Tax on sales/purchases is deducted from amounts in G/L account items and not for amounts in customer items. For customers, tax on sales/purchases is output tax and is posted to a tax account. In systems delivered to countries which have no tax on sales/purchases, the Tax code field is suppressed.

You can enter output tax in the following ways:

• Manually
• Automatically (that is, have the system calculate it)

The system posts an item for every tax code.

The following scenarios are possible when entering taxes:

• The invoice contains only one tax code

1. Enter this tax code and the system defaults it in every G/L account item.
2. Enter the entire tax amount for the invoice in the appropriate field.

• The invoice contains several different tax codes/tax rates

1. Leave the defaulted tax code "**" in the field.
2. Do not enter any tax amounts on this screen - instead, go to the separate tax screen at the end of the document entry procedure.

• The amount is not tax-relevant

• The document contains tax amounts but they are not explicitly stated

1. Select the Calculate tax field.
2. If the tax rate is clearly specified, enter the appropriate tax code. If it is not, leave the defaulted tax code "**" in the field.

The following figure shows the options available for entering a tax code in each customer line item:

When you post a customer invoice, the system automatically posts the output tax to the tax account.

The following figure illustrates how a customer invoice is posted:

Most countries have more than one tax on sales/purchases rate. The tax return must include a separate line for each rate of tax on sales/purchases. For this reason, you must enter a different tax code for each tax rate.

For more information about tax on sales/purchases, see the documentation created specifically for your country. For details about preparing the tax returns to submit to the authorities, see FI Closing and Reporting.