Tax

Overview

Manage tax configurations, rates, and rules for your transactions to ensure compliance with relevant tax regulations and accurate financial reporting.

Tax types configuration helps ensure your business stays compliant with tax requirements by providing flexible tools to configure and apply appropriate tax rates to your transactions as needed to stay compliant with local tax regulations.

Tax Types Form Fields Explained

Tax types in Mezan allow you to define different tax categories that can be applied to transactions. The system provides a flexible way to configure taxes based on your business needs and regulatory requirements.

1. Internal Name: Internal identifier for the tax type, shown in reports and transactions.
2. Display Name: Name displayed to users in forms and reports.
3. Tax Type Account: Account used to record transactions for this tax type.
4. Tax Percent: Rate percentage to apply on the tax. For Saudi Arabia, this must be 0% or 15% when sales are enabled.
5. Is Sales Enabled: Enable this tax type for sales related transactions.
6. Is Purchasing Enabled: Enable this tax type for purchasing related transactions.
7. This Tax Type is Deductible in Purchasing: This configuration is used to indicate that the tax type can be claimed as a tax reduction in the purchasing module for related transactions. If this is true, the tax cost in purchasing operations are not credited to the tax type account, but rather to the cost or inventory store account as part of the cost of the purchased items.
8. Active: Makes this tax type available in the tax type selection dropdowns in your organization in Mezan. You can disable a tax type to prevent it from being used in new transactions, while keeping existing transactions that already have this tax type applied to them.

Default Tax Type Configurations

Mezan comes with predefined tax types that cover most business scenarios if you're operating in Saudi Arabia:

1. VAT Deductible (15%)

• Used for standard taxable purchases where input tax can be claimed
• Connected to VAT Account (Code: 2120)
• Available for both sales and purchases

2. VAT Non-Deductible (15%)

• Used for purchases where input tax cannot be claimed
• Connected to VAT Account (Code: 2120)
• Available for purchases only

3. Tax Exempt (0%)

• Used for zero-rated or exempt transactions
• Connected to VAT Account (Code: 2120)
• Tax percentage is 0%

Tax Types Usage

Configured tax types become available in:

• Product sales & purchasing settings
• Receipt payment methods cost details

Which mezan then utilizes in both the sales & purchasing modules accordingly.

Other modules also interact with tax types, such as integrations with other services and government platforms, and some reports.

Regional Tax Considerations

Different regions have specific tax requirements. For Saudi Arabia:

• VAT is typically set at 15%
• Tax exempt transactions are set at 0%
• VAT account is typically configured with code 2120

Always consult with a tax professional to ensure your tax configuration complies with local regulations.

Reports that utilize Tax Types

One key report relies on tax types definitions as the source of tax data:

VAT Report (Saudi Arabia)

This report provides a quick summary of the VAT report in the format is it expected by the Saudi Arabian authorities. Keep in mind, if you adjust tax accounts manually using manual journals, this report will not pick up those changes as it only pulls data directly from the tax types linked transactions in the sales and purchasing modules.