This screen enables you to configure tax codes in your new database. These enable you to correctly record sales/GST/VAT type taxes. The fields are as follows:
- Tax code and Tax name: This is the principle tax code used in your database. Many businesses would call both the code and name “GST” or “VAT”.
- % of rate of tax: For non-us businesses, set this to your home country’s rate of GST and VAT. For US businesses, set this to your principle location’s rate of sales tax.
- Tax free code and Tax free name: For most businesses, this will be zero rated or exempt from GST/VAT supplies. For US customers, it will be sales tax exempt items. You may choose to set up an additional tax code later for sales to customers with sales tax exemption certificates.
- Tax N/A code and Tax N/A name: Many transaction entries in your database will not be part of sales or GST/VAT taxes. Internal transfers and items that are not part of the scope of these taxes. These items should use a N/A code rather than a tax free code. Other examples of N/A entries include account payments on existing sales/purchases invoices. The invoice itself may have had tax items on it, but related payments use the N/A code.
Tax codes and names can be changed later through Uwazi’s Tax setup screens. For some businesses, you may need to setup additional tax codes.
- Sales to different countries where you collect GST/VAT for these countries. Different countries have different rates, and obligations on businesses to collect these taxes for sales to destination countries is increasing.
- US businesses selling to places away from their principle rate of business. Where your business has a sales tax “nexus” with a location, this may mean collecting sales tax for sales to that location. A nexus could exist if you have a contractor that is deemed by the Department of Labor to be an employee. Where situations like this apply to you, you may wish to create additional tax codes to collect and manage taxes for these locations.