Setting Up VAT for GCC States
Tax codes determine how much tax is charged on each transaction line item. For NetSuite to calculate correct values on transaction records and tax reports, make sure that the tax codes for the GCC States are set up correctly.
For more information on tax codes, see Tax Code Properties and Creating Tax Codes.
Tax Code Provisioning for GCC States
To benefit from the automatic tax code provisioning feature, you must first install the International Tax Reports SuiteApp (Bundle ID: 43003) in your account before you create subsidiaries.
For more information on how to install the International Tax Reports SuiteApp, see Installing and Setting Up International Tax Reports.
If the GCC subsidiary and nexus have already been created before the SuiteApp is installed, you can create the GCC tax codes by running the Create Tax Code SS script.
To create tax codes for GCC States using a script:
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Go to Customization > Scripting > Script Deployments.
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On the Script Deployments page, click the Edit link next to the Create Tax Code SS (customdeploy_create_taxcodes_ss) script.
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On the Parameters subtab, select a GCC State in the Tax Code Nexus field.
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Click Save and Execute in the Save button dropdown menu.
To run the Create Tax Code SS script, you need to have an Administrator role.
If you already have created tax codes in the GCC subsidiary, the script will check for duplicates, and will not provision or overwrite the existing tax code.
After performing these steps, the tax codes for the GCC States are automatically created. To check and view the GCC States tax codes, go to Setup > Accounting > Tax Codes.
Tax Code Table for GCC States
You can rename the tax codes. Tax reports identify transactions by looking at the tax code properties, not the tax code names.
On the Tax Code page, check the boxes of the properties that apply to the tax code.
If the tax code is to be used for Intra GCC trading, you must check the GCC Member State box on the Tax Code page
For more information about tax code properties, see Tax Code Properties.
Tax Code Table for Saudi Arabia:
|
Tax Code |
Description |
Property |
Rate |
Notional Rate |
Available On |
|---|---|---|---|---|---|
|
S-KSA |
Standard Rate -Domestic |
|
5% |
|
Both (Sales and Purchases) |
|
Z-KSA |
Zero Rate -Domestic |
|
0% |
|
Both (Sales and Purchases) |
|
Z-S GCC |
Sales to registered customers in GCC states |
Custom Check box -GCC State Default to checked |
0% |
|
Sales |
|
EX-KSA |
Zero Rate-Exports |
Exports |
0% |
|
Sales |
|
IMZ-KSA |
Zero Rate -Imports (Goods and services) |
Imports Reverse Charge Code |
0% |
5% |
Purchases |
|
IMG-KSA |
Standard Rate -Imports (Goods) |
Imports |
5% |
|
Purchases |
|
IMS-KSA |
Standard Rate -Imports (Services) |
Reverse Charge Code Applies to Service Items Imports |
0% |
5% |
Purchases |
|
RCS-KSA |
Reverse Charge -Sales |
Reverse Charge Code |
0% |
|
Sales |
|
RCP-KSA |
Reverse Charge -Purchases |
Reverse Charge Code Applies to Service Items |
0% |
5% |
Purchases |
|
X-KSA |
Exempt |
Exempt |
|
|
Both (Sales and Purchases) |
|
No_Tax-KSA |
Out of Scope |
Exclude from VAT Reports |
Blank |
|
|
Tax Code Table for United Arab Emirates:
|
Tax Code |
Description |
Property |
Rate |
Notional Rate |
Available On |
|---|---|---|---|---|---|
|
S-UAE |
Standard Rate -Domestic |
|
5% |
|
Both (Sales and Purchases) |
|
Z-UAE |
Zero Rate -Domestic |
|
0% |
|
Both (Sales and Purchases) |
|
X-UAE |
Exempt |
|
|
|
Both (Sales and Purchases) |
|
ZS-GCC |
Sales to tax registered customers in GCC states |
GCC State -Checked by default Reverse Charge Code -Checked |
0% |
5% |
Sales |
|
EX-UAE |
Zero Rate -Exports |
Exports |
0% |
|
Sales |
|
IMZ-UAE |
Zero Rate -Imports (Goods and services) |
Imports Reverse Charge Code |
0% |
5% |
Purchases |
|
IMG-UAE |
Standard Rate - Imports (Goods) |
Imports |
5% |
|
Purchases |
|
IMS-UAE |
Standard Rate -Imports (Services) |
Imports Reverse Charge Code Applies to Service items |
0% |
5% |
Purchases |
|
RCS-UAE |
Reverse Charge -Sales |
Reverse Charge |
0% |
|
Sales |
|
RCP-UAE |
Reverse Charge -Purchases |
Reverse Charge |
0% |
5% |
Purchases |
|
No_Tax-UAE |
Out of Scope |
Exclude from VAT Reports |
Blank |
|
|
For more information about Setting Tax Preferences and Setting Up Tax Periods, see Setting Tax Preferences and Setting Up Tax Periods.
