In this lesson I will show you how to add sales taxes. Still under settings you will see

Sales taxes. The system comes pre-configured with rates for the VAT standard and also, for the VAT flat rate scheme. Depending on which of them you are registered under, you will apply them to your product or services.

If you want to create your own sales taxes, click on create a new sales tax. On the pop-up form, enter the standard tax name which is the name given to the tax by the tax authorities. So let's call our standard tax name, tourism levy. This name will be shown on your invoices and bills created.

Then there is display name, this can be used to differentiate various taxes that have undergone rate changes. For instance, if you had in the system, VAT being 3% and this rate is changed, you would need to create a new VAT but want to give it a different name to differentiate the first VAT from the second VAT.

In our example, we can call this second VAT. Also you will be required to select the

tax type whether it is a direct tax or a compound tax. Direct taxes are applied directly on the tax exclusive amount. An example is a withholding tax in Ghana or the VAT flat rate scheme.

Then we have compound taxes which after you create them, you will have to add input taxes for them to be complete. An example is the current VAT standard system in Ghana which has GETfund and NHIL as input taxes before the VAT of 12.5% is applied.

Then, indicate the tax rate. Lastly you will need to tick if the tax is recoverable or not. Currently, businesses that are registered under the VAT flat scheme cannot recover their sales taxes whilst those under VAT standard are allowed to recover their sales taxes. Thank you.