Zero rated tax
elyas786
Member Posts: 4
I have set a tax called Reverse-Charge as zero (0%) in Sales Taxes. But when we try to select this as a tax on transactions it does not come up as an option to select.
We would like to use this as workaround so that we can use it for the Reverse Charge mechanism whereby it will give us a total amount on the Sales Tax Report and from that we can quickly (manually) charge ourselves on our tax return for these.
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Hi, @elyas786.
You can't do this on the transactions page (I'm investigating why), but you can record invoices and bills with a 0% tax.
What kind of transactions would need this tax? If you record them through invoices or bills, depending on the nature of the transaction, you'll be able to see that total on your Sales Tax report, just like you're trying to do.
Okay but what if we want to add a purchase without an invoice/bill?
It's long winded if we have to add an invoice or bill first before we are able to mark it as paid....
We wanted to have this for two reasons:
Some of the items we buy or sell may have the slab of zero-rate tax. Although it is 0% we still need to show the total value of such items on our Tax Return.
We also wanted to use this as a work-around for the fact that WAVE does not have any options for the Reverse-Charge tax mechanism which we need for services/products that we import from abroad. That way we would call it "Reverse-Charge VAT" and be able to identify those on our Sales Tax report that way. On the tax return we "charge ourselves" for the VAT in this case so this would allow us to see the actual total value of items and apply the VAT manually on our Tax return.
Hi, @elyas786.
The only way to link a 0% tax to a transaction is through either bills or invoices, unfortunately.
As an alternative, you might just want to create a separate expense or income accounts for transactions would be affected by this. You could keep track of the total balance using the Account Transactions report for that account.
I guess we'll just have to use bills or invoices for now and then add payment - that would be okay for now I suppose.
Hi @elyas786.
I can't promise anything, but I'll make sure bring up reverse-charge taxes with our developers. I can't guarantee that we'll be building this feature, but I can tell you for sure that we do pay attention to the needs of our users and listen to their feedback. Thanks for bringing this up!