A tax type determines where the tax paid or collected is tracked on the balance sheet. The balance sheet account to which NetSuite posts the collection or payment of tax is called the tax control account.
In NetSuite, the tax types are either already set up by default, or set up for you by Professional Services. When you add a subsidiary in a new country, the tax types for that country become available in the system automatically. However, an administrator can create new tax types if necessary.
The definition of a tax type includes the tax type's tax control accounts. This is how NetSuite tracks taxes on the balance sheet. However, in certain countries, companies are required to record tax on income or expense accounts on the general ledger, balance sheet, and income statement reports. On the Set Up Taxes page for a VAT/GST nexus, you have the option of disabling the Only Use Tax Control Accounts on Tax Types preference. With this preference turned off, you can post tax amounts to any account in your chart of accounts, provided you have created an appropriate tax type record that uses this account, and you have set up a tax code that uses the new tax type.
Tax types are used to define tax codes. If your NetSuite account has the Advanced Taxes feature enabled, tax types are also linked to a country. When defining a tax code, the tax types available depend on the country selected. For example, when creating a tax code for the United States, the dropdown list for the Tax Type field includes Sales Tax. If you are creating a tax code for the United Kingdom, then the list of available tax types includes VAT.
A transaction record contains information about the tax code or tax group. The tax code or tax group holds the information about the tax type. The tax type holds the information about the tax control account.
Examples of tax types and tax control accounts (Australia)
Tax Type Name: GST
|
Nexus |
Liability/Sales Tax Account |
Asset/Purchase Tax Account |
|---|---|---|
|
Australia |
GST Collected |
GST Paid |
Tax Type Name: LCT
|
Nexus |
Liability/Sales Tax Account |
Asset/Purchase Tax Account |
|---|---|---|
|
Australia |
LCT Collected |
LCT Paid |
Examples of tax types and tax control accounts (Canada)
Tax Type Name: PST
|
Nexus |
Liability/Sales Tax Account |
Asset/Purchase Tax Account |
|---|---|---|
|
QC |
PST Payable QC |
PST Expenses QC |
|
ON |
PST Payable ON |
PST Expenses ON |
Tax Type Name: GST/HST
|
Nexus |
Liability/Sales Tax Account |
Asset/Purchase Tax Account |
|---|---|---|
|
QC |
GST/HST Payable |
GST/HST on Purchases |
|
ON |
GST/HST Payable |
GST/HST on Purchases |
Examples of tax types and tax control accounts (United States)
Tax Type Name: State
|
Nexus |
Liability/Sales Tax Account |
|---|---|
|
CA |
Sales Tax Payable CA |
|
GA |
Sales Tax Payable GA |
|
NY |
Sales Tax Payable NY |
Tax Type Name: Transit
|
Nexus |
Liability/Sales Tax Account |
|---|---|
|
CA |
Sales Tax Payable CA |
|
GA |
Sales Tax Payable GA |
|
NY |
Sales Tax Payable NY |
Examples of tax types and tax control accounts (International)
Tax Type: VAT
|
Nexus |
Liability/Sales Tax Account |
Asset/Purchase Tax Account |
|---|---|---|
|
Taiwan (Province of China) |
VAT on Sales |
VAT on Purchases |
Tax Type Name: GST
|
Nexus |
Liability/Sales Tax Account |
Asset/Purchase Tax Account |
|---|---|---|
|
Singapore |
GST on Sales |
GST on Purchases |