SolaBooks has three layers in its tax model:
- Tax codes — the policy entries (Standard rate, Zero-rated, Exempt, Reverse-charge). Codes group rates and decide how a tax line behaves on the VAT return.
- Tax rates — the actual percentages behind the codes. A "Standard" tax code may carry a 5% rate today and a 10% rate from a future date.
- VAT returns — the periodic reporting cycle where the tax codes are summed by period to produce the amount due to (or claimable from) your tax authority.
The setup wizard installs your country's default tax codes and rates, so most organizations only visit these pages for unusual configurations or rate changes.
Step by step
Tax codes
Open Settings → Taxes to manage tax codes.
- The page lists all tax codes.
- Click New tax code to add one. Fields: name, type (Output / Input / Both), behaviour (Standard / Zero-rated / Exempt / Reverse-charge / Out-of-scope), recoverability percentage, and default account.
- Edit or toggle visibility from each row.
Tax rates
- Open the tax rates list. Each row shows the code, label, rate %, effective-from date, effective-to date, and status.
- To add a rate, click New tax rate: pick a code, enter the rate %, the effective-from date, and an optional end date.
- When creating an item or a document line and the rate you need doesn't exist yet, a quick-create option lets you add it inline.
- Editing or archiving rates is limited to allowed users — if the options are missing, ask your workspace administrator.
Apply tax on a transaction
Tax can be applied on every line of a quote, sales order, invoice, sales receipt, credit note, bill, expense, debit note, refund, and journal entry. Picking a tax code (with its currently active rate) attaches a tax line to the document, and the totals recompute live.
Reverse charge
When reverse charge is enabled for your organization, a "Reverse-charge" tax code can be picked on supplier bills. The bill posts an output and an input VAT line in equal amounts, so the net owed to the authority is zero — the standard reverse-charge mechanism for imported services. If you don't see the option, your organization may not have reverse charge enabled; ask your workspace administrator.
VAT posting mode
Under Settings → Account Defaults, the VAT Posting Accounts card shows your organization's VAT Posting Mode:
- Separate VAT Input/Output accounts (default) — sales VAT posts to a VAT Output (liability) account; purchase VAT posts to a VAT Input (asset) account. Standard double-entry, with clearer input/output cards on the tax report.
- Single VAT Control account — both sales and purchase VAT post to one VAT Control account, so the net VAT payable is visible directly on a single account.
The tax report header reflects the mode: in separate mode it shows VAT Input and VAT Output cards; in control mode it shows a single VAT (Control) card labelled "Single control account". The posting accounts themselves are system-managed — you don't map them by hand.
VAT return lifecycle
VAT returns live under Reports → Taxes → VAT Returns.
- Create a return. Pick the period from the list of periods not yet returned.
- Review it. Each line shows turnover by tax code, output VAT, input VAT, and the net payable or claimable. Source documents are linked.
- Finalize. Finalizing locks the figures so later postings into the period cannot change them.
- Post reporting. Records that you have submitted the return externally (for example, uploaded to your tax authority's portal), and can write the receivable or payable journal.
- Settle. Records the actual payment made (or refund received) against the VAT control account, closing out the return.
- Carry forward. If the period closed in net credit, roll the credit into the next period instead of claiming a refund.
Finalizing a return is a controlled, hard-to-reverse step — check the figures with the VAT Detail by Rate report first.
VAT Detail by Rate report
The VAT Detail by Rate report (Reports → Taxes) shows every tax-bearing line by rate for a date range. Use it before finalizing a return to spot misclassified lines.
Worked examples
Standard 17% VAT on a JOD 100 sale:
| Account | Debit | Credit |
|---|---|---|
| AR — Customer control | 117.00 | |
| Revenue — Sales | 100.00 | |
| VAT Output | 17.00 |
The JOD 17 contributes to "Output VAT" on the VAT return.
Standard 17% VAT on a JOD 100 purchase, fully recoverable:
| Account | Debit | Credit |
|---|---|---|
| Expense | 100.00 | |
| VAT Input (Recoverable) | 17.00 | |
| AP — Supplier control | 117.00 |
The JOD 17 contributes to "Input VAT" on the VAT return and reduces the net payable.
