Set Up Calculations and Posting Methods for Goods and Services Tax

Consumers and businesses pay goods and services tax (GST) when they purchase goods or services. The amount of GST to pay can vary, depending on several factors. In Business Central, you set up GST to specify the rates used to calculate tax amounts based on the following parameters:

• Who you sell to
• Who you buy from
• What you sell
• What you buy

You can set up GST calculations manually, but that can be tricky and time-consuming. It's easy to use different GST rates by mistake and create inaccurate GST-related reports. To make GST set up easier, we recommend you use the assisted GST Setup guide provided in the product.

However, if you want to set up the GST calculations yourself, or just want to learn about each step, this article contains descriptions of each step:

Tip

Business Central is available in countries/regions that do not use VAT. For information about how to set up and report tax in your particular country/region, see the articles in the Local Functionality section.

Set up GST using the assisted setup guide (recommended)

Note

You can use the GST Setup guide only if you have created a My Company and have not yet posted transactions that include GST.

To start the assisted setup guide, follow these steps:

1. Choose the icon and enter Assisted Setup.
2. Choose Set up Goods and Services Tax (GST) and complete the steps.
3. When you have completed the assisted setup, visit the GST Posting Setup page to check if you need to fill in more fields according to the local requirements in your version of Business Central. Learn more at Local functionality in Business Central.

Check the GST posting setup

To support your fast start, Business Central notifies you of missing general ledger (G/L) accounts in posting groups or posting setups, such as on the GST Posting Setup page. You can turn this type of notification on or off using the G/L Account is missing in posting group or setup notification in the My Notifications page. Just go to the My settings page, and then choose the Change when I receive notifications. link.

If you choose such a notification, Business Central automatically creates those posting setups based on the posting groups in the document or journal you're currently working on.

At this point, you can just fill in the missing G/L accounts. But, later, when you further refine the setup, you might realise this initial setup is wrong. And Business Central doesn't allow the deletion of a GST posting setup and general posting setup when entries have been created based on such configurations. So starting in 2022 release wave 1, you can use the Blocked field on the GST Posting Setup page to prevent users from mistakenly using a setup that is no longer relevant for new postings.

Set up a default GST date for documents and journals

GST reporting in Business Central is based on the GST Date to include GST entries on GST reports in a GST period. The GST date can be changed on all documents and journals, but you must specify a default value for GST date.

Note

After posting the document or journal, the GST Date will appear on GST Entries and G/L Entries as well as on the posted document if exists.

To set up a default value for a GST date, follow these steps:

1. Choose the icon and enter General Ledger Setup, and then choose the related link.
2. On the General FastTab, in the Default GST Date field, choose either Posting Date or Document Date.
3. Close the page.

Note

By default, the Default GST Date is the Posting Date.

Enabling or disabling the GST Date feature

Some countries/regions require that businesses use a specific VAT date, but other countries/regions don't. Some countries/regions also require businesses to change the VAT date in specific situations after they have posted documents, but other countries don't allow changes to VAT dates. To allow for different contexts, you can choose whether you want to use this functionality and, if so, to what degree.

To set up the level of GST date usage, follow these steps:

1. Choose the icon and enter General Ledger Setup, and then choose the related link.
2. On the General FastTab, in the GST Date Usage field, specify the degree to which you want to use the GST date feature. You can choose one of the following options:

Type	Description
Use full GST Date functionality	Everything related to GST Date works by default, giving you the maximum GST Date functionality. You can set up the date, change it in documents, report based on it, and modify the date after posting as long as the period isn't closed or protected with allowed dates for posting.
Use but do not allow modifications	Everything related to GST Date works by default with one exception. You can't modify the GST Date in GST Entries.
Not using GST Date functionality	Business Central will hide and make the GST Date fields not available on documents, journals, and entries. The Default GST Date is configured as the Posting Date.

3. Close the page.

Important

Even if you choose the Not using GST Date functionality option, Business Central will use the GST Date in the background. Because the Default GST Date is configured as the Posting Date, and you can't change it in this case, you'll get the same experience as without this feature. GST Date fields will be removed from all pages, but this field will still exist in tables and reports will work based on it.

Limiting periods for posting and changing the GST date

You can prevent people from posting or changing GST entries in specific date ranges. You set the restriction using two settings:

• Based on closed GST Return Period
• Based on the Allow Posting From and Allow Posting To fields.

To limit posting based on GST return period

1. Choose the icon, enter General Ledger Setup, and then choose the related link.
2. On the General FastTab, in the Control GST Period field, specify the degree of GST Return Period control. The following table describes the options.

