Processing Value Added Tax (VAT) in Payables

This chapter provides an overview of processing value added tax (VAT) in Payables and discusses how to:

Understand accounts payable VAT calculations and accounting entries.
Enter online vouchers with VAT.
Enter third-party, VAT-only vouchers.
Enter vouchers with VAT and sales tax.
Enter vouchers with VAT and withholding.

Understanding VAT Processing in Payables

Payables enables you to record and report VAT information associated with vouchers. Before you can do this, you must set up your VAT environment and enable your business units for VAT.

The system calculates VAT based on the information you enter during setup (for example, VAT codes which determine the VAT rates that the system uses).

The system loads the VAT information on all your Payables transactions and documents into the VAT transaction table and then into the VAT reporting tables, which you can use to create VAT returns and other VAT reports.

You set up VAT for Payables and any other of your PeopleSoft applications that process VAT transactions using the VAT and Intrastat components and pages. VAT setup and the associated system pages are described in detail in the PeopleSoft Enterprise Global Options and Reports PeopleBook.

See Also

Working with VAT

Common Elements for This Chapter

VAT Entity

Displays the code identifying the VAT reporting entity.

Understanding Accounts Payable VAT Calculations and Accounting Entries

This section discusses:

VAT calculations in Payables.
VAT accounting entries in Payables.

VAT Calculations in Payables

This section discusses VAT calculations in Payables.

Exclusive VAT Calculation for Vouchers

In the case of exclusive VAT vouchers, when you save the voucher, a VAT confirmation process takes place. The system calculates the VAT amount for each line based on entered VAT values and stores that amount on the distribution line. The system compares the calculated amount to the amount of VAT that you entered on the voucher header. If there is a discrepancy, the system compares the amount of difference against the VAT tolerance rules, as defined in your Payables control hierarchy. If the difference is within tolerance, the voucher is accepted and the difference is allocated to the distribution line with the highest VAT basis amount upon running the Voucher Posting process. If the difference is out of tolerance, and you have set up VAT tolerance checking to issue a warning, the system alerts you with a warning message to check for input errors (you also have the option of having the system issue an error or not check for tolerances at all.) The system stores the calculated VAT amount on the voucher header, but the payment is always based on the VAT amount shown on the vendor’s invoice.

Inclusive VAT Calculation for Vouchers

Another common processing scenario generally occurs with low monetary value invoices. In this case, known as VAT inclusive, the amount of VAT is not explicitly detailed on the voucher, but is included in the merchandise amount for each voucher line. The system calculates the amount of VAT for the voucher and stores the amount for reporting purposes. The system calculates the VAT at the line level and stores the sum of all VAT amounts, on all lines, on the voucher header.

Vouchers with a VAT Exemption

When your organization is VAT exempt, the VAT Exception Type is Exoneration. In this case, the transactions are treated as taxable at a zero-rate. This means that the transaction line would have a taxable type VAT Applicability (X) and a VAT code with a zero rate should be specified on the line. There is nothing that prevents you from entering a VAT amount on the header in this case—even if all of the lines are zero-rated. However, the VAT tolerance check occurs (unless you have opted not to use it), since the calculated VAT amount would be zero.

When the good or service is VAT exempt, the voucher line is flagged with a VAT Applicability of Exempt, and there is no VAT code on the line. In this case, you are not allowed to enter a VAT amount on the header if all lines are flagged as exempt. However, it is possible for a voucher to contain a mixture of taxable and exempt lines, in which case you can enter a VAT amount on the header.

Another type of VAT exemption occurs when you have been granted a temporary suspension from paying VAT. In this case the transaction line has a taxable-type VAT Applicability (S), and a VAT code with a zero-rate should be specified on the line.

Finally, when a transaction line is outside the scope of VAT, VAT calculation simply ignores the transaction (except in some exceptional circumstances). Like exempt goods or services, these lines have a VAT Applicability of O, no VAT Code on the line, and you would be unable to enter a VAT amount on the header if all lines are thus flagged.

