Right now the taxable state list is using the smith_state table and is only programmed for US and Canada. If you send me your country and states I will see about getting that added to the states list.
You could also try using the tax table option for charging tax. In the cart settings if you select the "Use Tax Tables" option then the cart will lookup the tax rate in the tax table called "smith_tax" that has all the tax rates by country, state, county, city. The easiest way to populate the “Smith_Tax” table is to go into SQL Management Studio and right click the smith_tax table and click "import" and follow the wizard.
-Scott