Type	Description
Block posting within closed and warn for released period	Prevent people from posting a document or journal, or changing GST entries that have a GST date within a closed GST Return Period. Business Central also shows a warning if your GST Return Period is open, but the status of GST Return is Released or Submitted.
Block posting within closed period	Prevent people from posting a document or journal, or changing GST entries that have a GST date within the closed GST Return Period.
Warn when posting in closed period	Show a warning, but don't block posting, if you want to post a document or journal that has a GST date within a closed GST Return Period.
Disabled	Take no action based on a closed GST Return Period.

Limit posting based on Allow from/to period

Note

As of Business Central version 23.1, this control is changed. In earlier versions, there was only one control on the General Ledger Setup page for both Posting Date and GST Date. Now, these controls are split, so control in the General Ledger Setup page is for the Posting Date only and control in the GST Setup page is for the GST Date only. There are also new date controls in the User Setup page.

Version 23.1 or newer

Important

When you upgrade to a new version, be aware that values are upgraded in the new Allow GST Date From/To in the GST Setup page based on the values in Allow Posting From/To in the General Ledger Setup. If you want to use different date controls, open the GST Setup page and make changes.

You can set up limitations on the company or at specific user levels.

To limit all postings for the whole company:

1. Select the icon, enter GST Setup, and then select the related link.
2. On the GST Date FastTab, in the Allow GST Date From field, specify the GST date from which you allow posting. Posting a document or journal with a GST date before this date isn't allowed.
3. On the GST Date FastTab, in the Allow GST Date To field, specify the GST date until which you allow posting. Posting a document or journal with a GST date after this date isn't allowed.

To limit postings for the specific user:

1. Select the icon, enter User Setup, and then select the related link.
2. In the User ID field, specify the user allowed to post in a specific period.
3. In the Allow GST Date From field, specify the GST date from which you allow posting. Posting a document or journal with a GST date before this date isn't allowed.
4. In the Allow GST Date To field, specify the GST date until which you allow posting. Posting a document or journal with a GST date after this date isn't allowed.

Versions before 23.1

You can set up limitation on the company or specific user levels.

To limit all postings for the whole company:

1. Choose the icon, enter General Ledger Setup, and then choose the related link.
2. On the General FastTab, in the Allow Posting From field, specify the GST date from which you allow posting. Posting a document or journal with a GST date before this date isn't allowed.
3. On the General FastTab, in the Allow Posting To field, specify the GST date until which you allow posting. Posting a document or journal with a GST date after this date isn't allowed.

To limit postings for the specific user:

1. Choose the icon, enter User Setup, and then choose the related link.
2. In the User ID field, specify the user allowed to post in specific period.
3. In the Allow Posting From field, specify the GST date from which you allow posting. Posting a document or journal with a GST date before this date isn't allowed.
4. In the Allow Posting To field, specify the GST date until which you allow posting. Posting a document or journal with a GST date after this date isn't allowed.

Set up Australian business numbers for your country or region

To help ensure people enter valid exemption certification numbers, you can define formats for the exemption certification numbers that are used in the countries or regions in which you do business. Business Central displays an error message if someone makes a mistake or uses a format that is incorrect for the country or region.

To set up exemption certification numbers, follow these steps:

1. Choose the icon, enter Countries/Regions.
2. Choose the country or region, and then choose the VAT Reg. No. Formats action.
3. In the Formats field, define the format by entering one or more of the following characters:

• # Requires a single-digit number.

• @ Requires a letter. This format isn't case-sensitive.

• ? Allows any character.

  Tip

  You can use other characters as long as they are always present in the country or region format. So, if you need to include a period or a hyphen between sets of numbers, you can define the format as ##.####.### or @@-###-###.

Set up GST business posting groups

GST business posting groups should represent the markets in which you do business with customers and vendors, and define how to calculate and post GST in each market. Examples of GST business posting groups are Domestic and European Union (EU).

Use codes that are easy to remember and describe the business posting group, such as EU, Non-EU, or Domestic. Each code must be unique, meaning you can set up as many codes as you need, but you can't have the same code more than once in a table.

To set up a GST business posting group, follow these steps:

1. Choose the icon, enter GST Business Posting Groups, and then choose the related link.
2. Fill in the fields as necessary.

You can set up default GST business posting groups by linking them to general business posting groups. Business Central automatically assigns the GST business posting group when you assign the business posting group to a customer, vendor, or general ledger account.

Set up GST product posting groups

GST product posting groups represent the items and resources you buy or sell, and determine how to calculate and post GST according to the type of item or resource.

It's a good idea to use codes that are easy to remember and describe the rate, such as NO-VAT or Zero, VAT10 or Reduced for 10 percent VAT, and VAT25 or Standard for 25 percent.

To set up a GST business posting group, follow these steps:

1. Choose the icon, enter GST Product Posting Groups, and then choose the related link.
2. Fill in the fields as necessary.

