## Zoho Inventory Documentation Index

Access the complete documentation index at:
https://www.zoho.com/en-ng/inventory/llms.txt

Use this file to discover all available documentation pages before proceeding.

# Taxes

Every business must pay taxes based on where it operates and what type of business it is. Zoho Inventory helps you manage all your taxes in one place. The app includes taxes specific to your country, different tax rates for various products and services, and tax groups that you can set up to meet your business requirements.

## Enable VAT

To enable VAT in your organization:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   In the _VAT Settings_ page, fill in the following fields:
*   **VAT Registration Number Label:** Select **TIN** as the label that appears next to your VAT registration number on your transactions.
*   **VAT Registration Number:** Enter the VAT registration number issued to you by FIRS.
*   **VAT Registration Date:** Enter the date when FIRS registered your business for VAT.
*   Click **Save**. ![VAT Settings](/en-ng/inventory/help/images/settings/vat-settings.png)

Your VAT settings will be configured.

## VAT Rates

### Default VAT Rates

The following VAT rates will be available by default in the Nigeria edition of Zoho Inventory. You cannot delete or mark these rates as **Inactive**.

**VAT Name**

**Rate(%)**

Standard Rate \[SR\]

7.5

Zero Rate \[ZR\]

0

### How VAT Rates are Auto-Applied to Items in a Transaction

A tax rate is applied automatically to an item in a transaction using two key details:

*   **Item’s Tax Category:** When you create an item, you select its tax category (for example, hardware, services, and more). Based on the selected tax category, the VAT rate that’s applicable to the item is determined.
*   **Customer’s Country/Region in Billing Address:** You select the customer’s country or region in the billing address. This helps identify whether the transaction is local or overseas and ensures the correct VAT rate is applied (e.g., **0%** or **7.5%**).

Based on these details, the correct VAT rate is automatically applied to each item in a transaction.

## VAT Operations

### Create VAT Rates

Apart from the list of default rates, you can create VAT rates to meet your business requirements. Here’s how:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Click **\+ New VAT** in the top right corner.
*   In the _New VAT_ page, fill in the following fields:
*   **VAT Name:** Enter a name for the VAT rate.
*   **Rate (%):** Enter a percentage for the VAT rate.
*   Click **Save**.

The VAT rate will be created.

### Create VAT Rates in Bulk

You can also create VAT rates in bulk. Here’s how:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Click the dropdown next to **\+ New VAT** in the top right corner, and select **Create VAT Rates in Bulk**.
*   In the next page, fill in the required details.
*   Click **Save**.

The VAT rates will be created in bulk.

### View Details of a VAT Rate

You can only view the details of default tax rates in Zoho Inventory. Here’s how:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Hover over the required default VAT rate, click the dropdown next to it, and select **View**.

The details of the VAT rate will be displayed.

### View Associated Records

You can view the records (like sales and purchase transactions, tax groups, and more) for the VAT rates you created manually. Here’s how:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Hover over the required VAT rate, click the dropdown next to it, and select **View Associated Records**.

The list of records will appear in the right pane.

### Edit VAT Rates

You can edit a VAT rate you’ve created to update it’s details. To do so:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Hover over the required VAT rate, click the dropdown next to it, and select **Edit**.
*   In the _Edit VAT Rate_ page, make the required changes.
*   Click **Save**.

The VAT rate will be updated.

### Mark VAT Rates as Inactive

If you don’t want to use a VAT rate in your transactions, but don’t want to delete it, you can mark it as Inactive. Here’s how:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Hover over the required VAT rate, click the dropdown next to it, and select **Mark as Inactive**.

The VAT rate will be marked as **Inactive**. To use it again in your organization, follow the same steps and mark it as **Active** again.

### Delete VAT Rates

**Prerequisite:** Before deleting VAT rates in Zoho Inventory, you must delete the records associated with the VAT rate.

If you don’t want to use a VAT rate in your organization, you can delete the VAT rates. To do so:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Rates** in the left pane.
*   Hover over the required VAT rate, click the dropdown next to it, and select **Delete**.
*   In the confirmation pop-up, click **OK**.

The VAT rate will be deleted.

## Tax Automation Settings

### Configure Address Preferences for Tax Automation in Sales Transactions

Zoho Inventory lets you choose which address to use when you apply VAT to your sales transactions. To do so:

*   Go to **Settings**.
*   Select **Taxes** under _Taxes & Compliance_.
*   Click **Tax Automation Settings** in the left pane.
*   Under _Address Preference for Sales Transactions_, choose one of the following preferences:
*   **Billing Address:** Apply VAT based on your customer’s billing address.
*   **Shipping Address:** Apply VAT based on your customer’s shipping address.
*   Click **Save**. ![Address Preference](/en-ng/inventory/help/tax-automation/address-pref.png)

The VAT will now be applied to your sales transactions based on the address you selected.