Sales tax

Docz lets you apply one or more taxes to any invoice line. Each tax is a reusable preset in your library: pick an existing one from the line's tax picker, or create a new one on the fly. Line subtotals flow through your chosen taxes and show up as separate rows on the invoice PDF.

Apply a tax to a line

1. On the invoice editor, open the Tax picker on any line item.
2. Tick the tax(es) you want to apply. Multiple taxes per line are supported (e.g. VAT + withholding + city tax).
3. Each tax appears as its own row in the totals block, aggregated across all lines that use it.

If the tax you need isn't in your library yet, click + Create new tax at the bottom of the picker. Fill in the dialog:

• Tax name (e.g. VAT, GST, PIT)
• Tax rate — the percentage. 10% is entered as 10.
• Tax number / ID — your registration number. Printed on the PDF.
• Recoverable (checkbox, see below)
• Compound (checkbox, see below)

Taxes you use on any invoice are silently added to your library so the next time you type an invoice you can pick them from the dropdown.

Recoverable vs non-recoverable

A tax is recoverable if you can deduct the tax you've paid (on purchases and expenses) from the tax you've collected (on sales). The net amount is what you actually owe your tax authority.

• Recoverable example — VAT / GST in most jurisdictions. A plumber who pays 10% VAT on $1,000 worth of parts, then charges 10% VAT on $3,000 of labour, owes the tax authority $200 — the $300 collected minus the $100 paid.
• Non-recoverable example — US state sales tax in most states. You collect it on sales and remit it in full; the tax you pay on business purchases is just an expense.

Tick "This is a recoverable tax" in the Create-tax dialog if the tax follows the recoverable pattern in your jurisdiction. The flag is used for reporting — it does not change the invoice math. Non-recoverable taxes are simply the default (box left unticked).

Why does this matter?

Docz will eventually surface a "Sales tax report" that splits collected vs paid for any recoverable tax, so you know exactly what to remit each period. Marking a tax as recoverable now means those reports work correctly the day they ship — no data backfill needed.

Compound taxes (stacked taxes)

A compound tax, sometimes called a stacked tax, is calculated on top of another tax — not on the original line subtotal. The classic example is Canada's old Québec sales tax (QST), which was charged on the line subtotal plus the 5% federal GST.

How Docz calculates taxes on a line with both:

QST is calculated on $100 + $5 = $105, not on $100. If QST were a regular (non-compound) tax, step 3 would be $100 × 9.975% = $9.98 and the line total would be $114.98. The compound flag gives the correct rounding.

When to use the compound flag

• Your jurisdiction explicitly stacks one tax on top of another.
• You have a surcharge/levy that's calculated after primary taxes (e.g. some tourism taxes, some import duties).
• You're unsure — leave it off. Most taxes in most places are not compound.

Tick "This is a compound tax" in the Create-tax dialog to set the flag once; every line you apply that tax to will stack correctly.

Multiple taxes per line

A single line can carry any mix of taxes — the picker is a multi-select. Docz computes them in two passes:

1. Primary taxes (compound flag off) — each computed on the line subtotal, independently.
2. Compound taxes — computed on the line subtotal plus the sum of all primary tax amounts.

Every tax shows as its own row in the totals block, aggregated across all lines that use it. That way a client seeing the PDF sees exactly what you charged and why.

Worked example — multi-tax line

A Vietnamese freelancer invoices $1,000 with VAT 10% (non-compound) and PIT 5% withholding (non-compound):

• VAT: $1,000 × 10% = $100
• PIT: $1,000 × 5% = $50
• Invoice total: $1,000 + $100 + $50 = $1,150

Switch PIT to compound and the math shifts slightly:

• VAT: $1,000 × 10% = $100
• PIT: ($1,000 + $100) × 5% = $55
• Invoice total: $1,000 + $100 + $55 = $1,155