Tax Accounting Overview

NetSuite can help you track, calculate, and pay various types of taxes based on the sale or purchase of products and services. Read the following tax topics to understand how to enable and use the tax features provided by NetSuite.

Setting Up Tax Features

To understand the tax features that you can enable in your account, read the following topics:

Enabling and Setting Up Taxation Features – Describes what you must set up in your account to enable NetSuite to track taxes.
Working with Tax Periods – Describes how to set up and use tax periods.
Advanced Taxes – Describes the advanced taxes feature and how to enable it in your NetSuite account.
Managing Tax Codes – Describes how to set up tax codes, tax groups, tax types, tax control accounts. For most countries, the various elements used to track taxes in NetSuite are already provided for you when you get a NetSuite account or create a nexus. However, you must set up those tax items to add details and to make sure they are correct.
EU One Stop Shop (OSS) – Describes how you can charge the appropriate tax on B2C sales of digital services based on the VAT rate of the customer’s EU member state.
Taxation Features Provided by SuiteApps from NetSuite – provides links to information about International Tax Reports, Tax Audit Files, and Withholding Tax SuiteApps, and how to enable them

VAT/GST Support on Intercompany Journal Entries

If your business has multiple subsidiaries, use the Intercompany Journal Entries feature to record the tax impact of intercompany transactions. Using this feature, you do not need to manually post those transactions on journal entries for each subsidiary.

You can transfer an item or asset from one subsidiary to another, even if the subsidiaries are from different nexuses or their tax rates are different. Intercompany journal entries post to both source and destination subsidiaries in one transaction. Tax values are automatically posted to appropriate tax accounts.

For information about intercompany journal entries, see Making Intercompany Journal Entries.

Tax Amounts on Transactions

Changing the shipping address - Changing the shipping address on a transaction can impact the tax total and tax reporting. Depending on your tax setup, changing the shipping address may trigger a change in the nexus and tax codes.
Using multiple shipping routes - To use multiple shipping routes on a transaction, see Multiple Shipping Routes.
Changing a tax code - You can change the tax code on a transaction line. To understand how tax is recalculated when the tax code is changed on a transaction line, see Recalculating Line Item Amounts When the Tax Code Changes.

Tax amount rounding -When an item quantity is in decimal, (for example, in software companies), you may notice that the tax amount does not round up correctly. This is not a defect.

Rounding differences occur because the tax amount is derived from the rounded amount and the rounded gross amount.

The way the system calculates gross amounts and tax amounts in this case is as follows:

amount = round(quantity * rate)

gross_amount = round(quantity * rate * tax_rate)

tax_amount = gross_amount - amount = round(quantity * rate * tax_rate) - round(quantity * rate)

In other words, gross_amount = amount + tax_amount.

A notable consequence of this approach is that increasing the amount value results in non-decreasing gross amount values. It also prevents the tax amount from also being non-decreasing, as seen in the following example. This approach makes it possible to achieve any gross amount value, which is more important than the standalone tax amount.

Example

The following tax calculation example shows this scenario (with 15% tax rate):

Quantity	Rate	Amount	Rounded	Gross Amount	Rounded	Tax Amount
1.33331	150.0	199.9965	200.00	229.995975	230.00	30.00
1.33330	150.0	199.9950	200.00	229.994250	229.99	29.99
1.33329	150.0	199.9935	199.99	229.992525	229.99	30.00

Taxes on Discounts

For information about applying taxes on discounts on your transactions, read the following topics:

Nondeductible Input Tax

For information about applying nondeductible input tax and recording nondeductible tax amounts in the general ledger, read the following topics:

Recording Nondeductible Input Tax
- Setting Up Nondeductible Input Tax
- Applying Nondeductible Input Tax on Transactions

Tax Reporting

NetSuite provides tax reporting features for VAT, GST, and withholding tax. For information, read the following topics:

U.S. Tax Reports – for information about US sales tax reports
Viewing Canadian Tax Reports – for information about Canadian GST/HST and PST reports
Viewing Australian Goods and Services Tax (GST) Reports – for information about Australian GST reports
United Kingdom Tax Topics – for information about the UK VAT 100 tax return and online submission of tax reports to Her Majesty's Revenue and Customs (HMRC)
VAT and GST Reporting – for information about country-specific VAT/GST reports, EU Sales Lists, Intrastat Reports, and saved reports for purchases and sales by tax code
Tax Audit Files – for information about audit files that you can submit to tax authorities
Withholding Tax – for information about tracking and reporting withholding tax

Paying Tax Liabilities

NetSuite can also help you pay tax liabilities. For information about posting journal entries for taxes and preparing tax payments, read the following topics:

Country-specific Tax Topics

For information about general international and country-specific tax topics, read the following:

General Notices