Tax authorities and codes

A tax code is one tax at one rate: standard VAT, a zero-rated export, an exempt service. Each code belongs to a tax authority, and only applies in that authority’s country. Set up your codes before your tax groups, because a group is built from codes.

Review the starting taxes

When a subsidiary is added in Saudi Arabia, the United Arab Emirates, Egypt or Jordan, Axon Suite creates that country’s tax authority and its usual codes: the standard rate, zero-rated medicines and exports, exempt supplies, out of scope and, where the country has it, reverse charge. Check them against your registration before the first document.

1. Go to Tax ‣ Configuration ‣ Tax codes.
2. Check the Authority and Rate of each code.
3. Open each code that charges tax, and pick its Posting profile, so its tax can be booked.
4. Click Save.

The codes are shared by every subsidiary of your company. A subsidiary in another country does not use them, because a code only applies in its authority’s country.

Add a tax authority

Add an authority when you trade in a country Axon Suite did not set up for you.

1. Go to Tax ‣ Configuration ‣ Tax authorities and click New tax authority.
2. Fill in Code and Name.
3. Pick the Country the authority covers.
4. Pick the Reporting period.
5. Click Save.

Field	What it sets
Country	The country whose sales and purchases its codes apply to. A subsidiary’s documents use only codes whose authority covers the subsidiary’s own country.
Reporting period	How often the authority expects a return: Monthly, Quarterly or Annually. It is kept for reference.
Subsidiary	Restrict the authority to one subsidiary. Leave it blank to share it with all.
Active	Inactive authorities are not offered on new tax codes.

Add a tax code

1. Go to Tax ‣ Configuration ‣ Tax codes and click New tax code.
2. Fill in Code, Name and Description, for example VAT-STD, Standard VAT 15% and Standard-rated goods and services.
3. Pick the Tax authority, the Kind and the Category.
4. For a code that is not standard rated, enter the Exemption reason code.
5. Pick what the code Applies to, and enter the Jurisdiction.
6. Pick the Posting profile its tax books to.
7. Enter the Rate (%) and the date it is Effective from.
8. Click Save.

Field	What it sets
Kind	VAT, Excise or Stamp add to what the customer pays. Reverse charge is VAT you account for yourself on a purchase; it is never added to the vendor’s total.
Category	Standard rated, Zero rated, Exempt or Out of scope. It is sent with each e-invoice, and decides whether the code shows as Recoverable: standard and zero-rated codes are.
Exemption reason code	Why a zero-rated, exempt or out-of-scope supply is not taxed at the standard rate. Required for those three, refused on a standard-rated code. For Saudi e-invoicing, use the authority’s published code, such as VATEX-SA-32.
Applies to	Sales and purchases, Sales or Purchases. A code is only charged on the side of the trade it applies to.
Jurisdiction	Where within the authority the code applies, such as the country or a free zone, as a label.
Posting profile	The Tax posting profile whose accounts the tax books to. See Point each tax code at its accounts.
Rate (%)	The percentage charged: 15 is 15%.
Effective from	The first day this rate applies. A document dated earlier finds no rate in this period.
Active	Inactive codes are hidden from new documents.

Caution

Code, Subsidiary, Tax authority, Kind and Category cannot be changed after you save. To correct one, archive the code and add a new one.

Change a tax rate

When the law changes a rate, record the new rate on the same code, from the day it starts, so documents dated before that day keep the old rate.

1. Go to Tax ‣ Configuration ‣ Tax codes and open the code.
2. Enter the new Rate (%).
3. In Effective from, enter the first day of the new rate.
4. Click Save.

The old rate now ends the day before, and the code’s Rate shows the rate in force today. Every document takes the rate in force on its own date, so an invoice back-dated into the old period is still taxed at the old rate.

Example

A country raises VAT from 5% to 15% from 1 July. In June, the accountant opens VAT-STD, enters 15 in Rate (%) and 1 July in Effective from, and saves. Invoices dated 30 June charge 5%, and invoices dated 1 July or later charge 15%, with no change to any item or group.

A new rate must start after the day the current one began. While a recorded rate has not yet come into force, entering another rate and date replaces it.

Archive a code or an authority

Archive a code you no longer charge, so it stops appearing on new documents. Documents already taxed under it keep it. A code can be archived only once no tax group charges it, and an authority only once no code is filed under it. Open the record and click Archive; Restore brings it back.

Messages you may meet

Message	What to do
A tax code with this code already exists; archiving one does not release its code.	Use another Code, or restore the archived code instead.
A code that is not standard-rated states the authority’s exemption reason code.	Enter the Exemption reason code.
A standard-rated code is exempt from nothing, so it carries no exemption reason.	Clear the Exemption reason code.
A new rate starts after the one in force, never on or before it.	Enter an Effective from later than the day the current rate began.
That start date overlaps a period this code already charges.	Pick a start day after the period in force.
A tax group still charges this code; take it out of the group before archiving it.	Remove the code from its tax groups, then archive it.
Tax codes are still filed under this authority; move or archive them before archiving it.	Archive the authority’s codes first.
This code is filed under an archived tax authority; restore the authority before restoring the code.	Restore the authority, then the code.