Tax parameterization steps in Odoo :
- VAT settings (sales, purchases, exempt) :
One of the first steps in automating tax processing in Odoo is to configure the appropriate VAT rates. Depending on your country's regulations, configure the VAT rates for sales, purchases and exempt transactions, with the accounting charge linked to the VAT concerned. These configurations can be applied globally, to specific items or to partners (customer or supplier).
- Withholding tax: settings and use on supplier invoices
For service providers who are not subject to corporate income tax, it may be necessary to apply a withholding tax to their invoices, depending on the country and the nature of the service.
There are two possible scenarios: the supplier will bear the tax (withholding included), or the company will bear the burden (withholding excluded).
2.1. Withholding tax included
To set up a withholding tax, enter the tax with a negative amount (e.g. -10% for our example) and set up the withholding tax on the supplier (with the tax position) or on the product.
When the supplier invoice is entered, the tax amount is credited to the relevant account (in this case, account 447800).
2.2. Withholding tax excluded
Some suppliers invoice a net amount payable; in this case, the recipient company pays the tax. In this case, the calculation is reversed.
To do this, create a second tax in Odoo by checking ‘tax included’ in the tax parameters.
When the supplier invoice is entered, a reverse calculation is automatically performed and the correct accounting entry is generated.
- VAT for account: settings and use on foreign supplier invoices
Odoo enables the cumulative calculation of VAT and withholding tax, taking into account the allowance if necessary.
The term «VAT on account» is used when a company established in Senegal uses the services of a service provider liable to VAT but not established or represented in Senegal. VAT is payable by the Senegalese company, which must calculate and remit it to the tax authorities".
- Tax position: settings and use
The notion of tax position in Odoo enables you to configure and apply specific tax rules to certain trading partners, guaranteeing automatic tax calculation and compliance with tax regulations that may vary from one country to another, or even within the same country.
Here's how the notion of tax position generally works in Odoo:
- Configure tax positions according to specific tax requirements. Each tax position is associated with a set of tax rules that determine the applicable tax parameters such as tax rates, deductions, tax exemptions, etc. It is also possible to define tax rules according to different criteria, such as partner country, product category, etc.
- Associate with specific business partners, such as a customer or supplier. This allows you to define the tax rules that will be applied to transactions with this partner.
- Apply on transactions: when you create sales or purchase documents in Odoo, the tax position associated with the partner is automatically applied. The corresponding tax rules are used to calculate taxes and determine the appropriate accounting accounts.
- Tax reports :
Odoo offers flexible reporting features to help you track and analyze tax liabilities. It also facilitates the verification of tax returns, and can be used to support tax audits or controls. It's a document that summarizes information on sales and purchases, as well as taxes collected and deductible.
It also automatically generates the tax return accounting entry for the period concerned, and closes the tax period.
