VAT/GST extraction automates how Lightyear reads tax from your supplier invoices. Occasionally, VAT/GST may extract in an unexpected way or not appear at all. This article covers two common causes and how to resolve them, along with best practices to help prevent these issues going forward.
VAT/GST extracts as a separate overseas tax line
This happens when the supplier's country is different from your account's country. When this is the case, Lightyear treats the tax as an overseas tax and extracts it as its own line, instead of distributing tax across the individual line items. This behaviour keeps your invoice compliant with international tax rules.
To check and resolve this:
Click Suppliers, then select the supplier on the invoice.
Check the supplier's country setting.
Update the country to match your account's country, if VAT/GST shouldn't be treated as overseas tax.
Click Save, then reprocess the invoice.
đ Note: If the supplier is genuinely based overseas, this behaviour is expected and no changes are needed.
Tax doesn't extract on an invoice
If tax appears when you're in Edit mode but doesn't show once you leave it, the likely cause is that the supplier's default tax code is set to 0%. This stops tax from extracting correctly.
To resolve this:
Click Suppliers, then select the relevant supplier.
Click Edit, then update the default tax code to the correct rate.
Click Save.
Reprocess the invoice to apply the updated tax code.
â ď¸ Important: If you don't update the default tax code, tax won't extract outside of Edit mode, even if it appears correctly within it.
Best practices for tax setup
You can reduce the chances of running into tax extraction issues by following these practices:
Review and update your supplier tax codes regularly to keep them accurate.
Confirm that supplier country settings match your account's country, unless the supplier is genuinely overseas.
Test invoice processing after updating supplier settings, to confirm tax extracts correctly.