I understand that if I sell things online, I need to calculate Taxes based on customer location. Can I use IP 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.
No, you cannot use the IP address to reliably find the location of your customer.
If the customer is using a corporate network, then the geolocation of the IP address will identify the location where the corporate network connects to the internet. This location can easily be in a different country than where the customer is physically located in the case of a multi-national company.
When the customer has a dynamically-assigned IP address, which is the standard for mobile devices and home connections, then the geolocation information typically refers to either the ISP/mobile provider's headquarters or where their network connects to the internet.
When the customer is using a VPN connection, then that has the same effect as a corporate network. Also, using a VPN the customer could be standing next to you, while the geolocation tells you he is overseas in a location for which you don't need to charge taxes. As that kind of cheating the government would be too easy, I doubt that the tax office is going to accept geolocation based evidence that you paid the correct amount of taxes.
