Tax Tables can used to determine the tax for customer invoices (or vendor bills).
A tax table can be assigned to an invoice line or bill line.
Set up distinct tax tables for customers and vendors.
The default invoice line tax table can be assigned to each customer and the default bill line tax table can be assigned to each vendor.
The default tax table for new customers or new vendors can be specified in the Book Options window which can be accessed by → →
Tax Tables are maintained using the Sales Tax Table editor which is accessed via menu → .
Name This is the tax table name.
Type Either Percent % or Value $ .
Value This is the percentage or value depending on Type.
Account This is the account to which tax will be posted. For tax collected from customers, this should probably be a Liability account as it must be payed to the government. For tax paid to vendors, if tax laws allow tax paid to vendors to offset tax collected from customers, this should probably also be a Liability account (even though it will usually have a debit balance) so that the net tax owed to the government can be easily observed.
If you set up Tax on Purchases and Tax on Sales as subaccounts of Liabilities:Tax then the net tax will be rolled up
and can be seen in the
GnuCash Accounts tab.
If unsure about tax law requirements, get professional advise.