Tax codes
Goal
Maintain tax definitions used on sales and purchase lines. One definition can apply to Sales only, Purchases only, or Both.
Open
Accounting → Tax & FX → Tax codes.
Shared definition vs accounting treatment
- Shared: code, name, inclusive pricing flag, rate history, and component calculation settings (rates, compounding, withholding / reverse charge).
- Per transaction: sales documents post output tax (typically tax payable); purchase documents post input tax (typically tax receivable), including recoverability and optional component account overrides.
- A Both tax is still one definition — it is not a requirement to create separate sales and purchase codes for ordinary VAT. Separate codes remain available when you truly need different rates or rules.
Steps
- Create or edit a tax code and choose applicability: Sales only, Purchases only, or Both.
- Add effective-dated rates (and optional components). For Both, you may set separate sales/purchase account role and recoverability overrides on a component; leave them blank to use the defaults for that transaction side.
- On customer invoices and other sales documents, select Sales only or Both codes. On supplier bills and other purchase documents, select Purchases only or Both codes. The API rejects incompatible selections.
Example
Create one VAT code such as VAT16 with applicability Both, a 16% rate, and no special overrides. Use the same code on a customer invoice (books tax payable) and on a supplier bill (books tax receivable). Rate changes stay in one place; posted documents keep their frozen tax snapshots.