Tax Codes Overview

For most countries, tax codes are automatically provisioned when you initially set up your NetSuite account, and when you add a nexus. Your account administrator can create additional tax codes if necessary.

If you have the International Tax Reports installed in your account, then when you add a new country nexus, the VAT/GST tax codes for that nexus are automatically provisioned. The International Tax Reports SuiteApp creates tax codes only for the countries that it supports, because those tax codes are used to generate the tax reports. For more information, see International Tax Reports and Automatic Tax Code Provisioning.

Review your tax codes to make sure the rates and properties are correct. To view existing tax codes in your NetSuite account, go to Setup > Accounting > Taxes > Tax Codes. You can create, edit, inactivate, or delete tax codes.

Tax codes determine how much tax is applied to each line item on your transaction records. A tax code represents the following:

a tax that you collect from your customers located in a specific geographic area
a tax that you pay to a taxing authority on behalf of your customers
a tax rate for one location, to be paid to one tax authority
a tax that is applied only to certain types of transactions

Tax codes that can be applied to one transaction can be combined in a tax group. For example, for a specific US state, combine city tax and state tax into one tax group so that when you create an invoice for a sale in that state, you can then select the tax group. For information, see Tax Groups Overview.

You can associate a tax code with a customer. See Setting Default Tax Items on Customer Records.

You can associate a tax code with an inventory item and nexus, if each nexus applies a different tax rate for the same item. To do this, you must create a tax schedule. Tax schedules let you assign appropriate tax codes to an item based on the country or nexus it applies to. For example, graphic design services are taxable in New York, but not taxable in Florida. When you have created the tax schedule, you can select this on the item record. For information, see Creating Tax Schedules.

If you do not have Advanced Taxes enabled in your account, you can set a default tax code on an item record. If you have Advanced Taxes enabled, then you associate a tax schedule with an item record. See Setting Tax Codes or Tax Schedules on Item Records.

If you use the UK or International Edition of NetSuite, you can set a default tax code for vendors. See Setting Default Tax Items on Vendor Records.

If you operate a web store, you can select a default tax code to be used for a transaction when NetSuite cannot find a predefined tax code in your customer's record or in your inventory item record. To do this, go to Setup > Accounting > Taxes > Set Up Taxes. Select a tax code or tax group in the Default Tax Code field.

You can still change the tax code on individual transaction records.

For more information, see the Related Topics list.