VAT in Transactions
Using Zoho Books, you can create VAT-compliant sales and purchase transactions. Each of these transactions are VAT-compliant i.e. different VAT treatments can be applied while creating transactions.
Once you have enabled taxes, added your customers, vendors, and the items to your Zoho Books organisation, you can start creating VAT-compliant transactions.
Let’s take a look at the VAT Rates that are applicable on the sales and purchase transactions.
In Zoho Books, we have the following VAT rates which will be auto-created once you enable VAT:
- General Rate - 16%
- Reduced Rate - 8%
- Zero Rated for Supplies - 0%
- Exempt
| VAT TREATMENT | SALES | PURCHASES |
|---|---|---|
| VAT REGISTERED | General Rate, Reduced Rate, Zero Rate, Exempt | General Rate, Reduced Rate, Zero Rate, Exempt |
| NON VAT REGISTERED | General Rate, Reduced Rate, Zero Rate, Exempt | Out of Scope |
| NON-KENYA | Zero Rate | Out Of Scope, General Rate , Zero Rate, Reduced Rate Note: VAT rate will be applicable only if a Bill of Entry or E-slip is associated with the transaction. If not, it’ll be Out of Scope. |
VAT in Sales Transactions
VAT Registered
Let’s say you sell your goods or services to a VAT-registered customer who resides in Kenya, you can apply one of the following rates:
- General Rate
- Reduced Rate
- Zero Rate
- Exempt
Non VAT Registered
Non VAT registered customers are those whose business location is in Kenya but are not VAT registered. For such customers, you can apply one of the following rates:
- General Rate
- Reduced Rate
- Zero Rate
- Exempt
Non Kenya
Non-Kenya is a type of VAT treatment for customers who are outside Kenya. When you sell goods or services to such customers, you must apply Zero Rate on transactions.
VAT in Purchase Transactions
VAT Registered
If you purchase goods or services from a vendor who is VAT-registered and is located in Kenya, you can apply one of the following rates:
- General Rate
- Reduced Rate
- Zero Rate
- Exempt
Non Vat Registered
If you purchase goods or services from a vendor who’s business location is Kenya but is not VAT registered, then the supply of goods or services is Out of the Scope of VAT.
Non-Kenya
If you import goods or services from a vendor who is outside of Kenya, you’ll have to create a Bill of Entry for imported goods and E-slip for service from a non-Kenya vendor, you can apply one of the following rates on the transaction:
- General Rate
- Reduced Rate
- Zero Rate
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