Tax Rates

Tax rates define the VAT, sales tax, or other tax percentages applied to your invoices and transactions. The DirectSale supports multiple tax rates per tenant, allowing you to handle different tax categories for different products, services, or jurisdictions.

Accessing Tax Rates

Navigate to Dashboard > Accounting > Settings > Tax Rates.

Tax Rate Types

Each tax rate is classified into one of four types:

Type	Description
Standard	The default/normal tax rate in your jurisdiction (e.g., 20% VAT, 10% sales tax).
Reduced	A lower rate applied to specific categories of goods or services (e.g., 5% for food, 10% for books).
Zero	A 0% rate applied to goods or services that are technically taxable but rated at zero. Different from exempt because zero-rated items may still need to be reported on tax returns.
Exempt	Items completely exempt from tax. They are not included in tax calculations or tax return reporting.

The Tax Rates List

The page displays all configured tax rates in a table with the following columns:

Column	Description
Name	The display name of the tax rate (e.g., "Standard VAT", "Reduced Rate - Food").
Code	A short code for the tax rate (e.g., STD, RED, ZERO, EXM).
Rate	The tax percentage (e.g., 20.00%).
Type	The tax rate type badge (Standard, Reduced, Zero, Exempt).
Default	Whether this is the default tax rate applied to new invoices.
Status	Active or Inactive.
Actions	Edit and Deactivate buttons.

Creating a Tax Rate

Open the Add Dialog

Click the Add Tax Rate button. A dialog window opens.

Fill In Tax Rate Details

Field	Required	Description
Name	Yes	A descriptive name for the tax rate (e.g., "Standard VAT 20%", "Reduced Rate 5%").
Code	Yes	A short alphanumeric code (e.g., VAT20, RED5, ZERO). Must be unique.
Rate	Yes	The tax percentage as a number (e.g., 20 for 20%, 5 for 5%, 0 for zero-rated).
Type	Yes	Select from: Standard, Reduced, Zero, or Exempt.
Is Default	No	Toggle to make this the default tax rate. When enabled, this rate is automatically applied to new invoices. Only one tax rate can be the default at a time.

Save

Click Save to create the tax rate.

Editing a Tax Rate

Click the edit button on any tax rate row. The same dialog opens pre-filled with the current values. Make changes and click Save.

Deactivating a Tax Rate

Click the deactivate button on a tax rate. Deactivated rates:

• Are no longer available for selection on new invoices.
• Remain on existing invoices where they were previously applied.
• Can be reactivated by editing the rate.

Warning: Deactivating a tax rate does not change any existing invoices that use it. Historical invoices retain their original tax rate calculations.

Seeding Default Tax Rates

If you have not yet configured any tax rates, click the Seed Default Rates button to automatically create a standard set of tax rates. This typically includes:

• A standard rate (e.g., 20%)
• A reduced rate (e.g., 10%)
• A zero rate (0%)
• An exempt rate (0%, type: exempt)

Info: The seed defaults provide a starting point. You should adjust the rates and names to match the tax regulations in your jurisdiction. Tax rates vary significantly by country and region.

How Tax Rates Are Used

Tax rates are applied in several places across the accounting module:

Location	How Tax Is Applied
Sales Invoices	The VAT Rate field on the invoice form uses the tax rate percentage to calculate the tax amount.
Purchase Invoices	Similar to sales invoices, the VAT rate is applied to the purchase subtotal.
Credit/Debit Notes	Each line item on a credit/debit note has a tax rate field.
Accounting Settings	A global default VAT rate can be set that applies to all new invoices.
VAT Returns	Tax rates determine how amounts are categorized in VAT return reports.

Tips for Managing Tax Rates

• Set one default rate that matches your most commonly used tax rate. This saves time when creating invoices.
• Create separate rates for different tax categories in your jurisdiction rather than changing the rate on individual invoices.
• Use meaningful codes that your team can quickly identify (e.g., VAT20 instead of R1).
• Do not delete tax rates that are used on existing invoices. Deactivate them instead.
• Review rates periodically as tax regulations change. Update the rate percentage when your jurisdiction changes its tax rates.