Are taxes calculated based on addresses?

Yes. Shopify calculates taxes based on addresses, primarily the customer’s shipping address, and in some cases the billing address, depending on the tax rules of the country or region.

Shopify uses address information to determine:

• The applicable tax jurisdiction

• The correct tax rate

• Whether tax should be charged

• Any regional or local tax rules that apply

For physical products, the shipping address is usually the main factor, while some digital products or specific jurisdictions may also consider the billing address.