Tax Remitter Settings

Violet provides configurable tax remitter settings that determine how tax collection and remittance responsibilities are handled. These settings can be customized at both the app and merchant levels to align with compliance requirements and business preferences.

​

Tax Remitter Methods

​

Marketplace as Tax Remitter

How It Works:

• The Channel (i.e., your marketplace) is responsible for collecting and remitting taxes on behalf of merchants.
• The marketplace manages all tax calculations and ensures compliance with tax laws.
• The marketplace manages all tax reporting and remittance obligations to relevant tax authorities.

Application / Use Case:

• Suitable for businesses that want to assume tax compliance responsibilities for their merchants.
• Beneficial for platforms operating in jurisdictions with marketplace facilitator laws requiring marketplaces to handle tax compliance.

​

Merchant as Tax Remitter

How It Works:

• Individual merchants are responsible for collecting and remitting their own taxes.
• Violet provides detailed tax calculations per transaction, based on the tax codes set up by the merchant in their ecommerce platform.
• Merchants handle all tax reporting and payments to relevant tax authorities.

Application / Use Case:

• Ideal for businesses that prefer to delegate tax compliance to their individual merchants.
• Suitable for marketplaces with established merchants who have their own tax compliance processes.
• Appropriate for platforms operating in regions where merchants are legally required to handle their own tax obligations.

​

Choosing the Right Tax Remitter Setting

When selecting a tax remitter method, consider the following:

Choose Marketplace as Tax Remitter If You Need:

• To centralize tax collection and reporting.
• To provide a simplified merchant experience.
• To comply with marketplace facilitator laws.
• To maintain greater control over tax compliance.

Choose Merchant as Tax Remitter If You Need:

• To delegate tax responsibilities to individual merchants.
• To work with merchants who prefer to manage their own tax compliance.
• To operate in jurisdictions where merchants must handle their own taxes.
• To separate marketplace and merchant tax obligations.

Depending on the tax remitter settings and your transfer settings, Violet will automatically disburse tax to the designated entity when the order is placed. This data is available on the Distribution record.