South Africa


I’m wondering about these tax codes.

I’m not sure naming is correct. Could you please create sample transactions how each tax code is realistically being used?

Especially, tax codes that can be used on invoices, when viewing the invoice you want to make sure the name of tax code is appropriate as tax code name shows on invoice.

I was trying to achieve what is on that form attached. pg-2-3.pdf (363.4 KB)

Currently I have to manually separate such any transactions that are not the normal VAT 15% when I am doing returns.

The naming matches what is needed when submitting the VAT returns

Most small business mainly uses Standard rate - VAT 15%. Instances where they dispose of their capital asset - they need to declare that under capital goods.

Maybe what I can do for now will be show only VAT 15% and VAT 0% since most business uses these 2 more often.

I have created sample transactions on how the tax codes will be used. There is also a report under Report Transformations. You can see how the transactions pulls through on the declaration.

If there could be a way to use custom name as we do on the invoice it would assist to replace the name of the VAT type with a more friendly one.

  • To present data for a VAT return, a report transformation should be used

  • In a report transformation a longer description of each number is typically given to correspond the the tax authorities VAT return item label / description.

@Panashe_Mlambo I can see you’ve done some improvements. It looks better now. Can we have realistic sample transactions for each tax code? There are still 7 tax codes not being used in any transaction.

You will discover that some tax codes are not correct yet. For example

100% tax code is not going to do what you think it would do. I think this should be 0% tax code. Or if this tax code represents VAT paid to customs on imported goods, then it should be “pass-through” tax code.


But I’m not sure in what context this tax code is meant to be used. So that’s why it’s important realistic sample transactions are created for every tax code which will verify everything is right.

@lubos Regarding Imported Capital Goods (Fixed Asset purchases): I am not familiar with the Pass-through tax rate mechanism and would have used the Custom 100% single rate as Panashe has it. The same principle would apply to Imported Non Capital Goods (Trading stock). Here is how the VAT needs to be treated: First you have an invoice from a foreign vendor with no VAT on for the goods. You would process this invoice without VAT (0%). Then you have an invoice from the clearing agent which has separate line items, some may have VAT on and other line items not. However, you also have a separate line item with Customs VAT (only VAT). This customs VAT can be a different percentage of the actual cost of the goods, depending on the nature of the goods. So the practice on processing the invoice from the clearing agent would be to process one line on the purchase invoice to Freight Charges (Expense) no VAT (0%) and one line with the total of the VAT to VAT Payable (Liability). I.e. one line with 0% VAT and one line with 100% VAT. Hope this helps.

I also understand that the localisation caters for chart of account codes. Chart of Account codes are not strictly regulated, but it would make sense to have a more extensive list in the localisation. I would like to contribute towards this. @Panashe_Mlambo would you be interested for us to work together in getting a more extensive COA list together?

@lubos The other aspect I need to understand is if we can have two localisations per country? As far as VAT is concerned, any business in South Africa with a turnover of less than ZAR 1 000 000 are not required to register for VAT and would not charge VAT or claim VAT at all. So if we were to use the localisation to define a more extensive list for chart of accounts, we need one for VAT en one for no VAT, otherwise all businesses will be setup with VAT.

Read the section of this Guide on custom tax codes: Create and use tax codes | Manager.

Then simply do not select a tax code for line items on transactions. Whether a tax code has been defined in a localization or not is irrelevant.

Your chart of accounts does not need to be different. Accounts may be unused, but zero-balance accounts can be suppressed. And as a business grows above the threshold, Manager will already be set up to handle the change.

Thank you for your reply Tut. I have read the guide again. What had me a bit confused is this statement: " the tax is paid to the tax authority" The VAT is not paid directly to our tax authority, but to a clearing agent being a different supplier. However, now that I see the full VAT amount is booked to the VAT Liability account, the pass-through code makes more sense.

Yes, we don’t want them to be different, we want a more comprehensive list. I.e. the plan is to add more accounts to the default Manager list.

Read that statement in context. It is part of an example described as a “common application.” Nothing says that is the only potential application.

Adding accounts is fine. But you should only add accounts necessary for all businesses. You are not designing a template for your business or that you prefer for your clients. That is still a task for an individual business. You are designing a template that gives South African companies a structure for what is universally necessary. (However, there is nothing to say you could not take the final localization containing the necessary elements, customize it to your taste, and save it as a backup that would be imported as the foundation for every new client.)

Yes, the intention is only to add accounts which is universally necessary.

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I have updated those tax codes to pass-through since it is VAT charged on imported goods.

I am going to include some sample transactions to show you why I added the tax codes initially.

Tax codes that will be used on invoices
1. Accommodation
If a VAT vendor is supplying accommodation e.g a guest house. The supply of accommodation for bookings less than 28 days will attract normal VAT at 15%. For some reason lets say the VAT vendor decided to let out some rooms to patrons that will use them for the full month.

For vendors that supply accommodation they need to declare their VAT under supply of accommodation

When I added the tax codes below I was trying to cater for these businesses

Tax codes that will be used with journals
1. Bad debts
Sometimes a business may need to write off some debtors due to the debt being noncollectable. The tax code for bad debts will be used with journal entries but not on the invoice. I added this transaction. When declaring VAT return bad debts have to be declared separately.

2. Change in use
This tax code will be used with journals also. It will used for example when Vendor is now using capital asset that was being used to supply taxable supplies to supply exempt supplies. The VAT that was claimed when the capital asset bought will need to be paid back or vice versa. Another example is when there is mixed (60% use for taxable supplies & 40% use for non taxable supplies) use then to input tax could be claimed to the extent that it is for taxable supplies.

I was thought tax codes were defined based on

  • their reporting groups shown on the reports required to be submitted to a tax authority
  • Not what tax codes should be applied to individual goods and services.

So if reporting to your tax authority included

  • Accommodation exceeding 28 days and
  • Accommodation not exceeding 28 days

Then you would need a tax code for each.

However if your tax authority requires documentation of

  • Vat 15%
  • Vat 15% Capex
  • Vat exempt / zero rate

Then no accommodation tax codes would be required. When a user is invoicing for accommodation, they would then select the appropriate tax code depending on specific local regulations (such as duration of accommodation)

I added the tax codes based on the tax authorities reporting requirements.

Output tax form below

Input tax form below


I don’t think this is really correct.

My understanding is that you still charge customer 15% VAT even on 30 days of accomodation. It’s just that you remit to government 9% only (60% of 15%).

In that case tax code should be set up like this


You are correct. I have checked the updates that you have done on the invoice they make sense and the VAT return report is giving the intended results.

I think the changes that are done so far can provide minimum viable functions to spin out a South African localisation settings.