Tax configuration

Brightpearl supports two tax schemes. The selected scheme controls the tax rules used for applying tax codes and rates to orders.

  • VAT

    VAT mode supports the standard and cash schemes for VAT reporting. When in VAT mode the tax engine will apply VAT rules when assigning tax codes to orders.

  • Sales tax

    Sales tax mode provides sales tax reports. When in sales tax mode the tax engine will apply sales tax rules when assigning tax codes to orders.

Your tax scheme will be set by your Implementation Consultant when your Brightpearl account is created. View your tax scheme in Settings > Company > Accounting: Tax.

Tax configuration levels

Tax configuration involves several levels of setup:

  • Tax components

    Tax components hold the individual tax rates used to make up the total rate on a tax code. In the US, sales tax reporting is broken down by tax component to provide figures for the state, county, city and any other authority to which tax is reported. For VAT, tax codes typically require only a single component.

  • Tax codes

    Tax codes are assigned to contact records, product records and transactions. They control the total tax rate applied. A tax code's rate can be made up of multiple tax component rates, such as in the US where state, county and city components are usually required. For VAT, tax codes require only a single component, e.g. 20%.  It is also possible to create a tax code with no component where the total rate is 0%. In VAT mode please be aware of a few special tax codes needed for VAT reporting.

  • Tax zones

    Tax codes can be assigned to tax zones. Tax zones are assigned to countries such that a zone can include one or multiple countries. An example of a tax zone is 'Europe (EU)' which could include all member countries of the European Union.

    The zone influences which tax code is automatically assigned to an order based on its delivery address country. The tax zone's tax code is only used where the customer record does not have a default tax code assigned. A zone can also be created with no tax code, in which case the product's tax code is used instead. Tax rules are discussed in more detail here.

  • Tax regimes (beta)

    A tax regime is like a category for your tax codes which allows you to group tax codes and report on transactions belonging to these groups.

    Default tax regimes are already configured in your Brightpearl account, as such you only need to create a new tax regime if you report tax in more than one country and wish segment reporting by these countries. This is especially relevant in VAT mode accounts where you may need to exclude certain tax codes from the VAT return. The VAT return will only include transactions assigned to tax codes in the "VAT" tax regime and will exclude anything else.

    Currently, all tax codes will display on the US sales tax reports, i.e. these reports are not affected by tax regimes.

  • Default tax code

    A default tax code is defined in Settings > Company > Accounting: Tax. The default tax code is used by the tax rules described here.

How to add a tax components

  1. Go to Settings > Localization > Tax components
  2. Click the Add a new tax component button
  3. Enter a name for the component, e.g. the city or state name
  4. Enter the rate applicable for this component
  5. Click the Save button

How to add a tax code

When adding a new tax code, all the required tax components will need to be added first.

  1. Go to Settings > Localization > Tax codes
  2. Click the Add a new tax code button
  3. Enter the tax code and a name
  4. Select the tax regime(s) this tax code belongs to (beta only)
  5. Select the tax components (rates) applicable to this tax code. The total rate of the tax code is displayed
  6. Click the Save button

    add-tax-code.png

How to add a tax zone

  1. Go to Settings > Localization > Tax zones
  2. Click the Add tax zone button
  3. Enter a name for the tax zone
  4. Select a tax code applicable to this tax zone. If no tax code is assigned to the zone the product tax code will be used on transactions (VAT mode only)

    tax-zone.png

How to assign a country a tax code

  1. Go to Settings > Localization > Countries
  2. Click to edit button
  3. Select the tax zone applicable to this country

    assign-country-tax-zone.png

How to add a tax regime (beta only)

  1. Go to Settings > Localization > Tax regimes
  2. Click Add tax regimes
  3. Enter a name for the regime
  4. Click Save

    add-tax-regime.png

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