Similar to the general posting setup described in Set Up Posting Groups, you must define one or more Tax business posting groups and assign one of them to each general ledger, customer, and vendor account. You must also set up one or more Tax product posting groups and assign one of them to each item and resource account. After you have set up the groups, you must set up the necessary combinations of the groups in the Tax posting setup. For each combination, specify the Tax percentage, and general ledger accounts for sales Tax, purchase Tax, and, if needed, reverse charge Tax.
If you assign default Tax posting groups to the general posting groups, the Tax posting groups will automatically be assigned to general ledger, customer, vendor, item and resource accounts when you assign the general posting groups.
Import Tax
The import VAT feature is used when you need to post a document where the entire amount must be treated as VAT. This is necessary if you receive a VAT invoice from the tax authorities for imported goods. To handle import Tax, you must set up at least one Tax product posting group for import Tax, and include it in at least one combination in the Tax posting setup.
Reverse Charge Tax
Usually, the seller of an item calculates and withholds VAT. Companies in the EU, however, must use reversed VAT calculation when trading with other companies that are registered as VAT-liable in another EU country/region. This means that instead of Tax being calculated by the seller, it must be calculated by the purchaser.
You must set up at least one Tax business posting group for reverse charge Tax, and include it in at least one combination in the Tax posting setup. The reverse charge Tax feature can be used in connection with the standard Tax calculation principle, as well as with the unrealized Tax calculation principle.
Unrealized Tax
By default, Tax is calculated and posted when an invoice is posted. However, you can choose to have Tax amounts first calculated and posted to a temporary general ledger account when the invoice is posted, and then posted to the correct general ledger account and included in Tax statements when the actual payment of the invoice is posted.
Adjust Payment Discounts for Tax
If a payment discount has been calculated on the basis of an invoice amount including Tax, you can have the payment discount part of the Tax amount be debited to the Sales Tax account when the payment discount is granted.
The following table describes a sequence of tasks, with links to the topics that describe them. These tasks are listed in the order in which they are generally performed.
| To | See |
|---|---|
Learn about setting up Tax, including setting up Tax posting groups and Tax posting setup combinations, and using reverse charge Tax. | |
Set up posting groups that you can use to categorize customers and vendors for Tax posting purposes. | |
Set up posting groups that you can use to categorize items and resources for Tax posting purposes. | |
Set up the Tax percentage and default posting accounts for each combination of a Tax product group and a Tax business group. | How to: Set Up Combinations of Tax Business Posting Groups and Tax Product Posting Groups |
Link Tax business posting groups to general business posting groups, so they are assigned automatically. | |
Link Tax product posting groups to general product posting groups, so they are assigned automatically. | |
Assign Tax posting groups to general ledger accounts manually. | How to: Assign Tax Posting Groups to General Ledger Accounts |
Assign Tax business posting groups to customer and vendor accounts manually. | How to: Assign Tax Business Posting Groups to Customer Accounts and Vendor Accounts |
Assign Tax product posting groups to item and resource accounts manually. | How to: Assign Tax Product Posting Groups to Item Accounts and Resource Accounts |
Use the import Tax feature to post a document where the entire amount must be treated as Tax, for example, if you receive a Tax invoice from the tax authorities for imported goods. | |
Set up at least one Tax business posting group for reverse charge Tax in order to have Tax on purchases from the EU treated appropriately. | How to: Enter Basic Information on Reverse Charge Tax for Purchases |
Have Tax amounts calculated and posted to a temporary general ledger account when an invoice is posted, and then posted to the correct general ledger account and included in Tax statements when the actual payment of the invoice is posted. | |
Revert the payment discount part of the Tax amount when the payment discount is granted. | |
Set up periodic Tax reports that must be submitted to the tax authorities. |