Upon creating an invoice, credit note, bill or estimate and for every object charged on it you can determine VAT rates (see VAT rates examples below):
- Standard 20%: Most goods and services
- Reduced rate 5%: Some goods and services, e.g. children car seats and home energy
- Zero rate 0%: Zero-rated goods and services, e.g. most food and children’s clothes
You can define new taxes, by providing their rates and a name/description.
From the main menu select: Settings -> Taxes -> Add
There, you will be able to create one of the following tax types:
- VAT/GST (depending on our region)
- Withholding tax
- Simple tax (other taxes)
In the example below, a reduced VAT tax is being created. The moment 'VAT' is selected in the "Type" field, the system knows that the amount calculated as tax will be added in the final amount of the product/invoice. Therefore, "+" is the choice in the operand. All you need to do is to type-in the related percentage.
>> The operand field essentially suggests either a (value added) tax or a deduction.
Therefore, When a withholding tax is being created, minus "-" will appear in the related field. Τo complete the tax, you may simply type-in the percentage.
>> For a tax that is neither a value added nor withholding, you need to specify the operand symbol to so it is added or deducted in your total amount depending.
>> Fixed taxes are calculated as a flat amount rather then percentage. If the amount needs to be calculated following the number of products/items in each item line, you simply need to tick the related box, as shown below:
After saving, the new tax will be available upon issuing a new document, or while editing a draft.
The VAT's percentage can have up to 6 decimals to enable users from countries that need as much.
Below the title field you will notice that there is a “Translations” field. In case you want to issue documents in a foreign language, you can edit the tax and save its translation.
To create a document with VAT exemption, you simply do not select a tax for your products when creating it. Once the document has been saved, the system will display a "VAT Exempt" indication in the VAT column, provided that the “VAT” column is selected at the “Item” options table.
For data integrity purposes, if a certain tax has already been used for at least one commercial document, Elorus will not allow editing its rate. Furthermore, you cannot delete taxes from the system; you can only archive them. To put it simply, when a tax has been disabled, it cannot be used in new invoices but remains unchanged in already issued ones.
Suppose that, based on legislation, a VAT (GST) rate is decreased from 20% to 17%. The procedure you have to follow is:
Visit the taxes page and deactivate the 20% VAT rate. Next, create a new tax, which will also be a VAT and set its rate at 17%. Therefore, by the end of this process, your new documents will have a 17% VAT. This can help with avoiding errors, since the old tax is no longer active.