Postponed or Self-Assessed VAT

In some cases, you are required to record both input and output VAT on a voucher. In this case, VAT is due on your purchase but has not been charged by the vendor. Instead of including the VAT in your payment to the vendor, you pay it to your country’s VAT authorities. Examples of this include EC acquisitions, reverse charge transactions in Europe and self-assessed GST in Canada. This may also be referred to as postponed VAT or self-imposed VAT. When VAT is self-assessed, the Record Output VAT flag is set to Y. If all of the voucher lines are self-assessed, then you enter no VAT amount; the system calculates the VAT amount for each line and stores the total on the voucher header.

If you have both self-assessed and non self-assessed voucher lines, any VAT amount entered on the voucher header applies only to the non self-assessed lines.

VAT Accounting Entries

VAT accounting entries are created by voucher posting and payment posting, when applicable, for each combination of general ledger business unit, VAT code, and VAT transaction type that exists in the voucher distribution. Several factors affect how VAT can be accounted for, as follows:

If you are recording input VAT only, where VAT is included on the invoice and the VAT amount is payable to the vendor, the VAT amount is included in the accounts payable entry during voucher posting.
If you are recording both input and output VAT, where VAT is not included on the invoice and you may be liable for VAT, but it is not payable to the vendor, the system creates a separate VAT liability entry during voucher posting.
The VAT declaration point determines the date on which VAT is recognized. If VAT is declared at time of payment, intermediate VAT accounting entries are created by voucher posting. Payment posting reverses the intermediate entries and creates the VAT accounting entries against the final VAT accounts. If VAT is declarable at invoice or delivery time, the VAT accounting entries for the final VAT accounts are created by voucher posting; no intermediate accounts are used.
If VAT is initially calculated at gross and then recalculated at the time of payment, and a cash discount is being taken, adjusting VAT accounting entries are created by payment posting to reduce the amount of VAT that is recorded, based on the amount of the discount.
Voucher posting and payment posting create separate entries for recoverable VAT and non-recoverable VAT. If you are prorating non-recoverable VAT, the non-recoverable VAT is applied to the expense accounts specified for each VAT-applicable line. If you are not prorating non-recoverable VAT, the non-recoverable VAT is applied to the non-recoverable VAT account specified for each VAT code and VAT transaction type. If the Allocate Non-Recoverable option is selected on the transaction, then the system looks to the ChartField inheritance options for each ChartField to determine whether the value is inherited from the associated expense distribution line, from the defaults defined for the business unit, or from the VAT accounting template. If the Allocate Non-Recoverable option is cleared, then the rest of the ChartFields default from the VAT accounting template.
VAT can be recorded in the general ledger using the general ledger business unit associated with the accounts payable business unit on the voucher header or the general ledger business unit on the voucher distribution line, depending on the VAT interunit settings.

See Also

Working with VAT

Entering Online Vouchers With VAT

VAT information for vouchers defaults through the Payables control hierarchy. When you enter VAT-applicable vouchers online, you can review and override VAT defaults at the voucher header, voucher line, and voucher distribution line levels. You may specify that VAT defaults on lower levels be reset based on any overrides made at the higher levels. You can also enter a VAT amount for the voucher header and review VAT calculations before you save the voucher.

This section discusses how to:

Review and override voucher header VAT defaults.
Review and override voucher line VAT defaults.
Review and override voucher distribution line VAT defaults.
Review VAT summary information for a voucher.
Enter vouchers with VAT and sales tax.
Enter vouchers with VAT and withholding.

