Under the Sales module in the left-hand menu, click on Taxes and "+Tax" button.
From the new tax pop-up, assign a description to your tax and continue by adding the required information according to your country and your company.
How to set up a compound tax?
A compound tax is a tax calculated on top of a primary tax. So to create a compound tax, add two components to your tax where the second one is calculated on top of the first one as shown below: