DEAR systems use Tax Rules as a primary source of tax information. DEAR does not create new Tax Rules. The setting creates “wrappers” around existing rules from the accounting system. The reason for this is to allow users to apply inclusive/exclusive flag for the given tax.
Tax Rules can also be used to create multi-tier tax schemas i.e., in Canada some provinces require reporting two taxes on invoices.
Xero accounting software allows tax components but does not return components via API, which is why we have to maintain our own tax components.
How to use Tax Rules:
1. All Tax Rules must be created in Xero/QuickBooks Online.
DEAR Imports Tax Rules from Xero/QuickBooks Online and creates “wrapper” automatically.
2. Users can modify “wrapper” by changing tax inclusive/exclusive flag, tax % or create a new “wrapper” within DEAR.
3. This Tax Rule will be used when:
- Editing suppliers/customers
- Editing sale/purchase order header
- Editing sale/purchase order line items details and additional chargers
4. Tax Rule used in sale/purchase order.
As highlighted in the image below Tax Exclusive highlights whether tax will be inclusive or exclusive for the whole invoice.