Product Tax Override on Product Category

Product Tax Override on Product Category

In some jurisdictions, Tax regulations dictate various rates on different product types. For example, in the UK you need to consider the following when determining the taxability of a product.


“The standard VAT rate is only paid on some printed items. As a broad rule of thumb this is true for all items that you write on such as stationery, greetings cards, forms, postcards and invitations etc.
Promotional or information items of print are zero-rated, meaning they are completely free of VAT. These include brochures, leaflets, pamphlets and books.”

Examples of Zero-Rated products in the UK:
  • Antique Maps
  • Astronomical Charts
  • Bibliographies
  • Booklets
  • Books (complete and bound)
  • Brochures
  • Catalogues
  • Charts (geographical / topographical)
  • Circulars
  • Fixture Lists
  • Instruction manuals
  • Knitting Patterns
  • Leaflets (more than 50, A4 max size, less than 25% as a form)
  • Magazines
  • Manuals
  • Maps
  • Music & Scores
  • Newsletters
  • Price Lists
  • Programmes
  • Theses
  • Timetables (not card)
To manage these product types, printIQ has an optional General Ledger selector on the Product Category definition where specific tax rated products can reside.


When the ‘Force Override’ flag is set to ‘No’, the GL account is applied to the invoice line, but the tax rate is determined from the customers tax rate. 
Setting the ‘Force Override’ to ‘Yes’ will bring the tax rate on the linked GL account onto the invoice line.

To calculate tax rates on freight correctly, especially when multiple deliveries are used that have different tax rates applied, the setting Invoice Split Delivery Mode should be set to either Split Freight Lines per Delivery or Split All Lines Per Delivery


The setting Default Invoice Mode also requires to be set to anything other than ‘Single Line’


Setting this to Single Line will result in any freight tax rates being ignored, with the freight price rolled up into the product
Tax on Freight can be controlled by associating the appropriate General Ledger Account with the Delivery Types in Freight Admin

Where applicable, the results of these calculations can be seen on the Checkout screen under the totals of each product on the quote.

In the following example my Customer is set with the tax code VAT (20%)
Split Delivery Mode was set to Split Lines per Delivery .
Default Invoice Mode is set to Single Line Split Freight.

In the Business Card Category I set the GL account to ‘BC-BusCards’ with Force Override set to ‘No:


This should result in the invoice having the GL account BusCard for this product, and because Force Override is ‘No’, apply the Customers tax rate.

In the Letterhead Category I have set the GL Account to ‘No VAT’ and Force Override is ‘Yes’:


This will force the tax rate set against that GL account to be applied to this product at invoice time.

Creating a quote with each of these products, we can see the tax calculations under each product on the checkout screen with VAT applied to the Business Card while the Letterhead has no tax applied.


In this example, the freight is not set to have a tax override, so the Customers tax rate is applied to it:


The totals reflect this.


Tax being calculated from the Freight Cost plus the sell price of the Business Cards:
Product - 178 + Freight - 22.75 = Taxable Total - 200.75 * VAT Rate 20% = 40.15
Accept the order, create the jobs and invoice.

The invoice with present the appropriate tax rate and General Ledger account applies as per the setup:


Business cards has the GL code ‘BC’ with the customers tax rate (VAT) applied.
Freight defaults to the GL account 200 Sales which is not configured with a tax rate, so the Customers tax rate is applied.
The Letterhead has the GL code No VAT and the tax rate has been overridden with tax code Zero Rated

Applying Tax Rates to Store Items

The same methodology is used to set Tax Rates on IQ Store items.

Store items can be added to multiple IQ Store Categories.


If a store item is in both a taxable and a non-taxable category, the tax rate that is applied is determined by the general ledger tax rate of the IQStore category from which this item was LAST added to the cart.
The ‘Taxable’ category is set to ‘None’ in the Default General Ledger Account setting:

‘None’ is NOT a General Ledger account. It denotes that there is no GL account set against this category

While the ‘Zero Rated’ category is set to No VAT and Force Override:


The following situation should never occur if Customer and Customer Groups are used for access to the different categories, but to clarify what does happen if you can access the product in both categories.
When ordering this item if it is added from the Taxable category:


And then proceed to the checkout, there is a tax applied to the product in the cart.


If the same product is added again to the quote, but this time from the No VAT category


There is still 1 item in the cart, but with a quantity of 2
Looking at it in the Checkout screen, the tax rate from the No VAT category is applied to the product.

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