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Rules

The Rules tab is where the merchant defines the tax behavior the engine should apply in specific jurisdictions.

If registrations define where the merchant cares about tax, rules define how tax should behave there.

What a Rule Does​

A rule tells the engine:

  • which jurisdiction it applies to
  • which tax code it applies to
  • what rate to use
  • whether pricing is inclusive or exclusive
  • whether shipping is taxable
  • whether the rule is active
  • whether the rule is compound

That makes the Rules tab the actual behavior layer of advanced tax.

Core Fields​

Rule Name​

The rule name should describe the business intent, not just restate the rate.

Good names help teams audit and maintain the rulebook later.

Country and Region​

These fields define the rule’s jurisdiction target.

Tax Code​

The tax code links the rule to product or shipping classification. This is why rules and product mappings are connected operationally.

Rate​

The rate is the numerical percentage the rule applies.

Calculation Method​

This defines whether the rule is:

  • exclusive, meaning tax is added on top of price
  • inclusive, meaning tax is already inside the price

Rule Active​

Inactive rules remain saved but do not drive live tax quotes.

Shipping Taxable​

This determines whether shipping participates in the taxable base under this rule.

Compound​

Compound behavior should only be used intentionally in the rare scenarios that require tax-on-tax treatment.

How to Build a Good Rule Set​

The best rulebook is not the largest one. It is the smallest set of rules that clearly expresses real tax behavior.

The recommended order is:

  1. define the jurisdictions that matter
  2. define the tax codes that matter
  3. write one rule per real operational case
  4. validate each case in the simulator

Example Rulebook Patterns​

Single standard-rate rule​

A merchant may have one active rule for one country and one tax code. That is a valid advanced setup if the merchant mainly needs simulator support or registration tracking.

Multi-code country setup​

A merchant may use one country with several rules because shipping, standard goods, and reduced items do not behave the same way.

Country plus region setup​

A merchant may use region-specific rules when one country contains internal tax differences that matter operationally.

Common Mistakes​

Overbuilding the rulebook​

Merchants sometimes create too many rules before confirming what the business actually needs. That makes maintenance harder without improving accuracy.

Using the wrong tax code mapping​

If the rulebook is correct but products are mapped to the wrong tax code, checkout still produces misleading results.

Forgetting shipping behavior​

Shipping often gets overlooked. If shipping taxability matters, it should be expressed deliberately instead of assumed.

Best Practice​

Each rule should be understandable on its own. If a teammate cannot explain why a rule exists, the rulebook is already becoming opaque.

Next Reading​