I'm using PayPal Standard to process payments with WP e-Commerce. My client has all of her local tax rates already set up in her PayPal account. However, when using WP e-Commerce default settings, the taxes weren't being calculated on the PayPal site. I tried various combinations of the options under the Dashboard > Store > Store Settings but none of them seemed to fix the problem.
I went into the code and commented out the PayPal tax_cart variable and that made the taxes show up again on the PayPal side. In version 3.8.13 this code is located on line 329 and looks like this:
$paypal_vars['tax_cart'] = $this->convert( $tax_total );
In future versions, can you add a check to not set this PayPal variable if $tax_total is 0 or if Dashboard > Store> Store Settings > Enable Tax is not set.