Tax Accounting Overview

NetSuite helps you track, calculate, and pay different taxes based on the sale or purchase of products and services. Read the following tax topics to see how to enable and use NetSuite's tax features.

Setting Up Tax Features

To see what tax features you can enable, read these topics:

Enabling and Setting Up Taxation Features – Describes what you must set up in your account to enable NetSuite to track taxes.
Working with Tax Periods – Describes how to set up and use tax periods.
Advanced Taxes – Describes the advanced taxes feature and how to enable it in your NetSuite account.
Managing Tax Codes – Describes how to set up tax codes, tax groups, tax types, tax control accounts. For most countries, NetSuite provides the basic tax setup when you get an account or set up a nexus. You'll still need to set up those tax items, add details, and check they're correct.
EU One Stop Shop (OSS) – Describes how you can charge the appropriate tax on B2C sales of digital services based on the VAT rate of the customer’s EU member state.
Taxation Features Provided by SuiteApps from NetSuite – provides links to information about International Tax Reports, Tax Audit Files, and Withholding Tax SuiteApps, and how to enable them

VAT/GST Support on Intercompany Journal Entries

If your business has multiple subsidiaries, use Intercompany Journal Entries to record the tax impact of transactions between them. You don't have to manually post individual entries for each subsidiary.

You can transfer an item or asset between subsidiaries, even if they have different nexuses or tax rates. Intercompany journal entries post to both the source and destination subsidiaries in a single transaction, and NetSuite automatically posts the tax values to the right accounts.

For information about intercompany journal entries, see Making Intercompany Journal Entries.

Tax Amounts on Transactions

Changing the shipping address— Changing the shipping address on a transaction can affect the tax total and reporting. Depending on your tax setup, changing the shipping address might change the nexus and tax codes, too.
Using multiple shipping routes — If you want to use multiple shipping routes on a transaction, see Multiple Shipping Routes.
Changing a tax code — You can change the tax code on a transaction line. To see how tax is recalculated when the tax code changed when you do this, check Recalculating Line Item Amounts When the Tax Code Changes.

Tax amount rounding —If an item quantity has decimals (like in software sales), you might notice the tax amount doesn't round up as expected. This is not a defect.

Rounding differences happen because the tax amount comes from the rounded amount and rounded gross amount.

Here's how the system calculates gross and tax amounts in this case:

amount = round(quantity * rate)

gross_amount = round(quantity * rate * tax_rate)

tax_amount = gross_amount - amount = round(quantity * rate * tax_rate) - round(quantity * rate)

In other words, gross_amount = amount + tax_amount.

One consequence is that when the amount increases, the gross never decreases. The tax amount can decrease or stay the same, as you can see below. This ensures you can get any gross amount value, which matters more than the tax amount alone.

Example

Here's an example using a 15% tax rate:

Quantity	Rate	Amount	Rounded	Gross Amount	Rounded	Tax Amount
1.33331	150.0	199.9965	200.00	229.995975	230.00	30.00
1.33330	150.0	199.9950	200.00	229.994250	229.99	29.99
1.33329	150.0	199.9935	199.99	229.992525	229.99	30.00

Taxes on Discounts

For information about applying taxes on discounts on your transactions, check these topics:

Nondeductible Input Tax

For information about nondeductible input tax and recording it in the general ledger, see these topics:

Recording Nondeductible Input Tax
- Setting Up Nondeductible Input Tax
- Applying Nondeductible Input Tax on Transactions

Tax Reporting

NetSuite offers tax reporting for VAT, GST, and withholding tax. For information, check these topics:

U.S. Tax Reports – for information about US sales tax reports
Viewing Canadian Tax Reports – for information about Canadian GST/HST and PST reports
Viewing Australian Goods and Services Tax (GST) Reports – for information about Australian GST reports
United Kingdom Tax Topics – for information about the UK VAT 100 tax return and online submission of tax reports to Her Majesty's Revenue and Customs (HMRC)
VAT and GST Reporting – for information about country-specific VAT/GST reports, EU Sales Lists, Intrastat Reports, and saved reports for purchases and sales by tax code
Tax Audit Files – for information about audit files that you can submit to tax authorities
Withholding Tax – for information about tracking and reporting withholding tax

Paying Tax Liabilities

NetSuite can also help you pay tax liabilities. For information about posting tax journal entries and preparing tax payments, read these topics:

Country-specific Tax Topics

For information about general international and country-specific tax topics, read the following:

General Notices