In Payhawk, you can use line items to split invoices and expenses across multiple categories, GL codes, and tax treatments. This article helps you find guidance on when to use line items, how to handle specific scenarios like import taxes and customs duties, and how to configure tax codes for accurate accounting.
What are import taxes and how should they be accounted for?
Import taxes and customs duties can be accounted for in two ways, depending on your company's accounting policies:
Some companies account for import taxes separately using dedicated general ledger codes.
Others include import taxes as part of the total cost of the purchased item or capitalize them as part of the fixed asset cost (in line with standards such as IAS 16, which treats import duties as costs of bringing an asset into use).
How do I record import taxes in Payhawk?
The method depends on your accounting treatment:
If import taxes are accounted for separately, use line items in Payhawk to split the invoice, allocating the import tax portion to its dedicated GL code.
If import taxes are included in the item cost, treat the invoice as a standard single-line invoice without splitting costs.
What if the invoice includes VAT on imports?
If your invoice includes VAT related to imports that you need to reclaim or report:
Use line items to split the invoice components (item cost, import tax, VAT).
Apply the appropriate tax codes in Payhawk to match your accounting system's VAT treatment (for example, reverse charge mechanism, imports, deductible VAT).
Consult your accounting system to confirm which GL codes and tax codes should be used for each line.
Where should this information be verified?
Always confirm with your Finance team:
What GL codes are used for import taxes in your accounting system.
Whether import taxes should be recorded as separate line items or included in the total cost.
Which tax codes apply to VAT on imports and how they should be configured in Payhawk.