Odoo 16 Community Book

Taxes

In the accounting management of a business, managing and computing taxes are considered as one of the difficult operations which require more attention and accuracy. The comprehensive accounting management system offered by Odoo ERP can help you in ensuring transparency and accuracy in tax-related operations. You can use the Invoice module to configure different taxes for your business and manage them effortlessly. The Taxes option will be available under the Configuration menu of the module.

This is the list view of the Taxes window. The list will show pre-configured taxes in the module. The platform can be viewed in Kanban view also by selecting the corresponding icon. The window displays the details of the Tax Name, Tax Type, Tax Scope, Label on Invoice, Company, and Active status. In order to make any changes in the available taxes, you can click on the respective ones and edit them. You will get Sales, Purchase, Services, Goods, Active, and Inactive options as the default Filters. You can use Company, Tax Group, and Tax Scope as default Group By option. The Custom option will allow you to customize filters and group by options as per your requirement.

Now, click on the New button to configure a new tax for your company. You will get a new form view as shown below that will help you to configure the details required to create a new tax.

In the Tax Name field, you can provide the name of the new tax. The Tax Computation field will help you to define the computation method used for this particular tax. In the drop-down menu, you will get Group of Taxes, Fixed, Percentage of Price, Percentage of Price Tax Included, and Python Code as options to select a suitable computation method for tax.

• Group of Taxes- The tax will be a set of sub-taxes.
• Fixed- The tax amount will be the same even if the price changes.
• Percentage of Price- The tax amount will be a % of the price.
• Percentage of Price Tax Included- The tax amount will be a division of the price.

The Tax Type will define the places where this particular tax is selectable. It can be either Sales or Purchases. If you want to restrict the use of this tax only to a type of product, you can mention it in the Tax Scope field. You can set this option as Goods or Services. For all tax computation methods except the Group of Taxes option, you need to mention the Amount in the given space. In the case of the Group of Taxes, the tax will be calculated based on the set of sub-taxes added to the configuration.

Under the Definitions tab, you can add the tax rule for the Distribution for Invoices and Distribution for Refunds.

The details you mention in the Distribution for Invoices field will be useful if the tax is used on an invoice and the Distribution for Refunds will be used when the tax is used to create a refund. You can use the Add a Line button to mention the required details.

In the Advanced Options tab, you can add a description in the Label on Invoices field, which will appear on the invoices when you use this particular tax on invoices. Mention Tax Group, Company, and Country in the respective fields. You can activate the Included in Price field if the price you use on the product and invoice includes this particular tax. If you activate the Affect Base of Subsequent Taxes field, the taxes which are computed after this one will be computed based on the price tax included. When you activate the Base Affected by Previous Taxes, the taxes with a lower sequence might affect this one. This is how we create and manage new taxes in the Odoo Invoicing module.

Under the Configuration menu, you can find the Tax Group option, which will record all tax groups mentioned while creating a new tax, as shown in the image above. This window shows the Name, Country, Tax Payable Account, Tax Receivable Account, and Tax Advance Account details of the Tax Groups.

In the Settings menu of the Invoicing module, you can set default taxes under the Taxes tab. The default taxes will be automatically selected for accounting operations when there are no other taxes mentioned in the configuration of the operation. It will be automatically applied to new products also. If you want, you can change the tax later from the form view of the product. You can set Sales and Purchase Taxes in the respective fields as shown in the screenshot below.

You can use the Cash Discount Tax Reduction field to define when the tax will be deducted while offering a cash discount. You can set the reduction option as On early payment, Never, or Always (upon invoice).

When you sell goods and services to customers from a foreign EU country, you can impose VAT based on the delivery address. The EU Intra-community Distance Selling feature available in the Settings menu of the Invoicing module will help you to perform this operation. Regardless of the location, this rule can be applied. Based on the country of the customer, Odoo will automatically apply appropriate taxes and fiscal positions for each EU member state. You can use the Verify VAT Number feature to verify VAT using the European VIES service. By activating this feature, the contact will be saved only after its VAT number has been verified by the European VIES service.

The Rounding Method option will define the method to calculate the total tax amount in orders and invoices. You can choose either Round per Line or Round Globally method for the tax rounding. A rounding per line is advised to use if your prices are tax-included. That way, the sum of line subtotals equals the total with taxes.