VAT Tax Payable and Receivable

Value Added Taxes (VAT) or Goods & Services Taxes (GST) are consumption taxes collected from your customers and taxes paid to your vendors. You can define an unlimited number of VAT Tax Groups to report specific types of vendors and customers for tax reporting purposes. Follow these steps to set up VAT and produce the appropriate report(s):

• Turn on VAT/GST Taxes by going to Admin -> System -> System Settings -> Region and checking the box for Set Taxes for VAT/GST.
• Go to Admin -> Billing -> Sales Taxes and create entries for known VAT/GST jurisdictions.
• Visit Admin -> Billing -> Sales Taxes -> VAT Tax Groups Add/Update to create VAT groups for vendors and customers.
• Set VAT groups for vendors by going to Expenses -> Vendors, select a vendor, then under Vendor Terms -> Additional set the VAT Tax Group. You can also assign default VAT/GST that will apply for vendors (Sales Tax 1, 2, 3).
• Set VAT groups for customers by going to Income -> Customers, select a customer, then under Tax set the VAT Tax Group for the customer. You can also assign default VAT/GST that will apply for customers.
• Add vendor bills and customer invoices, and those customers and vendors who have been assigned VAT will have tax amounts tracked in the system. When adding vendor bills, be sure to enter a tax amount when putting in bill details. 
• Generate a VAT report by going to Income -> Reports -> Sales Tax Report. You can filter the report by VAT group if needed. This will show incoming and outgoing VAT/GST along with a net total for each VAT/GST group.