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Tax Report

This guide explains how to use the Tax Report to summarize taxes collected on sales and taxes paid on purchases. This report is essential for filing your regulatory tax returns (such as VAT) accurately and on time.

What is the Tax Report?

The Tax Report calculates your Net Tax Statement for a specific period. It answers the critical question: "How much tax do I owe the government, or how much do they owe me?"

It works on this simple formula:

Output Tax (Sales) - Input Tax (Purchases) = Net Tax Payable (or Refundable)

Key Concepts:

  • Output Tax: The tax you collected from customers when you sold goods or services. You owe this to the tax authority.
  • Input Tax: The tax you paid to vendors when you bought goods or services. You can usually claim this back.
  • Net Tax: The difference between the two. If Output > Input, you pay the difference. If Input > Output, you may get a refund.

Where to Find It

Navigate to: Accounting → Reports → Tax Report

💡 Tip: You can also access this report from the "Reporting" dashboard if you have it pinned.

How to Use the Report

1. Set Your Date Range

Tax returns are usually filed for a specific period (monthly, quarterly, or annually).

  • Start Date: The beginning of the tax period (e.g., Jan 1).
  • End Date: The end of the tax period (e.g., Mar 31).

2. Generate the Report

Click the Generate Report button (). The system will calculate totals from all posted transactions.

Understanding the Sections

The report is divided into two main sections:

1. Output Tax (Sales)

This section lists all taxes collected from your Customer Invoices and Credit Notes.

  • Tax Group: Taxes are grouped by type (e.g., "VAT Standard 15%", "VAT Zero Rated").
  • Net Amount: The value of goods/services sold excluding tax.
  • Tax Amount: The actual tax collected on those sales.

2. Input Tax (Purchases)

This section lists all taxes paid on your Vendor Bills and Debit Notes.

  • Tax Group: Taxes are grouped by type (e.g., "VAT Standard 15%", "Import VAT").
  • Net Amount: The value of goods/services purchased excluding tax.
  • Tax Amount: The tax paid on those purchases.

3. Net Tax Payable

The final line shows the total calculation:

  • Positive Amount: You owe this amount to the tax authority (Payable).
  • Negative Amount: The tax authority owes you this amount (Refundable).

Common Scenarios

Scenario A: Filing a Quarterly VAT Return

Situation: You need to file your VAT return for Q1 (January - March). Steps:

  1. Go to Tax Report.
  2. Set date range: Jan 1 to Mar 31.
  3. Click Generate.
  4. Use the Total Output Tax figure for "Total Sales VAT" box in your summary.
  5. Use the Total Input Tax figure for "Total Purchase VAT" box in your summary.
  6. The Net Tax Payable should match the amount you pay via bank transfer.

Scenario B: Verifying Tax Accounts

Situation: You want to ensure your Balance Sheet "Tax Payable" liability matches this report. Steps:

  1. Run the Tax Report for the period.
  2. Note the Net Tax Payable.
  3. Open the Balance Sheet for the same end date.
  4. Check the Current Liabilities section for your Tax/VAT Control account.
  5. The numbers should generally match (unless there are manual journal entries or payments already made).

Best Practices

🔒 Post All Transactions

Ensure all invoices and bills for the period are Posted. Draft transactions are NOT included in the Tax Report.

📅 Watch the Dates

Be careful with the transaction date vs. the accounting date. The report uses the Accounting Date. If you date a bill March 31st but it relates to April, verify which period it falls into.

🔍 Audit the Numbers

If a tax amount looks wrong (e.g., too high):

  1. Go to the General Ledger.
  2. Filter by the Tax Account (e.g., "VAT Output").
  3. Look for unusual entries or manual journals that shouldn't be there.