VAT Setup for Transaction Types Tutorials
The default VAT Type is set on each Transaction Type, including whether the VAT is treated as Input or Output. The default can be changed when a transaction is entered (for example, if the supplier is not registered for VAT). How VAT Types work is explained on VAT Types Interface.
💡These tutorials explain how to set VAT defaults for Transaction Types: imported VAT settings, default VAT Type, input/output and inclusive/exclusive.
How to Import VAT Settings When Creating Transaction Types
- Navigate to Transaction Types (Main Menu > Setup > Transaction Types).
- Double-click the Transaction Type you want to edit.
- Click Settings (tab).
- Click Add/Edit (button) on the top row.
- Click Settings (button) next to Add.
- Enter VAT in the search box of the popup.
- Click the VAT setting you need, or select all the VAT settings with Ctrl + left-click.
- Click Add/Update (button).
How to Select a Default VAT Type
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- For Transaction Types where VAT applies, select the Standard Rate VAT Type as the default (e.g. Bank Payments, Customer Invoices, Supplier Invoices).
- For Transaction Types where VAT does not apply, select No VAT (e.g. Supplier Payments, Customer Receipts).
- You can change the VAT Type when recording a transaction, so this selection needs to cover only most of the transactions, not all of them.
- Navigate to Transaction Types (Main Menu > Setup > Transaction Types).
- Double-click the Transaction Type you want to edit.
- Click Settings (tab).
- Click Add/Edit (button) on the top row.
- Accounting > Default – VAT Type = Select a default VAT Type from the dropdown list in the Value column.
- Click Save (button).
How to Select a Default Input / Output Option
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- Categories explained:
- Input + Standard Rate: Qualifying* expenses, inventory and purchases.
- Input – Standard Rate: Goods returned to suppliers if you claimed VAT on the original transaction and trade discounts received (amounts deducted on supplier invoices).
- Input + Capital Goods: Qualifying* asset purchases.
- Output + Standard Rate: Sales and services rendered to local customers.
- Output – Standard Rate: Goods your customers returned that reduce your sales and trade discounts granted (discounts reflected on customer invoices).
*To qualify, you must have been charged VAT and you must have the required paperwork (Tax Invoice) as proof. You must also be allowed to claim VAT back for that type of expense or asset purchase.
- Navigate to Transaction Types (Main Menu > Setup > Transaction Types).
- Double-click the Transaction Type you want to edit.
- Click Settings (tab).
- Click Add/Edit (button) on the top row.
- Accounting > Default – VAT Category (Input/Output) = Select an option from the dropdown list in the Value column:
- N/A (e.g. Quotations)
- Output + (e.g. Customer Invoices)
- Output – (e.g. Customer Credit Notes)
- Input + (e.g. Supplier Invoices)
- Input – (e.g. Supplier Debit Notes)
- Click Save (button).
How to Select a Default VAT Inclusive / Exclusive Option
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- Typically, customer and supplier invoices exclude VAT because cost prices are VAT exclusive.
- In contrast, it is easier to record VAT-inclusive amounts for expenses such as rent and insurance.
- Navigate to Transaction Types (Main Menu > Setup > Transaction Types).
- Double-click the Transaction Type you want to edit.
- Click Settings (tab).
- Click Add/Edit (button) on the top row.
- Accounting > Default – Price includes VAT = Check the box in the Value column for VAT-inclusive prices, or uncheck it for VAT-exclusive prices.
- If checked, the entered price is treated as VAT inclusive, and VAT is deducted to determine the VAT-exclusive price.
- If unchecked, the entered price is treated as VAT exclusive, and VAT is added to determine the VAT-inclusive price.
- Click Save (button).