Amey-Thakur Tax calculation
Tax on a sale depends on where the seller is, where the buyer is, what is being sold, and whether the buyer is a business. A single hardcoded rate is wrong in most cross-border cases and the exposure accumulates silently.
Method
- Establish where you have an obligation. Physical presence, thresholds, and digital services rules each create liability independently, and thresholds are crossed without any deliberate decision.
- Classify what you sell. Digital services, physical goods, and professional services are taxed differently in the same jurisdiction, and the classification drives the rate.
- Determine and evidence the customer's location. Billing address, payment origin, and IP are the common signals, and some regimes require two non-contradictory pieces of evidence, stored.
- Handle business customers separately. A valid tax identifier can shift the liability to the buyer in some regimes, and validating that identifier is part of the process rather than trusting input.
- Use a maintained tax engine rather than a rate table. Rates and rules change constantly, and a table in your codebase is stale within months.
- Record the rate, basis, and reason on the transaction. What was charged and why must be reconstructable years later for a filing or an audit (see invoicing-and-receipts).
- Decide inclusive or exclusive pricing per market. Consumer expectations and law differ, and displaying an exclusive price where inclusive is required is a compliance problem, not a design choice.
Boundaries
- This is not tax advice; obligations and thresholds need a qualified advisor in each jurisdiction.
- Calculating tax is not filing or remitting it, which are separate obligations with their own deadlines.
- Marketplace and platform rules may shift liability to the platform, which changes who calculates and remits.