charge taxes only on domestic orders—US taxes for US-to-US shipments and Canadian taxes for Canada-to-Canada shipments—while avoiding tax collection on cross-border orders. They have products dropshipped from the US and inventory stored at their home in Canada.

Proposed Solution:

  • Set up separate locations in Shopify (US dropshipper and Canadian home)
  • Assign products to their respective locations
  • Shopify should then automatically calculate taxes based on customer and inventory location

Current Issue:

  • Initial testing shows taxes are still being calculated incorrectly (Canadian warehouse products triggering taxes on US orders)
  • The supplier’s product sync automatically defaults items to all locations with inventory counts, overriding the intended setup

Next Steps:

  • Contact supplier to restrict uploads to US locations only
  • Consider using bulk edit methods as an alternative solution

The discussion remains open as the merchant troubleshoots the location-based tax configuration.

Summarized with AI on October 27. AI used: claude-sonnet-4-5-20250929.
1

Hoping for some help with my issue.

I have products being dropshipped out of the US and some products stored at my house in Canada.

How can I set up Shopify to collect taxes on only domestic orders from US to US and not collect taxes going US to Canada and vice versa? I know how to do it one way, but then I also need the products stocked in Canada

Same thing vice versa, my products here in Canada, I want to collect taxes for domestic orders staying in Canada, and have them turned off for any orders shipping to US.

I have 2 shipping profiles created but not sure how to set up taxes for this.

Thanks in advance.

2

Taxes are calculated automatically for you and are determined by where your customer is based and where you are based (the address listed for your store). In order to get what you need, you need to add your U.S dropshipper and your Canadian home as separate locations within Shopify. Then, assign products to the appropriate location and Shopify will only charge sales tax on orders where you are legally obligated—US taxes on US orders for the US location and Canadian taxes in Canada on your Canada location. No customs tax will be imposed on cross-border orders. There is no need to manually calculate tax rules and for product assignments, just set your locations properly.

3

Thanks, that makes sense although I tried and doesn’t seem to work unless I’m doing something wrong. I tested and added a product that is only in a Canadian warehouse, selected a US address and taxes were still being calculated.

The other issue is my supplier syncs products and they seem to always default to all locations with inventory showing at which one has stock.

I’ll try to speak with them and see if they can only upload to their US locations, otherwise maybe using a bulk edit method.