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Glossary

This glossary defines the terms used throughout the tax documentation. Each term is written in operational language so merchants and team members can connect the concept directly to the interface.

Jurisdiction​

A jurisdiction is the place whose tax rules apply to a transaction. In the platform, that is often a country, and sometimes a country plus a region or state.

When the documentation says a rule applies “by jurisdiction,” it means the engine evaluates where the order is being collected or delivered and then looks for the matching rule set.

Registration​

A registration is the record that the merchant is monitoring or actively collecting tax in a jurisdiction.

In the advanced workspace, a registration answers questions like:

  • Where am I active?
  • Where am I still monitoring?
  • Which jurisdictions should collect tax versus remain visible only for threshold tracking?

Read more in Jurisdictions.

Threshold​

A threshold is the level at which a merchant begins paying attention to or activating tax collection in a jurisdiction.

In the advanced workspace, a threshold helps a merchant document the boundary between “we are only monitoring this place” and “we now need to collect here.”

Rule​

A rule is the piece of logic that tells the engine what rate or calculation behavior to apply in a jurisdiction for a specific tax code.

A rule is where a merchant defines things like:

  • the rate
  • whether tax is inclusive or exclusive
  • whether shipping is taxable
  • whether a rule is active

Read more in Rules.

Tax Code​

A tax code is the category label used to classify products or shipping for tax purposes.

The tax engine uses the tax code to match products against the correct rules. A tax code is not the same thing as a product category used for storefront browsing. It exists specifically to drive tax behavior.

Tax Behavior​

Tax behavior describes how a line item should generally be treated, such as taxable, reduced, or exempt.

In the advanced product mapping tab, tax behavior works alongside the tax code. The code points to the rule family; the behavior indicates whether normal taxation, reduced treatment, or exemption is expected.

Manual Tax​

Manual tax is the store-level fallback tax policy. It uses a simpler configuration surface for merchants who do not need jurisdiction-specific logic.

Read more in Manual Tax Overview.

Advanced Tax​

Advanced tax is the separate tax workspace used for more complex collection logic. It includes the engine, registrations, rules, and products & simulator.

Engine​

The engine is the top-level configuration for advanced tax. It decides whether advanced behavior is enabled, what the home country is, which default codes are used, and how checkout should interpret destination and price behavior.

Read more in Engine.

Inclusive Pricing​

Inclusive pricing means the catalog price already contains tax.

If a rule is inclusive, the engine interprets the product price as already containing the tax amount and derives the tax portion from the displayed amount rather than adding it on top.

Exclusive Pricing​

Exclusive pricing means tax is added on top of the catalog price.

If a rule is exclusive, the engine calculates the tax amount separately and adds it to the subtotal to arrive at the final total.

Destination-Based Collection​

Destination-based collection means the engine uses the customer’s checkout destination as the main signal for choosing tax behavior.

In operational terms, this lets the same store behave differently for different destinations, provided the merchant has configured the corresponding registrations and rules.

Simulator​

The simulator is the advanced tax testing surface that lets a merchant choose products, destination, shipping, and discount values, then run a backend tax quote without placing a live order.

Read more in Products & Simulator.

Tax Quote​

A tax quote is the backend-calculated tax result for a potential order. It includes subtotal, tax amount, total amount, matched jurisdiction, line-level breakdowns, and warnings when applicable.

The simulator uses a tax quote, and live checkout can also use the same quoting logic when the advanced engine is enabled.

Fallback​

Fallback means the system safely returns to the simpler manual tax behavior when advanced tax is not enabled or not configured for the case being evaluated.

This is important because advanced tax was designed to be additive. A merchant does not lose the basic behavior merely because the advanced engine exists.