VAT Rules
VAT rules in Zoho Spend determine which tax rate is automatically applied to a purchase transaction based on the contact or item involved. VAT rules can be associated with either contacts or items:
- Contact-based rules apply when a particular contact is selected on a transaction.
- Item-based rules apply based on the contact’s location when a particular item is selected.
When both the contact and the items on a transaction have VAT rules associated with them, the contact’s rule takes precedence over the item’s rule.
Default VAT Rules
After you configure VAT, the following five VAT rules are auto-created for purchases. These default rules are system-generated and cannot be edited or deleted.
| VAT Rule Name | Transaction Type |
|---|---|
| Out of Scope - Purchases | Purchases |
| General Rate - Purchases | Purchases |
| Reduced Rate - Purchases | Purchases |
| Zero Rate - Purchases | Purchases |
| Exempt - Purchases | Purchases |
One of these rules is marked as the Default VAT Rule. This rule is applied to items on a transaction when the items or the contact don’t have any VAT rule associated with them.
View a VAT Rule
To view the details of a VAT rule, including its association type and the tax assigned for each country and state:
- Go to Settings on the left sidebar.
(OR)
Click Settings in the top right corner of the page. - Click VAT under Taxes & Compliance.
- In the VAT pane under Advanced Tax Automation, click VAT Rules.
- Hover over the VAT rule and click View at the right end of the row.
The VAT rule’s details page will open, showing the VAT Rule Name, Association Type (Item based or Contact based), Transaction Type, and the tax assigned for each country and state.
Mark a VAT Rule as Default
You can mark any of the available VAT rules as the default VAT rule for your organisation. The default rule will be applied to items on a transaction when neither the items nor the contact have a VAT rule associated with them.
To mark a VAT rule as the default:
- Go to Settings on the left sidebar.
(OR)
Click Settings in the top right corner of the page. - Click VAT under Taxes & Compliance.
- In the VAT pane under Advanced Tax Automation, click VAT Rules.
- Hover over the VAT rule you want to set as the default and click Mark as Default at the right end of the row.
The selected VAT rule will now be marked as the Default VAT Rule.