1.     Introduction:

This option is used to set up and maintain details about the Tax Rates used by your company.

These will be used extensively by the Sales, Purchases, General Ledger, and Reporting options.

A default Tax Code can be associated with all your products during set-up so that the associated code will be used as the default in transactions using that Product/Item.

You can also associate a specific Tax Code with Customer and Suppliers so that code is used in all transactions with that Customer/Supplier regardless of the Product.

2.     Accessing and screen layout:

Please go to Setup > Codes Maintenance > Taxes;

A list of existing rates is displayed in the standard listing format. These rates have been set up as part of the standard implementation but you can modify them as required and add new ones.

A sample tax rates screen is shown below with each Column explained

Code - This is the unique code for each Tax (Vat) rate you set up. 

Description - This field contains a description of the rate. Enter a meaningful description such as UK Standard Rate or 'EU Purchases at 0%’.

Rate - This stores the appropriate rate in decimal format for the code that you are setting up.  So for 20%, you would enter 20.

Excl. - Check this box if you want any tax transactions associated with this tax code to be excluded from the Tax return.

Standard - This is the standard tax rate for the company. There must only be one.

Withholding - Used on the purchase transactions if this tax code is to be used for withholding tax this box should be checked.

Updated - This is the date on which the rate was entered or last changed and it is maintained by the system.

3.     Editing / Adding a VAT (Tax) rate:

Click 'Edit' beside a record to open up the edit screen and edit the record.

if you wish to Add a new tax rate Click the "Add New Tax" rate button.

The screen will be shown with an existing tax rate. If you are adding a new tax rate please populate the fields as you require.

Tax Code - This is the unique code for each Tax (Vat) rate you set up. 

Description - Insert a brief description here.

Rate - Insert the rate to be used for this tax code.

Withholding - Click the withholding flag if you wish to treat this tax code as a withholding rate to be used during purchases.

Withholding GL account - Choose the GL account that the Withholding Tax should be posted to.

Standard Tax rate - Click the standard flag if you wish to treat this tax code as the standard rate to be used in Cash Receipts based tax reporting.

Exclude - Tick the box should the VAT Rate be excluded from appearing in the VAT Return.

EU Trade - Click the EU Trade flag if you wish to treat this tax code as EU trade for reporting purposes.  

Partial Reclaimable and Partial Reclaim Rate (%) - Refer to the Article How do I Partially Recover my Input Tax? for details.  

Goods / Services - Select 'Goods' option if you need the Tax code to be associated with selling/ purchasing goods. This will be reflected in your VAT return reporting, i.e. Boxes E1 and E2.    

Select 'Services' option if you need the Tax code to be associated with selling/ purchasing services. This will be reflected in your VAT return reporting, i.e. Boxes ES1 and ES2.

Every supplier, customer and stock code should have an appropriate tax code assigned to their account. This will allow the system to calculate the relevant tax that is applicable on invoices to customers and invoices from vendors.