Tax/VAT

Setting up Tax Rules

In order to charge tax, you must first enable Tax charges in WHMCS. To do this, go to Setup > Tax Rules and then tick the checkbox at the top of the page labelled Tax Enabled and click Save Changes. Tax is now enabled in WHMCS. Now, you can proceed to setup your tax zones. This is done as follows:

1. Click the Add New Tax Rule tab on the Tax Setup page
2. In the Name field, enter a name for the tax zone which allows you to identify it
3. Next, for the Country, choose where this tax rate applies to all countries or whether it only applies to a selected country
4. For the state, again you can choose whether it applies to all states in the selected country or only a selected state
5. Finally, enter the tax rate as a percentage, for example 17.5 and then click the Save Changes button

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 "17.50" and click the Save Changes button. You can setup an unlimited number of tax rules.

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 Config > Tax Setup.

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 Configuration > 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 Configuration > Tax Setup - there is a tick box at the top of the page for this.

Setting Late Fees as Taxable

You can set if late fees on invoices should be taxed also in Configuration > Tax Setup.

Showing your Tax ID/VAT Number on Invoices

When charging your customers tax, it is often a requirement for you to display your companies Tax or VAT Number on all invoices. To do this in WHMCS, simply add a line to the bottom of your company address in the General Settings page containing the number - eg. VAT Number XXXXXXXX

Setting Clients as Tax Exempt

You may have clients where you don't want to charge any tax. If this is the case, you need to set them as Tax Exempt. This is done by ticking the tax exempt checkbox on the clients profile page in the admin area.

Automatic VAT Number Validation

WHMCS can be set to check the VAT number a user supplies during the order process and therefore validate it and automatically set tax exempt status if meeting the required conditions. Those are that the client is within the EU, but outside your home country, and with a valid VAT Number supplied. To enable this feature, you need to locate and open the file includes/hooks/vatnumbervalidation.php and follow the instructions within it.