Tax Tables - an illustrated primer?

[Christopher Lam]

Thank you all

I'd think that the following would nicely summarise how we'd record VAT as
applied to Commonwealth and Europe. We'd assume that the recording of VAT
only matters because we need to submit returns periodically for business
sales and expenses to tax authorities, and this would really not be
necessary for personal expenses. Numbers from wikipedia. I'm not going to
attempt India which has different % according to the initial price...

Sample Tax Tables for EC country (e.g. 21% / 6% / 0% for Belgium, 20% / 5%
/ 0% for UK etc) (2017)

*Tax Table*

*Tax Table Entries [Asset/Liability] *

*Percentage or Amount*

Standard VAT on Sales

Liability:VAT:Sales:Standard [L]

21%

Reduced VAT on Sales

Liability:VAT:Sales:Reduced [L]

6%

EC Sales

Liability:VAT:Sales:EC [L]

Liability:VAT:Sales:Reversed [L]

21%

-21%

Standard VAT on Purchases

Liability:VAT:Purchases:Standard [A]

21%

Reduced VAT on Purchases

Liability:VAT:Purchases:Reduced [A]

6%



Sample Tax Table for Australia (2017)

*Tax Table*

*Tax Table Entries [Asset/Liability]*

*Percentage or Amount*

Standard GST on Sales

Liability:GST:Sales:Standard [L]

10%

GST-free Sales

Liability:GST:Sales:Zero [L]

0%

Standard GST on Purchases

Liability:GST:Purchases:Standard [A]

10%

GST-free Purchases

Liability:GST:Purchases:Zero [A]

0%



Sample Sales Tax for Chicago, Illinois USA (2017)

*Tax Table*

*Tax Table Entries [Asset/Liability]*

*Percentage or Amount*

Chicago Sales Taxes

Liability:Tax:Sales:State [L]

Liability:Tax:Sales:City [L]

Liability:Tax:Sales:County [L]

Liability:Tax:Sales:Regional [L]

6.25%

1.25%

1.75%

1%




On 3 September 2017 at 19:40, Geert Janssens <geert.gnucash at kobaltwit.be>
wrote:

> On zondag 3 september 2017 06:29:48 CEST Christopher Lam wrote:
> > Hi Users & Devs,
> >
> > I'd like to gather data on how Business > Tax Tables are currently being
> > used by users. Tutorial is rather blank on this; says "set up your tax
> > tables", "choose name, entries and percentage or amount", and in doubt,
> > seek an accountant who usually doesn't use gnc.
> >
> > From my understanding, Tax Tables are mainly used to *automatically*
> > calculate various county and state taxes as applied to business invoices
> > and bills... but it's rather confusing that:
> > - menu is labelled 'Sales Tax Tables' but the tables are designed for
> both
> > sales & purchase taxes
>
> True. I have wondered about this also. I assume "Sales Tax" is a standard
> term
> in American English ? It helps to consider that the difference between an
> invoice or a bill is only from which side of the transaction you look at
> it.
> The bill you receive from your vendor is an invoice from their point of
> view.
> Strictly speaking they are all invoices, but the name bill was adopted in
> gnucash to make the differentiation easier (I was told it's a common name
> for
> invoices you have to pay).
>
> > - multiple tax table entries are possible
> > - each tax table entry allows *multiple* account selection, each with its
> > own percentage/amount and tax account
> I don't think this is exactly correct.
> One can define multiple tax tables. Each tax table can have multiple tax
> table
> entries. And each entry has *exactly one* tax account.
>
> >
> > So instead of delving deep into theory of taxes and how they apply, could
> > users please let me know illustrated examples of how they have set up
> their
> > tables in their jurisdiction, and example invoices/bills that apply? I'm
> > especially keen on an example of an invoice/bill which has multiple
> > entries, each with its own tax table, and the tax table entry
> incorporates
> > multiple tax accounts. (If this makes any sense... because the software
> > supports it!)
> >
> Practical examples in Belgium:
> Depending on the type of good or service being sold we have different tax
> (VAT/GST) regimes.
> On 'luxury goods' (very broad term) we are required to charge 21% VAT
> On food only 6% VAT is charged
>
> That requires me to define two tax tables:
> One for 21% VAT
> One for 6% VAT
>
> So whenever I buy a 'luxury good', I select the 21% VAT tax table for that
> good on the bill. When I buy groceries, I select that 6% VAT tax table. I
> can
> also shop in a big shopping mall and buy both something considered luxury
> and
> some groceries. In that case some lines on the bill will be assigned the
> 21%
> VAT tax table and some the 6% one.
>
> Note these are very simple tax tables. They both have only one entry
> setting
> the percentage and an account to collect the VAT. It makes it easier for my
> VAT declaration to track the diffent VAT percentages in separate accounts
> so I
> have accounts for 6% VAT and 21% VAT.
>
> On to a more complicated example: Europe has some special legislation
> regarding sales across country borders. When I sell something to a German
> client (being in Belgium myself), I don't have to charge VAT on the
> invoice,
> but I do have to declare this VAT to the VAT office in two separate lines:
> - I have to count the VAT as 21% sales tax (adding it to all the VAT
> collected
> on invoices for Belgian customers)
> - I have to add it to a special entry that counts all the VAT I did not
> collect because it was an intra-European sale.
>
> To collect these numbers I have created an additional tax table, this time
> with 2 entries:
> - the first entry is set up for 21% and the normal 21% VAT tax account
> - the second entry is set up for -21% and a separate account (intra-Euro
> tax).
>
> So whenever I use this tax table two tax splits are created, one to declare
> the 21% VAT and one to neutralize it again accounting wise. When declaring
> my
> taxes I have to reverse the sign of the intra-Euro tax value but that's
> due to
> a mismatch in what gnucash generates as report and what the tax office
> expects
> as value.
>
> There are other uses for tax tables with multiple entries. The most
> straight-
> forward is no doubt the concept of multi-layered taxes. Some jurisdictions
> require to charge different taxes on one invoice: federal, state, county,
> each
> with their own percentages. Each of these taxes would have its own tax
> table
> entry in the same tax table.
>
>
> > This could be used to populate the documentation with examples to follow.
> >
> Good plan :)
>
> > Ultimately I'll be keen to create a periodic report which sums all
> relevant
> > data, such as for the Australian Tax Office which wants to know GSTs on
> > sales & purchases every quarter.
> This is not unique to Australia. The Belgian tax office expects this as
> well.
> The exact form of report is what differs from country to country. Since a
> few
> years now the Belgian Tax Office requires the user to upload an xml sheet
> adhering to a certain DTD. Gnucash can't create this (yet).
>
> Geert
>