VAT in Transactions
In Zoho Spend, you can create VAT-compliant purchase and expense transactions, including bills, purchase orders, purchase requests, and expenses, by selecting the applicable VAT treatment and VAT rate when you record the transaction.
After you enable VAT and add your vendors and items, the following VAT options will be available across transactions:
- General Rate: 16%
- Reduced Rate: 8%
- Zero Rate: 0%
- VAT Exempt
- Out of Scope
The specific VAT options available on a transaction depend on the VAT Treatment that applies to it. For purchase transactions (bills, purchase orders, and purchase requests), the VAT Treatment is read from the vendor’s record. For expenses, the employee selects the VAT Treatment on the expense itself.
VAT Treatments
A VAT Treatment describes the supplier of the goods or services in the transaction:
| VAT Treatment | When to Use |
|---|---|
| VAT Registered | The supplier is located in Kenya and is registered for VAT. |
| Non VAT Registered | The supplier is located in Kenya but is not registered for VAT. |
| Non Kenya | The supplier is located outside Kenya. |
The VAT options available on the transaction change based on the VAT Treatment that applies.
VAT in Purchase Transactions
When you create a bill, purchase order, or purchase request for a vendor, the VAT options available depend on the vendor’s VAT Treatment:
| VAT Treatment | Available VAT Options |
|---|---|
| VAT Registered | General Rate, Reduced Rate, Zero Rate, VAT Exempt |
| Non VAT Registered | Out of Scope |
| Non Kenya | Out of Scope, General Rate, Reduced Rate, Zero Rate |
When the vendor’s VAT Treatment is Non VAT Registered, the supply is Out of Scope of VAT and no VAT rate can be applied. When the vendor’s VAT Treatment is Non Kenya, you can apply the applicable VAT rate on imports of goods or services, depending on the documentation associated with the transaction.
VAT in Expenses
When an employee adds an expense, they select a VAT Treatment for the expense based on the supplier they purchased from. The VAT field then behaves as follows:
| VAT Treatment | VAT Field Behaviour |
|---|---|
| VAT Registered | The VAT dropdown lets the employee choose VAT Exempt or any active VAT rate (such as General Rate, Reduced Rate, or Zero Rate). |
| Non VAT Registered | The VAT field is automatically set to Out of Scope and cannot be edited. |
| Non Kenya | The VAT field is automatically set to Out of Scope and cannot be edited. |
The selected VAT details are recorded against the expense and carried into any expense report that includes it.