During the initial connection of Xero to Katana, you are asked to map Katana Tax Rates to Xero taxes. This ensures that taxes are accounted for correctly in Xero when creating invoices in Xero based on Katana Sales Orders.

This is the tax mapping screen:

Mapping all Katana Tax Rates to Xero taxes is required, the "Done" button is disabled until all the required fields are filled.

You can create new Katana Tax Rates on this screen if needed. To delete existing Tax Rates that you do not need in Katana and would not like to map to any Xero taxes, you need to exit the Xero integration flow (just close it from the "X" button at the top right corner) and navigate to the "Tax rates" page in the "Settings" screen in Katana. You then need to start your Xero connection from the beginning.

Additional comments:

- Katana does not differentiate between sales taxes and purchase taxes, you can add any Tax Rate to any Sales or Purchase Order. If you need to apply different Tax Rates for purchases and sales for the same tax type, you should create 2 Tax Rates in Katana (one for purchases and one for sales). Then map both of those taxes to the same tax in Xero. Xero will apply the correct tax based on the transaction (a sales or purchase).

- In Katana, you can choose to add "No tax" to a Sales or Purchase Order line. During the initial connection of Xero and Katana, a new tax called "No tax" with 0% rate will be created in Xero and the respective Katana "No tax" rate is mapped to this new rate in Xero automatically.