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Tax codes ​

Tax codes hold the tax rates used on supplier and customer invoices, such as standard-rated VAT at 16%, zero-rated VAT, and withholding tax. The VAT return adds up invoices by tax code, so the codes must be right before you file.

Open Finance & ERP › General ledger › Tax codes (a configuration page).

The tax codes list with VAT16, VAT0, WHT15 and an inactive TOT5 code

Add a tax code ​

  1. Click New tax code.

  2. Enter:

    • Code: a short code, for example VAT16. It can't be changed later.
    • Name: for example VAT standard rate.
    • Tax type: VAT for value added tax. Use other types, such as WHT or TOT, for other taxes.
    • Rate (%): the rate as a percentage. Enter 16 for 16% and 0 for zero-rated.
    • Effective from: the date the rate starts.
    • Effective to (optional): the last date it applies. Leave blank if there's no end date.

  3. Leave Active on and click Create.

    The New tax code form for a VAT exempt code

Enter the rate as a percentage

Type 16 for 16%, not 0.16. The list then shows 16%.

When a rate changes ​

Don't edit the existing code's rate, because that would change how past invoices are reported. Instead:

  1. Edit the old code and set Effective to to the last day of the old rate.
  2. Add a new code with the new rate and an Effective from date of the first day of the new rate.

Tips and common mistakes ​

  • Tax type spelled differently. Only codes with tax type VAT are counted on the VAT return. Value Added Tax or V.A.T. won't be.
  • Invoices without a tax code. The VAT return lists them separately as No tax code — classify before filing. Fix those invoices before you submit your return.
  • Deleting old codes. Make a code inactive instead of deleting it. Invoices and journals that used it may break.

FAQs ​

What's the difference between zero-rated and exempt?

Both carry 0% VAT. Zero-rated supplies are taxable at 0%, so they're still reported as taxable on the return. Exempt supplies aren't taxable at all. Set up a separate code for each so your return shows them correctly. Check with your tax adviser which applies to your goods or services.

How do I know the VAT return matches my books?

The VAT return compares its output and input tax with the VAT movements in your general ledger, and tells you whether they agree. See Financial reports › VAT return.