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I understand that if I sell things online, I need to calculate Taxes based on customer location.

Can I use IP(Internet Protocol address) to locate customer or should I ask them explicitly?

If it is fine to use IP to identify customer's Country, is it fine to locate customer State/Province.

I need it because Canada has different taxes in different Provinces.

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    For 10% of all US IP addresses, the best available location information is “somewhere in the USA” (actually, the result will be “just 100 meters from some farm in Kansas, with an error of up to 3,000 miles”; the gus there get harassed all the time by stupid police who missed the 3000 mile error bit). – gnasher729 Jul 26 at 9:27
  • Online orders are often going to be shipped somewhere. (Not necessarily so for video streaming, online subscriptions, etc.) At least in the US sales tax is usually based on the address the item is being shipped to, not on the physical location of the person placing the order. – Gerard Ashton Jul 26 at 10:58
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You ask them explicitly, maybe adding that you need that info specifically to calculate tax.

IP address is not reliable because your customers could be using VPN, Tor, or be on vacation overseas.

(By the way, "IP" on a website about law would more likely be understood as "Intellectual Property", not "Internet Protocol address".)

  • Do you think the direct answer of the customer will give me more reliable answer than IP? – Yevgeniy Afanasyev Jul 26 at 8:25
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    @YevgeniyAfanasyev Probably yes. Also if you pay the incorrect taxes because your customer lies to you is probably handled differently (in your favor) than you paying incorrect taxes because you decided to disregard what the customer states and instead use an unreliable method to determine location. – Giacomo Alzetta Jul 26 at 9:14
  • @YevgeniyAfanasyev As Giacomo says, this is more a matter of your tax responsibilities rather than accuracy of the information about your customers. Asking customers where they live for tax purposes is widely accepted by tax authorities. Not doing so and instead trying to guess it is questionable and risky. – Greendrake Jul 26 at 9:47
  • @YevgeniyAfanasyev if it is an usability issue, you can also prefetch the geolocalization that you got from the IP into the form and let the user change it if he does not agree. – SJuan76 Jul 26 at 10:50

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