Zero-rated sale of JOD 100 (e.g. an export): no VAT lines at all — the sale still appears on the return as zero-rated turnover for reporting, but there is no output VAT to remit.
| Account | Debit | Credit |
|---|---|---|
| AR — Customer control | 100.00 | |
| Revenue — Sales | 100.00 |
Exempt sale of JOD 100 (e.g. some financial services): like zero-rated, no VAT is collected, but the sale is reported in a different box and input VAT on related purchases is NOT recoverable.
Partially-recoverable VAT — a JOD 100 expense + JOD 17 VAT, only 50% recoverable:
| Account | Debit | Credit |
|---|---|---|
| Expense | 100.00 | |
| VAT Input (Recoverable) | 8.50 | |
| Expense (non-recoverable VAT gross-up) | 8.50 | |
| AP — Supplier control | 117.00 |
The non-recoverable half is added back to the expense account — the full JOD 117 hits the P&L.
Reverse charge on a JOD 100 imported service (output and input cancel out, net payable = zero):
| Account | Debit | Credit |
|---|---|---|
| Expense | 100.00 | |
| VAT Input (Recoverable, reverse charge) | 17.00 | |
| VAT Output (reverse charge) | 17.00 | |
| AP — Supplier control | 100.00 |
Both VAT lines show on the VAT return — output in the reverse-charge box, input in the recoverable box — netting to zero cash impact.
A VAT-return period summary (illustration):
| Box | Amount (JOD) |
|---|---|
| Standard-rated sales (Output VAT) | 1,700.00 |
| Zero-rated sales | 0.00 |
| Exempt sales (reporting only) | 0.00 |
| Reverse-charge output | 17.00 |
| Total Output VAT | 1,717.00 |
| Standard purchases (Input VAT, recoverable) | 850.00 |
| Reverse-charge input | 17.00 |
| Total Input VAT | 867.00 |
| Net payable to authority | 850.00 |
Common mistakes
- "The tax line doesn't appear on a document." Check the line's tax code — every line carries its own. A blank tax code means "no tax". If new documents always miss tax, set a default on the customer or supplier record.
- "Reverse charge isn't an option." Reverse charge must be enabled for your organization. Ask your workspace administrator.
- "The VAT return is locked but I need to add a transaction in that period." Finalized returns block new postings into their period. Either have an allowed user re-open the return, or post in a later period and pick it up in the next return.
- Rate change mid-period. Tax codes don't expire — rates do. When a rate changes (say 16% → 17%), add a new rate with the new effective-from date; existing documents keep their original rate.
- Non-recoverable VAT confusion. Non-recoverable VAT is added back into the expense account, not the recoverable VAT account. Check the tax code's recoverability percentage if a bill's input-VAT figure doesn't match your expectation.
- A negative VAT return ("you're owed money"). Don't claim a refund every period — use Carry forward to roll the credit into the next period, especially if you expect output VAT to outweigh input VAT soon.
Tips
- Run the VAT Detail by Rate report before finalizing a return — it breaks down every tax line by code for the date range and makes misclassifications obvious.
- A reverse-charge bill nets to zero cash impact — the bill itself never asks for a separate VAT payment.
Behaviour and rules
- Tax codes don't expire. Rates do — one code can carry multiple rates with effective-from/to dates.
- VAT-return blocking. Once a return covers a period and is finalized, postings into that period are blocked unless the period is unlocked first — see Fiscal years and lock dates.
- Reverse-charge lines don't add to the tax payable but do show in the relevant boxes of the VAT return.
- One VAT regime per organization. Multiple tax authorities are not currently supported.
- Archive vs delete. Archive a rate to hide it; a rate can only be deleted while no transaction has ever used it.
- If your organization has VAT turned off entirely, the tax pages are hidden and no tax lines are produced — the rest of SolaBooks still works normally.
- Editing rates, archiving, and VAT-return actions are limited to allowed users — ask your workspace administrator if an action is missing.
Related
- Setup wizard — initial tax setup
- Invoices, Bills, Expenses — where tax lines actually post
- Reports — the Taxes group: Tax Reports, VAT Detail by Rate, VAT Returns, Discounts Report
- Fiscal years and lock dates — how periods interact with returns
- Settings — Taxes, Account Defaults (VAT posting mode)