In this article we'll show you how typical VAT transactions will appear in A2X and the basics of accounting for VAT in A2X for both Amazon and Shopify sellers.

If you are using more advanced A2X VAT jurisdiction tracking, then you will have additional transaction information - see the detailed VAT guide here.

Amazon VAT

There's two ways that Amazon handles VAT in the UK and EU - depending on whether you have the VAT Calculation Service (VCS) enabled in your Amazon seller central account. 

Amazon VCS enabled
If you have VCS enabled, then Amazon will calculate the VAT and charge it to the customer. You then see the Tax amounts charged as separate transactions in the Amazon settlements.

Principal - Amazon.co.uk  (Order ItemPrice)      $100
Tax - Amazon.co.uk  (Order ItemPrice)                 $20

In this situation you would assign both the sale amount and the tax amount to a sales account in your ledger, and combine both amounts together at the given tax rate (20% in the example we are using). That way your accounting system will put $20 into your VAT liability account (and include it on your VAT return) and correctly calculate the $100 of sales.

Similarly if you have sales where there was no tax charged, you would see a transaction like this:

Principal - Amazon.co.uk NoTax (Order ItemPrice)
(for this transaction you won't have a Tax transaction)

In a situation like this you would use a 'zero rated' tax rate, which will ensure your accounting system sees this transaction as having no tax applied, and will include it in the correct place on your VAT return.

Amazon VCS disabled
If you do not have VCS enabled the settlements will not have any Tax transactions as Amazon is not VAT aware.

Principal - Amazon.co.uk  (Order ItemPrice)      $120

In this situation the sale amount is considered to include VAT (if any) so you would pass the full total to your accounting system at the required tax rate (20% in our example above).

For a detailed guide to Amazon VAT see this article.

Shopify VAT

If you have configured Shopify to calculate and collect VAT, then for a Shopify store you will typically see the tax amounts as separate transactions in your Shopify payouts like this:

ProductSales - Online store     $100
Tax - Online store                       $20

In this situation you would assign both the sale amount and the tax amount to a sales account in your ledger, and combine both amounts together at the given tax rate (20% in the example we are using). That way your accounting system will put $20 into your VAT liability account (and include it on your VAT return) and correctly calculate the $100 of sales.

For sales where no VAT was charged A2X will show the transactions as 'Not Taxed' like this:

ProductSalesNotTaxed - Online store     $100
(for this transaction you won't have a Tax transaction)

In a situation like this you would use a 'zero rated' tax rate, which will ensure your accounting system sees this transaction as having no tax applied, and will include it in the correct place on your VAT return.


For a detailed guide to Shopify VAT see this article.

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