You know what they say… there are only two certainties in life - death and taxes. Well, we’ve been working to teach Civi to help make the latter a bit easier. We’re very pleased to announce that Web Access and core team have collaborated to ensure that CiviCRM 4.6 will fully support Sales Tax ( VAT). As of the conclusion of the Edale London sprint we’ve merged this functionality into the master branch.
Not only will CiviCRM understand Sales Tax, it can actually allow users generate Sales Tax invoices right in the back office. This will eliminate the need to track invoices separately in your accounting software and manually upload transaction data.
Variable tax rates can be configured by creating separate “Financial Accounts” for each. We modified core to use “Is Tax?”, the financial account type must be “Liability” and will require that a “Tax Rate” be specified. Tax exemption is supported by setting the percentage tax rate to 0%. Then create “Financial Type” and link it to above financial accounts.
For more details: https://issues.civicrm.org/jira/browse/CRM-15409
We would like to thank Jamie Novick for his contributions to the wiki and assistance in planning and testing this functionality. We would also like to thank Joe Murray who was a consultant on the project.