Finance > VAT/GST/Tax Settings

VAT settings (or GST/Tax settings) is where you will define the tax rate that will be used on Sales Invoices and Creditor Invoices (Supplier/Vendor invoice).

Locate the setup menu under Settings > Finance > VAT Settings (this could also be named GST Settings or Tax Settings depending on your system setup).

VAT (GST/Tax) ACTIVITY CODES

• From the VAT (GST) settings menu > click to select the first tab VAT activity codes

Open

This tab is used for defining the VAT (GST/Tax) code that can be used in the Activity setup. Depending on the tax system of each country, this tab will be used to set up accordingly.

• For European countries, it will be required to have more than one code to define different groups of VAT/GST that allow having full deduction, half deduction, quarterly deduction, and no deduction.

• For the other countries, there will be only one code to be defined here as Full deduction (or ordinary VAT).

To create a new VAT (GST/Tax) activity code:

• Click on the icon

Open

• A new line will be added at the end of the list

  • Code: enter the initial for this code

  • Description: a quick description to explain this code

  • Manual correction: Does this code allow manual correction? Select the checkbox if yes, leave it unchecked if no (default is no)

AR/AP VAT (GST) CODES

This tab is used for defining the types of VAT/GST/Tax that will be used on a debtor (account receivable) and/or creditor (account payable) entries.

To create a new AR/AP VAT (GST) code:

• Click on the icon

• A new line will be added at the end of the list

  • Code: enter the initial for this code e.g. VAT - Invoice; VAT - purchase; VAT - exempted, etc.

  • Description: a quick description to explain this code type e.g. VAT on Sales invoice; VAT Free, etc.

  • Debtor: Can this code be used on a debtor (AR) entries?

  • Creditor: Can this code be used on a creditor (AP) entries?

  • External type: leave blank (this is used for integration purposes)

  • External code: leave blank (this is used for integration purposes)

  • Manual Correction: Does this code allow manual correction? Select the checkbox if yes, leave it unchecked if no (default is no)

VAT (GST) CODE COMBINATIONS

This tab is used for defining the tax rate for each of the combinations between the VAT (GST/Tax) Activity Codes and the AR/AP VAT (GST/Tax) Codes that have been created above.

Each combination will have a separate line from the upper grid that is required to define a VAT (GST/Tax) account linking into it.

From the upper grid:

• VAT (GST) account: click the dropdown list and select the GL account that is used for VAT/GST/Tax

• Import (checkbox): will this code be used for import products/services? Select the checkbox if Yes, leave it unchecked if No

• Debit account: The G/L account that will keep the amount on the Debit side (only select if Import checkbox is selected)

• Credit account: The G/L account that will keep the amount on the Credit side (only select if Import checkbox is selected)

• Reverse charge (checkbox): Will the VAT/GST/Tax code allow reverse charge? (usually, this is used for European countries only, other countries leave this unchecked)

• Goods or services required (checkbox): Will the code be required to mark the transaction as Goods or Service? (usually, this is used for European countries only, other countries leave this unchecked)

From the sub-grid:

• Click on the icon to define the tax rate for the selected combination code above

• Valid from: The date when this VAT/GST/Tax rate will take effect

• Invoice VAT percentage: VAT/GST/Tax rate

• Deductable Share: Deductable share percentage that applies to European countries. For other countries outside Europe, enter 100%.

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