Specifying Deductible Rate on Tax Code Records
On Tax Code records (Setup > Accounting > Taxes >Tax Codes), you can specify the deductible rate in the Tax Deductible field, where you can select either 100%, 80%, or 50% deductible rate. When you use or apply the tax code to a transaction, the deductible rate you selected will be the percentage of tax exempt that your company can claim.
For example, a vendor bill or vendor credit will contain these details:
Gross Amount: ¥10,000
Applied Tax Code: Standard Rate 10%
Selected Deductible Rate on Tax Code: 100%
The tax is computed as follows:
(10,000/110%) x 10% x 100% = 909, this is the tax amount, to be deducted from the gross amount,
10,000 - 909 = 9091, this is the item amount.