How to manage Taxes in Odoo

A business needs to pay taxes which comes in several variations like federal, state, and local.

Taxes may differ due to various business activities. Hence, you also need to charge the taxes from your customers. Therefore, managing taxes in the way you want to charge from your customers is vital.

Let’s see how you can manage taxes in Odoo!

Manage taxes in Odoo

By default in Odoo, you can manage taxes inside the products. If you want to manage taxes products wise then you can set taxes for Sale/Purchase inside the product form.

• You can set customer taxes inside the General Information tab.

• Navigate to the Purchase Tab in the product form to set vendor taxes.

Default taxes for Invoices in Odoo

You can also set default taxes for invoices. Simply, go to the Accounting Module and then navigate to the Settings.

Here, you can set the Sales and Purchase Tax in Odoo.

General Use Cases

Some use cases that you may stuck while charging taxes from your customers

• Different customers may have different tax rates for the same product.
• Tax rates may be different for countries or in some countries there are tax exemptions
• Tax rates may differ by Country Group/ Country/ Province(States).

So in order to set correct taxes for customers/products Odoo uses the concept of Fiscal Positions.

Fiscal Positions in Odoo

As per fiscal position concept, if customers have fiscal position then actual taxes will be replaced by another one.
There have some example to demonstrate use of Fiscal Positions,

• Belgian: with 21% VAT (default, on product form)
• European: with 0% VAT (intra-EU)
• Other countries: 0% (but a different tax since it uses different accounts)
• Construction: with 0% VAT, only for construction companies in Belgium

Configure Fiscal Positions

Define Fiscal Positions

User can define fiscal position from the Accounting application by going through below path,

“Accounting -> Configuration -> Invoicing -> Fiscal Positions”

Here you can define fiscal position and prepare ‘Tax Mapping‘ inside it as per your requirement.

You can also map income/expense account mapping inside Account mapping.

Automatically Apply Fiscal Positions

If you want the fiscal position to be automatically applied on orders then you can enable ‘Detect Automatically‘ checkbox inside the fiscal position. After enabling the options you will see some other options as well.

• Country Group : If you want fiscal positions to be automatically applied Country group wise.
• Country : If you want fiscal positions to be automatically applied country wise.
• Federal States : If you want fiscal positions to be automatically applied to a country’s province(state) wise.
• Zip Range : If you want fiscal positions to be automatically applied between the range of zip(postal code) of a specific country.

Tax Mapping to manage the use cases mentioned above

Inside the ‘Tax Mapping‘ you can tax with the tax for which you want to replace with or you can leave it blank if you don’t want to apply any taxes.

Manage Tax Exemption Cases for B2B or other type Customers

You can enable ‘VAT required‘ to manage that case, which means if the user doesn’t have VAT then fiscal positions will not be applied.

Enhance tax management more in Odoo

Visit the store page to know how Odoo Price Inclusive For Group Taxes can help you in detail.

Visit the store page to know how Odoo GST – Returns and Invoices can help you in detail.

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