Setting Default Tax Items on Customer Records
After you have set up your tax codes, you can set a default tax code on a customer record.
For example, you can set a default tax code that defines a customer as VAT Exempt if they provide financial services, life insurance, or if they are based in a Designated Free Tax Zone. Charities and nonprofit organizations are usually exempt from tax.
This default tax code will be automatically filled on all transaction forms related to this customer. However, you can override this on the transaction form.
Selecting anything other than the default ‘blank' selection will override the tax engine lookup for that customer on transactions and will always use the selected tax code.
To set tax items on customer records:
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Go to Lists > Relationships > Customers.
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Click the Edit link of the customer record, or click New to create a new customer.
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Click the Financial subtab.
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In the Tax Item field, select a default tax code for this customer.
-
Click Save.
Setting Up Tax Agencies as Vendors
In most countries, businesses are required to collect tax from sales. Then, the collected tax must be paid to the tax authority on behalf of the customers. Default tax agencies are automatically set up by the system when you create a subsidiary or nexus, but you must edit the tax agency vendor record to provide details such as address information and change the name of the tax agency.
In a OneWorld account, multiple subsidiaries can pay taxes to the same tax agency. When you add a subsidiary, and its nexus is the same as that of an existing subsidiary, NetSuite creates a copy of the preferred tax vendor for that nexus to associate it with the new subsidiary. This copy (known as a child or shadow vendor) is necessary because tax agency vendors cannot be shared between subsidiaries. However, you can share non tax agency vendors with multiple subsidiaries. For more information, see Assigning Subsidiaries to a Vendor.
The child tax vendors that NetSuite creates when subsidiaries share a tax nexus are hidden, and therefore cannot be used directly in transactions.
Accounts associated with tax agency vendors are tax control accounts. If you want to attach an A/P account to a vendor, make sure the vendor type is not tax agency.
Tax agency vendors are not available for selection in the Name column when you create a journal entry. If you use tax codes in transactions, NetSuite posts tax to the appropriate tax agency associated with the subsidiary.
Do not use Write Check to pay a tax agency. If you want to pay liabilities to a tax agency, you must go to Transactions > Bank > Pay Tax Liability, where you can select the appropriate tax agency in the Payee field.
An administrator can create a vendor record for a tax agency if necessary.
To set up a tax agency as a vendor:
-
Go to Lists > Relationships > Vendors > New.
-
On the Vendor page, specify the governmental authority to which you must pay tax. For example, in the Vendor field, you can enter the name of the state or provincial tax agency where your business is located.
-
In the Category field on the Info subtab, be sure to select Tax Agency.
-
Enter any additional information as needed.
-
Click Save.
You can select this tax agency when you set up tax preferences and tax codes.
Creating Tax Schedules
Tax schedules are required in accounts with the Advanced Taxes feature enabled. Tax schedules determine how NetSuite calculates taxes for items in each nexus. The Tax Schedule field on an item record is located on the Accounting subtab, under Tax/Tariff Information.
For most countries, goods and services are charged at the same rate across the country, so there is no need for tax schedules to be set up.
In accounts without Advanced Taxes enabled, the tax treatment for an item is determined by the tax code assigned to it.
To create a tax schedule:
-
Go to Setup > Accounting > Taxes > Tax Schedules > New.
-
In the Product field, enter the name of the tax schedule that you want to associate with a product or item.
When you create or edit item records, you can select the name of the tax schedule on the Accounting subtab of standard item forms.
-
Enter a description for this tax schedule.
-
Click the Non US Nexuses subtab, and select the sales and purchase tax codes to be used when charging customers with shipping addresses in those countries.
Non US Nexuses Subtab
-
Click Save.
You can create or edit an item record and choose the tax schedule that applies to the item. For more information about item records, see Using Item Records.