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Level 2

Re: Tax Exempt Customers

Hi there, I am based in South Africa, so I work with VAT and not TAX.


When I am editing a customer in QuickBooks Online, I do not see an option to mark a customer as taxable or tax exempt. I only have an option in the Customer screen to add a VAT number. 


How do I mark a customer as tax exempt?




2 Comments 2
QuickBooks Team

Re: Tax Exempt Customers

Hello there, @GeorgeK1981


I see the importance of making your customer VAT-exempt. Let me help you clear things up.


The option to automatically VAT-exempt your customer isn't available in your region. Currently, this can only be performed in the US region that has the term Tax-exempt. 


As a workaround, we can VAT-exempt the customer by choosing the Out of scope of Tax in the Amounts are section every time we create an invoice to that customer. Allow me to show you how:


  1. From the + New icon, select Invoice.
  2. Choose in the Customer field that you want to be VAT exempted. 
  3. Enter the necessary details of the invoice.
  4. Click the Amounts are dropdown above the AMOUNT (ZAR) column, and choose Out of scope of Tax.
  5. Review the invoice. Then, Save and close.


Take note that this isn't a default one. Every time you create an invoice for a VAT-exempt customer, you should perform the steps above.


Moreover, I'll also share this article to help you determine if your sale is exempt from tax: Understand nontaxable sales in QuickBooks Online.


If you have additional questions about managing your customer's VAT, never hesitate to reply to this post. I'll be willing to assist you. Take care and enjoy the rest of the week.

Caroline HPE
Level 1

Re: Tax Exempt Customers

Hi GeorgeK1981

We have the same problem here in Ireland. Unfortunately it is not possible, although on the 2016 Quickbooks Desktop version it was possible to set up a customer as VAT exempt so the QB system would automatically input tax exempt against the invoice created. There should be an option on the 'Newer' version of Quickbooks to also allow us to do this. Currently every VAT exempt customer we invoice has to be repeatedly inputted as 'VAT exempt' on each invoice created.

Quickbooks you need to fix this. If it was possible on older versions you must be able to set it up on the updated version.