Combine GST posting groups in GST posting setups

Business Central calculates GST amounts on sales and purchases based on GST posting setups, which are combinations of GST business and product posting groups. For each combination, you can specify the GST percent, GST calculation type, and general ledger accounts for posting GST for sales, purchases, and reverse charges. You can also specify whether to recalculate GST when a payment discount is applied or received.

Set up as many combinations as you need. To group GST posting setup combinations with similar attributes, define a GST Identifier for each group, and assign the identifier to the group members.

Note

A GST Identifier is a code you can use to group similar attributes. We recommend you use different GST identifiers for different GST percentages.

To combine GST posting setups, follow these steps:

1. Choose the icon, enter GST Posting Setup, and then choose the related link.
2. Fill in the fields as necessary. Hover over a field to read a short description.

Assign GST posting groups by default to multiple entities

If you want to apply the same GST posting groups to multiple entities, you can set up Business Central to do so by default. There are a couple of ways to do this:

• You can assign GST business posting groups to general business posting groups, or customer or vendor templates
• You can assign GST product posting groups on general product posting groups

The GST business or product posting group is assigned when you choose a business or product posting group for a customer, vendor, item, or resource.

Assign GST posting groups to accounts, customers, vendors, items, and resources

The following sections describe how to assign GST posting groups to individual entities.

To assign GST posting groups to individual general ledger accounts

1. Choose the icon, enter Chart of Accounts, and then choose the related link.
2. Open the G/L Account card for the account.
3. On the Posting FastTab, in the Gen. Posting Type field, choose either Sale or Purchase.
4. Choose the GST posting groups to use for the sales or purchase account.

To assign GST business posting groups to customers and vendors

1. Choose the icon, enter Customer or Vendor, and then choose the related link.
2. On the Customer or Vendor card, expand the Invoicing FastTab.
3. Choose the GST business posting group.

To assign GST product posting groups to individual items and resources

1. Choose the icon, enter Item or Resource, and then choose the related link.

2. Do one of the following:

   • On the Item card, expand the Price & Posting FastTab, and then choose Show more to display the GST Product Posting Group field.
   • On the Resource card, expand the Invoicing FastTab.

3. Choose the GST product posting group.

Set up clauses to explain GST exemption or non-standard GST rates

You set up a GST clause to describe information about the type of GST that is being applied. The information may be required by government regulations. After you set up a GST clause, and associate it with a GST posting setup, the GST clause is displayed on printed sales documents that use the GST posting setup group.

If needed, you can also specify how to translate GST clauses to other languages. Then, when you create and print a sales document that contains a GST identifier, the document will include the translated GST clause. The language code specified on the customer card determines the language.

When non-standard GST rates are used in different types of documents, such as invoices or CR/Adj notes, companies are usually required to include an exemption text (GST clause) stating why a reduced GST or zero GST rate has been calculated. You can define different GST clauses to be included on business documents per the type of document, such as invoice or CR/Adj note. You do this on the GST Clauses by Document Type page.

You can modify or delete a GST clause, and your modifications will be reflected in a generated report. However, Business Central doesn't keep a history of the change. On the report, the GST clause descriptions are printed and displayed for all lines in the report alongside the GST amount and the GST base amount. If a GST clause has not been defined for any lines on the sales document, then the whole section is omitted when the report is printed.

To set up GST clauses

1. Choose the icon, enter GST Clauses, and then choose the related link.
2. On the GST Clauses page, create a new line.
3. In the Code field, enter an identifier for the clause. You use this code to assign the clause to GST posting groups.
4. In the Description field, enter the GST exemption text that you want to display on documents that can include GST. In the Description 2 field, enter more text, if needed. The text will be displayed on new document lines.
5. Choose the Description by document type action.
6. On the GST Clauses by Document Type page, fill in the fields to set up which GST exemption text to display for which document type.
7. Optional: To assign the GST clause to a GST posting setup right away, choose Setup, and then choose the clause. If you want to wait, you can assign the clause later on the GST Posting Setup page.
8. Optional: To specify how to translate the GST clause, choose the Translations action.

To assign a GST clause to a GST posting setup

1. Choose the icon, enter GST Posting Setup, and then choose the related link.
2. In the GST Clause column, choose the clause to use for each GST posting setup it applies to.

To specify translations for GST clauses

1. Choose the icon, enter GST Clauses, and then choose the related link.
2. Choose the Translations action.
3. In the Language Code field, choose the language you are translating to.
4. In the Description and Description 2 fields, enter the translations of the descriptions. This text displays in the translated GST report documents.

To specify extended text for GST clauses

Note

If your country or region requires longer text for the GST clauses than the default version supports, you can specify the longer text for the GST clauses as extended text so that it prints on the sales and purchase reports.

