How to manage different VAT rates?
This guide will show you how to set different VAT rates and zones for products in the AI Commerce platform so that taxation works correctly in different countries.
Written by Petro Mäntylä
Updated at April 17th, 2025
Different product groups and countries have different tax rates. AI Commerce provides tools to create flexible rules—Tax Classes, Tax Rates, and Geo Zones—that ensure the correct VAT rate at checkout. This reduces the risk of errors and speeds up international sales.
Step-by-step instructions
- Open Control Panel > Local & Taxes > Tax Classes
Create or edit tax categories (e.g. Food , Books , Surcharge ). At this point, you won't set percentages yet. - Go to Local & Taxes > Tax Rates
- Select Insert to create a new VAT rule or click on the row and Edit to edit an existing one.
- Fill in the Description (e.g. “VAT 10%”).
- Select Geo Zone , Tax Class , Priority and Rate % .
- Open Local & Taxes > Geo Zones
- Press Insert , name the zone (e.g. “Åland”) and add a description.
- Select the folder icon and add the required countries to the zone.
- Check your priorities
If multiple rules match the same order, the lowest Priority (0 = highest priority) wins. If you want to stack taxes, use the same priority for different tax categories. - Test in checkout view
Create a test account with different shipping countries and make sure the correct tax rate is displayed in the shopping cart.
Where do you edit from?
- Tax Classes : Dashboard > Local & Taxes > Tax Classes
- Tax Rates : Dashboard > Local & Taxes > Tax Rates
- Geo Zones : Dashboard > Local & Taxes > Geo Zones
Example table: tax rule definition
| Zone | Tax category | Priority | VAT % |
|---|---|---|---|
| Finnish | Merchandise | 20 | 25.5 |
| Swedish | Foods | 30 | 10 |
| VAT 0% countries | All | 999 | 0 |
Additional tips
- Group “Alvinola countries” into one Geo Zone instead of creating a separate zone for each country.
- Update tax rates regularly—AI Commerce doesn't do this automatically.
- Check with local tax authorities (e.g. Romanian VAT on animal food) before creating new rules.
Summary
Tax Classes define tax classes for each product group, Tax Rates assign country/zone percentages to them, and Geo Zones define which countries the rule applies to. When set up correctly, the system will always use the lowest priority matching rule and display the correct VAT rate at checkout.