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Product Tax Category


2Checkout added a new product attribute in the Merchant Control Panel, the Product Tax Category, to increase the accuracy of the tax determination and reporting process.


Available by default for all 2Checkout merchants. Read here how to apply the Product Tax category from your Merchant Control Panel.

Product Tax Category rules

Product Tax Category Category Description
Credit reports Credit scores and other credit characteristics of individual consumers (US only).
Electronically-delivered software Software that is primarily downloaded from the Internet and operates from customers' computers.
Digital products Examples are digital books and newsletters, digital music or other audio, digital audio-visual works, pictures, online games, ringtones, etc.
Software as a Service (SaaS) Online software-based services where primary functions are performed on remote servers. Software primarily resides in cloud or remote servers, not on the customer computer. Examples are Virtual Private Networks (VPN), data storage or backup online, website optimization, etc.
Technical support/Helpdesk services Online or telephone support services for software or hardware.
Specialized education services Online training or learning modules. Excludes in-person training.
Generic taxable product  
Taxes differ according to the various product tax categories. Tax deduction takes into account the product tax category added at product level for more accurate tax determination (for example, there are certain states  in USA where SaaS products are charged an 8% sales tax, others where the sales tax is 0%).

Default Tax category assignment

  • For the 2Monetize accounts: Products that don't have a tax category assigned will be automatically considered as "Electronically-delivered software".
  • For 2Sell & 2Subscribe accounts: Products that don't have a tax category assigned will be automatically considered as “Generic Taxable Product”.

For all new products, the selection of the Product Tax category is mandatory.

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