After VAT information is set up in the system, VAT is recognized at the time of payment for service invoices, and at the time of invoicing for merchandise invoices. For PO vouchers, VAT is recognized when the voucher is submitted for payment.
VAT amounts paid are placed into the appropriate A/P or A/R tax account at the rate specified by the assigned tax code. Upon bank reconciliation of the payment or deposit, the system determines the VAT amount to transfer after bank reconciliation. The VAT amount is then transferred to either the VAT A/R Received Account or VAT A/P Paid Account. The VAT is paid to the taxing authority from this account.
Use these general steps to set up value-added (VAT) tax code information in the system.
NOTE: For additional information on entering tax codes, see Entering Tax Code Information (Area-Based) or Entering Tax Code Information (GST/PST).
For A/R, after you reconcile a deposit on the Bank Reconciliations form, the system:
For A/P, after you reconcile a payment on the Bank Reconciliations form, the system:
The system automatically updates A/P payments during bank reconciliation. However, the system does not automatically update A/R deposits during bank reconciliation. Customer A/R deposits must be manually entered on the Bank Reconciliations form. See Preparing a Bank Reconciliation Using Transfer VAT for information on how to reconcile invoice and voucher payments when this check box is selected.
For customers or vendors in European Union countries, you can enter the customer or vendor VAT number in the [Tax ID Label 1] field on the Customers, Customer Ship-Tos, or Vendors form. The EU mandates that all VAT numbers must be verified yearly.
Click the verification button next to the [Tax ID Label 1] field to pass the specified VAT number to the VAT Information Exchange System, which verifies that the number is valid for each EU member. A success or failure message is returned, and the date when the verification expires is stored in the customer table. When the validation is successful and you save the record, all customer ship-to records with the same VAT number, EU code and tax code are also updated with the new date.
The icon next to the button indicates whether the VAT number has been verified within the last year (green check mark) or needs to be verified (red X).
These forms determine if a customer’s VAT number is valid at the time of an order due date or shipment date:
If the number is not valid at the ship date/due date, a warning message is displayed. However, you are still allowed to ship the order.
Run the Bank Reconciliation - Compression utility occasionally to purge transactions related to deposits.
Entering Tax Code Information (Area-Based)
Entering Tax Code Information (GST/PST)