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How Shopify Makes Tax Compliance Easier for +2 Million Merchants
Data Science

How Shopify Makes Tax Compliance Easier for +2 Million Merchants

Discover how Shopify tackles dynamic tax regulations with their Tax Insights feature

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Data Tinkerer
Dec 13, 2024
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How Shopify Makes Tax Compliance Easier for +2 Million Merchants
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High-level representation of the tax insights architecture (Source: Shopify)

TL;DR


Situation

Managing sales tax compliance in the U.S. is complex due to varying tax laws across states, cities, and products. To assist merchants, Shopify aimed to provide timely, accurate tax liability insights within the platform.

Task

The goal was to develop the Tax Insights feature within Shopify Tax to inform merchants when they approach or meet tax collection liabilities in different states. This required integrating dynamic tax laws with merchants' sales data to deliver actionable insights

Action

1- Understanding Tax Laws: Collaborating with internal tax experts to grasp U.S. tax codes and their implications for merchants.

2- Data Modeling: Modifying existing data models and creating four new ones to handle dynamic tax data effectively.

3- Prototyping with SQL: Utilizing SQL for initial data model prototyping to manage complex datasets.

4- Implementing with Spark: Productionizing data processing using Spark jobs to handle large-scale data efficiently.

5- Data Integration: Extracting data from core application databases into a data warehouse on Google Cloud Storage, processing it, and loading the final model into Google Cloud Bigtable for the end user.

Result

The Tax Insights feature enabled merchants to monitor their tax compliance proactively, reducing the risk of non-compliance and allowing them to focus more on business growth.

Use Cases

Tax Liability Monitoring, Compliance Monitoring, Sales Analysis

Tech Stack/Framework

Google Cloud Storage, Google Could Bigtable, Google BigQuery, Apache Spark, dbt, Starscream, Seamster


Explained Further


Understanding Tax Laws

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