Tax Configuration

From WHMCS Documentation

This page describes a feature updated in version 7.7 and above

Enabling Tax Support

In order to charge tax, Tax Support must be enabled. To do this, go to Setup > Payments > Tax Configuration and toggle switch at the top of the page labelled Tax Support and click Save Changes. Tax support is now enabled in WHMCS and further tax configuration can now be completed.

General Tax Settings

Tax/VAT ID Number

Enter your company Tax/VAT ID in this field to be displayed under the company address on the invoices displayed in the client area and on the PDF printable versions.

Inclusive/Exclusive Tax

By default, tax is exclusive. What this means is that the prices you enter into WHMCS need to have tax added onto them at the rates you've set. The alternative is inclusive tax. Oppositely, this means that the prices you enter into WHMCS already have tax included in them and WHMCS needs to work backwards to calculate the amount of tax being charged based on the rates you've set. You can choose the tax method you want to use in Setup > Payments > Tax Configuration.

  • Exclusive Tax > Tax Amount = Item Price x ( Tax Rate / 100 )
  • Inclusive Tax > Tax Amount = ( Item Price / ( 100 + Tax Rate ) ) x Tax Rate

Custom Invoice Numbering

Custom Invoice Number was part of the EU VAT Addon

To enable Custom Invoice Numbering, toggle the appropriate switch on the Tax Configuration page and click Save Changes. Once enabled, the configured custom invoice numbering will apply to invoices generated from the point of enabling.

Custom Invoice Numbering Format

This is the format of the custom invoice number to be applied to the invoices generated in WHMCS. The default value of this is `{NUMBER}` which will contain just the value from Next Invoice Number. The field can contain any text to be contained in the invoice number that the client will see. Additional tags can be added to the field which will be replaced as the invoice is generated. Available tags are:

  • {NUMBER} - This is the value of the Next Invoice Number field
  • {YEAR} - The four digit year value for the current date
  • {MONTH} - The two digit month value for the current date
  • {DAY} - The two digit day value for the current date

Next Invoice Number

The next number that will be assigned on the next invoice generated.

Only fill in this field if you want to change the number of the next invoice to be generated. This number should only ever be moved forwards.

Auto Reset Numbering

Allows you to automatically reset the invoice number periodically. The automatic invoice numbering reset occurs when the automation cron runs on the last day of the month/year, so if you wish to use this feature we recommend that you configure the cron hour to run late at night in Setup > Automation Settings

VAT Settings

Previously this was separated into the EU VAT Addon

Enabling VAT Mode

Toggle the "Enable VAT Mode" switch on the VAT Settings tab of Tax Configuration. This will automatically save and open a modal to setup your VAT rules automatically for the EU.

Auto Configure VAT Tax Rules

Should any rules be accidentally deleted, need to be re-created, or the rule name changed, this can be used to create any missing rules or update the name using the appropriate VAT Rate for each EU country.

Custom Field Migration

If a WHMCS installation previously used the EU VAT Addon and a custom field to contain the client VAT Number, this option will display to perform a migration of the tax numbers from the custom field to store them in the client table.

Additional Settings

Further settings can be configured including validating the tax number and setting the client tax exempt. Each setting has a short description.

Tax Rules

Tax Rules must be configured in order to automatically charge tax in the cart. Tax Rules can be viewed and added from the Tax Rules tab of the Tax Configuration page.

Adding a Rule

  • In the Name field, enter a name for the tax zone which allows you to identify it
  • Next, for the Country, choose where this tax rate applies to all countries or whether it only applies to a selected country
  • For the state, again you can choose whether it applies to all states in the selected country or only a selected state
  • Finally, enter the tax rate as a percentage, for example 17.5 and then click the Add Rule button
  • The tax rule will be created and automatically added to the appropriate table for Level 1 or Level 2 rules.

For example, if you were a UK business you would setup the system to charge VAT. In the country field, you would choose "United Kingdom" and for the state you would leave it set at "Apply Rule to All States". You would then enter the tax rate of "20.0" and click the Add Rule button. You can setup an unlimited number of tax rules.

Advanced Rules

Setting Taxed Items

The flexible tax system in WHMCS allows you to set individually which items apply for tax. By default in WHMCS, a product is set to not be taxed. What this means is that even though you have tax rules setup, no tax would be charged for it. So for example you might charge tax on the products you offer but not on services.

Setting a Product/Service as Taxable

  1. Go to Setup > Products/Services > Products/Services
  2. Click the edit icon next to the product you wish to set to be taxable
  3. Tick the checkbox next to the item labelled "Tax Product"
  4. Save your changes to the product

Setting Domains as Taxable

You can set if tax should be applied to domains in Setup > Payments > Tax Configuration - there is a tick box at the Advanced Settings tab for this.

Setting Billable Items as Taxable

You can set if tax should be applied to billable items in Setup > Payments > Tax Configuration - there is a tick box at the Advanced Settings tab for this.

Setting Late Fees as Taxable

You can set if tax should be applied to late fees on invoices in Setup > Payments > Tax Configuration - there is a tick box at the Advanced Settings tab for this.

Setting Custom Invoices as Taxable

You can set if tax should be applied to custom (manually created) invoices in Setup > Payments > Tax Configuration - there is a tick box at the Advanced Settings tab for this.

Compound Tax

A compound tax is one that is calculated after and on top of a primary tax. If you require the Level 2 tax to be added on top of the Level 1 tax, toggle this option on the advanced tab.

Deduct Tax Amount

If the Tax Type is set to Inclusive and the client's country and State/Province selections result in them not meeting any of the tax rules configured, deduct an amount from the order based on the total amount of the taxable items on the order and the percentage of tax that would apply to the default country set under Setup > General Settings > Localisation tab. It will deduct the percentage that applies to the first applicable Level 1 and Level 2 tax rules.

Tax Calculation Mode

The Calculation Mode setting determines how taxes are calculated.

Tax calculation method.png

The two possible values for this setting are as follows:

  • Calculate individually per line item - Selecting this option will calculate taxes on a per line item basis. When selected, tax will be calculated for each line item, rounded to 2 decimal places, and the total tax calculated by taking the sum of the tax calculation for each individual line item.
    Example Tax Calculation for 4 Line Items of $1 each: (1.00 x 20%) + (1.00 x 20%) + (1.00 x 20%) + (1.00 x 20%) = 0.80
  • Calculate based on collective sum of the taxable line items - Selecting this option will calculate taxes using the sum of the line items that are set as taxable on an invoice. When selected, the individual line items marked as taxable will be totalled, and tax calculated based on the sum total of those taxable line items.
    Example Tax Calculation for 4 Line Items of $1 each: (4.00 x 20%) = 0.80