Hello bport-salon,

You'll want to select No VAT or Exempt to get past the prompt. Let me guide you how.

1. Click (+) Create.
2. Click Expense.
3. Enter your Category details, then choose NO VAT or Exempt (0%) in the VAT column.
4. Click Save.

I've attached a screenshot for you.

You can read these handy articles for more information about:

• VAT Feature Update FAQ.

• How do I set up sales GST/VAT rates and use them on forms? (International QBO).

If in case you need some articles for your future tasks, you can visit our page: Tax for QuickBooks Online.

Please don't hesitate to reply anytime if you have other questions.