Introduction
VAT (Value Added Tax) settings in ProdSys allow businesses to manage and configure VAT rates applicable to their sales, purchases, and services. Correct VAT management is essential for ensuring compliance with tax regulations, accurately calculating VAT on invoices, and ensuring proper financial reporting. This guide provides an overview of the VAT settings in ProdSys and explains how to configure them effectively.
Purpose of VAT Settings
The primary goal of VAT settings is to ensure that the correct tax rates are applied to transactions based on the type of product or service, the customer’s location, and any applicable tax exemptions. This helps businesses automate tax calculations and remain compliant with national and international tax laws. Vat code on Order Lines are controlled by the financial account selected for the line.
Accessing VAT Settings in ProdSys
Login: Start by logging into your ProdSys account using your credentials.
Navigate to VAT Settings: From the main menu, go to System > Settings > VAT. Here you will find a list of all the VAT rates that are configured in the system, as shown in the image.
Key Features of the VAT Settings Page
Name: This column displays the name of each VAT rate, such as "Export" or "VAT 25%." The name provides an easy reference for understanding the type of VAT being applied.
Rate: The percentage rate applied for VAT. For example, "25%" is the VAT rate for most goods and services in many countries. The system automatically calculates the VAT based on this percentage when creating invoices or other financial documents.
External Code: The external code links the VAT rate to external financial systems or accounting software. This ensures that data can be seamlessly transferred and processed in compliance with external systems’ requirements.
Default: The default checkbox allows you to select which VAT rate should be automatically applied to new transactions, unless otherwise specified. Setting a default VAT rate can save time and reduce errors by ensuring the correct tax rate is applied to most transactions.
How to Configure VAT Settings
Adding a New VAT Rate:
Click on the "+" button in the upper-left corner of the page to create a new VAT rate.
Enter the Name for the VAT rate, such as "Sale 25% VAT ."
Set the Rate in percentage, for example, "25%."
Provide the External Code if applicable. This code is required if the VAT rate needs to be integrated with an external accounting system.
Mark the Default checkbox if you want this VAT rate to be the default for future transactions.
Click "Save" to add the new VAT rate.
Editing an Existing VAT Rate:
To modify an existing VAT rate, click on the three dots next to the VAT entry you wish to edit.
This opens the editing menu where you can update the Name, Rate, or External Code as needed.
You can also change which VAT rate is set as the Default by toggling the checkbox.
Deleting a VAT Rate:
If a VAT rate is no longer needed, you can delete it by selecting the three dots next to the rate and choosing the delete option.
Be cautious when deleting VAT rates as they may be linked to past transactions or orders.
Types of VAT Rates
Common VAT rates used in ProdSys include:
Export (0%): Typically used for sales made outside the domestic country, where goods or services are exempt from local VAT.
VAT 25%: A common VAT rate applied to most goods and services in many countries.
VAT 15%: Used for reduced VAT rates, such as those applied to certain essential goods or services.
Export 0%: VAT exemption for specific regions or categories within the country, such as non-profit organizations or government entities.
Best Practices for Managing VAT Rates
Regularly Review VAT Rates: Make sure that your VAT rates reflect current tax regulations in the countries you operate in. Tax laws can change, so keeping these rates updated ensures compliance.
Use External Codes for Integration: If your business uses external accounting systems, ensure that the External Code is properly configured for seamless integration.
Set Default VAT Rates: Choose a default VAT rate that will apply to most transactions to reduce manual selection and speed up order processing.
Conclusion
The VAT settings feature in ProdSys is a vital tool for managing tax compliance and ensuring that transactions are accurately taxed. By configuring VAT rates correctly and regularly reviewing them, businesses can streamline their invoicing processes, maintain compliance with tax laws, and ensure smooth integration with external accounting systems.