Configuring Tax Exemption Rules
The “Tax Exemption Rules” app allows you to configure custom conditions to prevent VAT (or any other tax) from being applied to specific clients or products across sales cycle outputs (sales orders, estimates, invoices, and others), in line with tax exemption laws in certain sectors (such as medical and educational). This guide explains how to access the rule configuration screen and set up exemption conditions for clients and products.
How to Access the Rule Configuration Screen
- From the main menu, click on “Sales”.
- From the dropdown menu, click on “Sales Settings”.
- On the “Sales Settings” screen, click the “Invoice Settings” card.
- Under “Invoice Issuance” settings, look for the “Tax Exemption Rules” setting, and click the “Manage Rules” button.
Rule Setup Information
Apply Rule To
A dropdown field (required) that defines the basis on which the exemption rule is built, supporting the following values:
- Clients: the exemption rule involves conditions specific to clients only.
- Products: the exemption rule involves conditions specific to products only.
- Clients and Products: the exemption rule includes conditions for both clients and products together.
Client Conditions
This section appears only when “Clients” or “Clients and Products” is selected in the “Apply Rule To” field, and contains the following fields:
- Select Clients: a multi-select search field that lets you specify one or more specific clients by name, to exempt them specifically without affecting other clients on the account.
- Client Category: a multi-select search field that lets you specify one or more client categories (e.g., VIP), exempting all clients belonging to those categories without needing to select them individually.
- Client Nationality: a multi-select dropdown field that lets you apply the exemption based on the client’s nationality — for example, exempting local clients while excluding foreign nationals, or vice versa.
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Product Conditions
This section appears only when “Products” or “Clients and Products” is selected in the “Apply Rule To” field, and contains the following fields:
- Select Products: a multi-select search field that lets you specify a particular product or service to exempt from tax when it’s included on invoices or various sales forms.
- Product Category: a multi-select search field that lets you specify one or more product categories (e.g., Meals), exempting all products and services belonging to those categories at once, instead of selecting each item individually.
Logical Operator
This field appears only when “Clients and Products” is selected in the “Apply Rule To” field, and determines how conditions are handled when both sections have conditions configured:
- Check Both Conditions Together: requires both the client condition and the product condition to be met simultaneously for the exemption to apply. Example: if the client matches the exemption condition but the product doesn’t, the exemption rule is voided and tax is applied to the product normally.
- Check Only One Condition: it’s enough for either condition (client or product) to be met for the exemption to apply. Example: if the client matches the exemption condition, even if the product doesn’t, the exemption still applies, and selecting a tax rate above 0% is blocked.
Saving and Using the Rules
- After configuring the rules and conditions as needed, click “Save”.
- Go to the sales invoice or estimate screens to test exempted clients or items; the system will automatically prevent applying any tax rate above 0% on items matching the exemption rule.
- If the user attempts to select a tax rate above 0% on an item covered by the exemption, a message appears indicating that applying tax is blocked according to the exemption rules configured on the account.