Skip to main content
Documentation
Documentation
Administrator Guide
Last Updated: 2026-03-13
Steps: Set Up VAT on Customer Payments

Steps: Set Up VAT on Customer Payments

  • Create a VAT tax category and VAT code for tax applicability.
  • Define the VAT ledger account on the Transaction Tax account posting rule for customer payments to process correctly.
You can configure Workday to calculate and automatically post the accounting for recognizing the Value Added Tax (VAT) when you apply the payments. On-Account payments use the default tax rate of the company for VAT. You can also record unrecognized VAT when you approve an invoice and book VAT receivables.
Workday displays VAT as
Tax Amount
 on invoice header and as
Transaction Tax
 at line level. Workday also supports VAT on:
  • Cash sales.
  • Customer invoice and customer invoice adjustments with different rates per invoice line.
  • Prorated tax amounts for partial payments.
When you don't configure VAT, the payments you apply use general accounting.
Workday does not support VAT on payments for direct intercompany transactions when Worktag Balancing is enabled for intercompany receipts.
  2. To enable VAT, access the
    Edit Company Tax Details
     task from the related actions menu of your company.
    Select the
    VAT on Payment
     check box, and select VAT options from these prompts:
    • Default Tax Applicability
    • Default Tax Code
    Security:
    • Set Up: Company General
       domain in the Common Financial Management functional area.
    • Set Up: Payroll - Company Specific (Accounting)
       domain in the Core Payroll functional area.
    • Set Up: Tax
       domain in the Common Financial Management functional area.
  3. To configure VAT Payable as the default ledger account for automatically posting the accounting, access the
    View Account Posting Rule Set
     report.
    Select these account posting rules:
    • Transaction Tax
    • Transaction Tax on Payment
    Click
    Edit Posting Rule
     and select the VAT option from the
    Default Ledger Account
     prompt.
    Security:
    • Set Up: Account Rules
       domain in the Common Financial Management functional area.
    • Set Up: Payroll - Company Specific (Accounting)
       domain in the Core Payroll functional area.