Override VAT Functionality and Sales Tax Directions on General Journal

In D365 F&O, the sales tax direction is determined depends on the type of account in the voucher also by the combination of account type and sales tax code.

We have 4 account types in D365 F&O these are Ledger, Project, Vendor and Customer.
I will explain these possibilities in a bit more details;

When a voucher has journal lines where the account type is the only Ledger the system is going to look at the sales code and account type combination in this case we have only the ledger account type below rules are going to apply.

If the journal amount is debit the sales tax direction is going to be tax receivable if the journal amount is credit the sales tax direction is going to be tax payable...

You may want to define the tax direction on a specific main account this is where we use Override the sales tax direction functionality let's say we do have a revenue account the sales tax direction should always be the sales tax payable

Go to General ledger > Chart of accounts > Accounts > Main accounts, and select the Legal entity overrides FastTab

Click VAT you can choose VAT directions depends on your main account type in this example it is a revenue account so I have chosen Sales, no matter what whether the journal amount is debit or credit, it will always get posted to your VAT payable main account.
When the voucher has journal line account type is Project or Vendor all the journal lines in the voucher apply the same direction. Following diagram shows the rule as an example if the sales tax code is exempt tax, then sales tax direction is Tax-Free Purchase.

When the voucher has journal line account type Customer all the journals line in the voucher apply the same direction.

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