VAT in Transactions
In Zoho Spend, you can create VAT-compliant 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:
- Standard Rate: 15%
- Zero Rate: 0%
- 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 South Africa and is registered for VAT. |
| Non VAT Registered | The supplier is located in South Africa but is not registered for VAT. |
| Overseas | The supplier is located outside South Africa. |
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 | Standard Rate, Zero Rate, Exempt |
| Non VAT Registered | Out of Scope |
| Overseas | Out of Scope |
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 Overseas, the relevant import VAT treatment is applied based on the goods or services being purchased and 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. They then select whether the expense is for Goods or Service. 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 Standard Rate or Zero Rate). |
| Non VAT Registered | The VAT field is automatically set to Out of Scope and cannot be edited. |
| Overseas | The VAT field is automatically set to Out of Scope and cannot be edited. When the expense is for Service, an Is Reverse charge applicable? checkbox is shown; Reverse Charge can be applied only on the import of services. |
The selected VAT details are recorded against the expense and carried into any expense report that includes it.
Domestic Reverse Charge (DRC)
Domestic Reverse Charge (DRC) is a VAT mechanism prescribed by the South African Revenue Service (SARS) for businesses dealing in valuable metals. Under DRC, the VAT liability shifts from the supplier to the recipient, who accounts for the VAT directly in their VAT return.
You can enable DRC on a purchase transaction when both your organisation and the vendor are VAT-registered entities in South Africa and the transaction involves valuable metals.
To apply DRC on a purchase transaction:
- Create a Purchase Order, Bill, or other purchase transaction as you normally would.
- Check This transaction is applicable for Domestic Reverse Charge (DRC) below the Shipment Preference field.
- Add the line items and complete the rest of the transaction details.
- Save the transaction.
Note: Refer to the South African Revenue Service’s (SARS) guidelines on Domestic Reverse Charge to confirm whether DRC applies to your transaction.