Overview

Tax groups are collections of individual taxes that are applied to customers and suppliers. Properly configuring tax groups is essential for accurate tax application on both sales and purchases. This document provides detailed instructions on how to create and manage tax groups within the system.

Configuration of Tax Groups

Purpose

Tax groups facilitate the application of multiple tax types to customers and suppliers. By grouping different taxes together, you ensure that all applicable taxes are correctly applied to each transaction.

Creating Tax Groups

1. Create Tax Group Name: Assign a name to the tax group that reflects its purpose or the specific taxes it includes.
2. Select Applicable Taxes: From the list of available taxes, select those that apply to the group. This includes checking the respective checkboxes for each tax type you want to include.
   • For example, if you wish to add a shipping tax, select the corresponding checkbox. Note that service items typically do not have shipping taxes.

Applying Tax Groups

Tax groups can be applied to both customers and suppliers, allowing for comprehensive tax management across all transactions. The same tax group can be used for both sales and purchases.

Example Scenario

When a customer buys an item and a service, different tax rates may apply. For instance:

• The item might be taxed at 5%.
• The service might be taxed at 6%.

Both taxes need to be applied to the customer’s invoice. For example:

Similarly, when a supplier is entitled to collect more than one tax from purchases, configuring them with a tax group ensures that all applicable taxes are correctly recorded.

Flexibility and Management

Country and Currency Level Flexibility

Tax groups are adaptable to both country and currency levels, allowing for configuration and application based on specific regional regulations and currency requirements.

Updating Tax Groups

Tax groups can be updated at any time to reflect changes in tax regulations or business needs. This flexibility ensures ongoing compliance and accurate tax management.

Inactivating Old Tax Groups

When a tax group is revised or no longer needed, it can be inactivated:

1. Press the Show Inactive switch to display inactive tax groups.
2. Turn the unnecessary or unused tax groups inactive as needed.

Summary

Tax groups are essential for managing multiple tax types in transactions with customers and suppliers. By configuring and applying tax groups, you ensure accurate tax application and compliance with regional regulations. The system's flexibility allows for updates and inactivation of tax groups as needed, supporting ongoing business requirements and regulatory changes.