I have to configure default tax rate which is 25% for the default country and 0 tax for other country. How do I do that?

Right now I set product tax class to all the products and so even if I'm using other country I still got tax which is 25% where it should be 0 tax.

Can anyone give me some idea on how to achieve it?

Quite similar issue/question: Different State Different Tax

2 Answers 2


Based on my trial and error on this issue I got it working and here is what I did.

I created two tax rate for the two countries.

Country 1 -> 25%

Country 2 -> 0

In my first tax rule I changed it and I selected the rates "Country 1" and "Country 2" and save it.

In Tax settings (System->Configuration->SALES->Tax) I changed "Tax Calculation Based On" from "Shipping Origin" to "Shipping Address".

So when a user will checkout it will check the shipping address and will calculate the tax based on the tax rule/rate.

enter image description here

Hope this help.


Are you in Europe so showing prices including tax? If so assume you setup your default destination tax setting, sales/shipping origin for the website and included tax rates for your country per (http://docs.magento.com/m1/ce/user_guide/tax/configuration-eu.html).

To have other countries show 0% tax rate just don't load tax rates for those other countries (will default to 0%) and have a tax rule that only includes rates for your country. Make sure you don't have the cross-border trade option selected in your tax configuration (that option holds the price including tax that you loaded into your catalog for all countries and just varies the amount of tax collected based on the tax rate in your tax rule; i.e. floats your price excluding tax).

  • Thanks @Chuck. So do you suggest that I should remove product tax class and just add it in the price? And set default for Tax Class Shipping for the default country right?
    – nhinzky
    Commented Oct 21, 2016 at 15:26
  • Yes; you should only need to use product tax class if you have different tax rates for different types of clothing. Ie shirts < $100 are taxed at say 7% if they're over they're taxed at standard rate (21%), etc. Then your shirts < $100 are reducedproducttaxclass and your shirts $100+ are standardproducttaxclass. And you create 2 rules one for each product tax class with the appropriate tax rate.
    – Chuck
    Commented Mar 24, 2017 at 16:14

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