1. Choose the icon, enter GST Clauses, and then choose the related link.
2. Choose the Extended Texts action.
3. Choose the New action.
4. Fill in the Language Code and Description fields.
5. Optionally, select the All Language Codes field, or specify the relevant language in the Language Code field if you use language codes.
6. Fill in the Starting Date and Ending Date fields if you want to limit the dates on which the extended text is used.
7. In the Text lines, write the extended text for your GST clauses.
8. Select the relevant fields for the document types where you want the extended text printed.
9. Close the page.

Create a GST posting setup to handle Import GST

You use the Import GST feature when you need to post a document where the entire amount is GST. You will use this if you receive an invoice from the tax authorities for GST for imported goods.

To set up codes for import GST, follow these steps:

1. Choose the icon, enter GST Product Posting Groups, and then choose the related link.
2. On the GST Product Posting Groups page, set up a new GST product posting group for import GST.
3. Choose the icon, enter GST Posting Setup, and then choose the related link.
4. On the GST Posting Setup page, create a new line, or use an existing GST business posting groups in combination with the new GST product posting group for import GST.
5. In the GST Calculation Type field, choose Full GST.
6. In the Purchase GST Account field, enter the general ledger account to use for posting import GST. All other accounts are optional.

Use reverse charge GST for trade between EU countries or regions

Some companies must use reverse charge VAT when trading with other companies. For example, this rule applies to purchases from EU countries/regions and sales to EU countries/regions.

Note

This rule applies when trading with companies that are registered as VAT liable in another EU country/region. If you do business directly with consumers in other EU countries/regions, then you should contact your tax authority for applicable VAT rules.

Tip

You can verify that a company is registered as VAT liable in another EU country/region by using the EU VAT Registration Number Validation service. The service is available for free in Business Central. For more information, see Verify VAT registration numbers.

Sales to EU countries or regions

VAT isn't calculated on sales to VAT-liable companies in other EU countries/regions. You must report the value of these sales to EU countries/regions separately on your VAT statement.

To correctly calculate VAT on sales to EU countries/regions, you should:

• Set up a line for sales with the same information for purchases. If you have already set up lines on the GST Posting Setup page for purchases from EU countries/regions, then you can also use these lines for sales.
• Assign the VAT business posting groups in the VAT Bus. Posting Group field on the Invoicing FastTab of the customer card of each EU customer. You should also enter the customer's VAT registration number in the VAT Registration No. field on the Foreign Trade FastTab.

When you post a sale to a customer in another EU country/region, the VAT amount is calculated, and a VAT entry is created by using the information about the reverse charge VAT and the VAT base, which is the amount that is used to calculate the VAT amount. No entries are posted to the GST accounts in the general ledger.

If you want to use combination of GST business posting group and GST product posting group for reporting as services in the periodic GST reports, mark the EU Service field.

Note

The EU Service field is only applicable for GST reports. The field isn't related to the Service Declaration or Intrastat for Services features.

GST rounding for documents

Amounts in documents that are not yet posted are rounded and displayed to correspond with the final rounding of amounts that are actually posted. GST is calculated for a complete document, which means that GST is calculated based on the sum of all lines with the same GST identifier in the document.

Set up GST reporting

You must set up information about how the tax authorities in your country or region require you to submit GST reports. The following steps illustrate the most commonly used information. However, your country or region may require other steps. For more information, see the relevant article in the Local functionality section in the panel to the left.

1. Choose the icon, enter GST Report Setup, and then choose the related link.

2. To let users change and resubmit this report, choose the Allow Modification field.

3. If the tax authorities require that you submit GST reports that also include the net amount that was used to calculate GST, choose the Report GST Base field.

4. Choose the number series to use for each report. Hover over a field to read a short description.

5. In supported countries/regions, to set up VAT return periods, fill in the Report Version and Period Reminder Calculation fields in the Return Period section.

   In countries/regions where VAT return periods are required by the tax authorities, such as the UK, you must fill in additional fields as well. Hover over a field to read a short description. However, in the British version, this section has the name Making Tax Digital.

6. If your company is part of a GST group, then specify your role. For more information, see The GST Group Management Extension

See also

Set Up GST Statement Templates and GST Statement Names
Set Up Unrealised Goods and Services Tax
Report GST to a Tax Authority
Work with GST on Sales and Purchases
Work with the GST Rate Change Tool
Verify VAT registration numbers
Local functionality in Business Central
VAT Reporting in the German version
Belgian VAT
Italian VAT
Set Up Electronic VAT and ICP Declarations in the Dutch Version
VAT Reports in the Spanish Version
Set Up Goods and Services Tax Posting in the Australian Version
VAT in the Czech Version
VAT Reporting in the Norwegian Version
Reporting Goods/Services Tax and Harmonized Sales Tax in Canada

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