Pages Used to Review and Override VAT Defaults for a Voucher

Page Name	Object Name	Navigation	Usage
Invoice Header VAT Information	VCHR_VAT_HD_EXP	Click the VAT Summary link on the Invoice Information page, then click the Transfer to VAT Header link on the Invoice VAT Summary Information page.	Review and, if applicable, override the voucher's VAT settings.
Invoice Line VAT Information	VCHR_LINE_VAT_SEC1	Click the Invoice Line VAT link in the Invoice Lines scroll area on the Invoice Information page. This link appears as the VAT/Intrastat link for adjustment voucher lines.	Review, and if applicable, override VAT defaults for the voucher line. Enter Intrastat information for Intrastat-applicable vouchers.
Voucher Distribution Line VAT Information	DISTRIB_LN_VAT_SEC	Click the VAT link on the VAT tab in the Distribution Lines scroll area on the Invoice Information page, then click the VAT link for the distribution line row.	Review, and if applicable, override VAT defaults for the distribution line.
Invoice VAT Summary Information	VCHR_VAT_SM_EXP	Click the VAT Summary link on the Invoice Information page.	Review the VAT amounts summarized by VAT rate. This page provides a preliminary view of the VAT calculations based on the parameters that have defaulted (or been manually updated), as well as the amounts entered. You can also link from this page to the VAT header, line, and distribution line defaults pages.
Voucher VAT Details	VCHR_VAT_INFO	Accounts Payable, Review Accounts Payables Info, Vouchers, VAT Details, Voucher VAT Details	Search for vouchers and view VAT details for a voucher, including all calculated and entered VAT amounts, VAT code, transaction type, and use type.

Reviewing and Overriding Voucher Header VAT Defaults

Access the Invoice Header VAT Information page.

Note. Because complex algorithms are used to obtain the VAT voucher header defaults, avoid overriding these values whenever possible. If you do change any values on this page, be aware that values that appear lower down on the page can be dependent on values that appear higher up on the page. For example, if you override the VAT reporting country, all other VAT default fields that appear lower down on the page will have to be changed to the default values defined for the new VAT reporting country. You should therefore work from top to bottom and click the Adjust Affected VAT Defaults button in the Adjust/Reset VAT Defaults collapsible region each time you change a value. This automatically updates any dependent values that appear on the page, and avoids updating values that you have already overridden.

Physical Nature

Physical Nature	Indicates whether an object is a good or a service. For many countries there is a requirement to report the sale and/or purchase of goods separately from services. The system defaults this value from the vendor or Payables business unit, depending on the transaction.
Change Physical Nature	Click to override the default physical nature value for this invoice. The system resets all of the VAT defaulting for this level only.

VAT Locations

The following terms appear only when the transaction is for a service: Location Country, Location State, Vendor Location Country, Vendor Location State, Service Performed Country, and Service Performed State.

Location Country	Shows the Payables business unit country.
Location State	Shows the Payables business unit state. This field is applicable only in a VAT environment that tracks the tax by regional subunit of a country, such as a province or state.
Vendor Location Country	Shows the vendor location country.
Vendor Location State	Shows the vendor location state.
Service Performed Country	Depending on the services performed flag setting in the VAT defaulting hierarchy (for example at the vendor or business unit level), the system sets the value for this field as follows: If it is the ship from location, it sets it to the vendor location country. If it is the ship to location, it sets it to the Payables business unit country. If it is the buyer's location, it sets it to the Payables business unit country. If it is the supplier's location, it sets it to the vendor location country.
Service Performed State	Depending on the services performed flag setting in the VAT defaulting hierarchy (for example the vendor or business unit level), the system sets the value for this field as follows: If it is the ship from location, it sets it to the vendor location state. If it is the ship to location, it sets it to the Payables business unit state. If it is the buyer's location, it sets it to the Payables business unit state. If it is the supplier's location, it sets it to the vendor location state. This field is applicable only in a VAT environment that tracks the tax by regional subunit of a country, such as a province or state.
Ship From Country	Shows the country from which the good or service is shipped. In the case of transactions involving goods or freight service transactions, this is used to determine the VAT treatment.
Ship From State	Shows the state from which the good or service is shipped. In the case of transactions involving goods or freight service transactions, this is used to determine the VAT treatment. This field is applicable only in a VAT environment that tracks the tax by regional subunit of a country, such as a province or state.
Ship To Country	Shows the country to which the good or service is shipped. In the case of transactions involving goods or freight service transactions, this is used to determine the VAT treatment. Note. This value must be identical to the country of the Ship To ID on the voucher line.
Ship To State	Shows the state to which the good or service is shipped. In the case of transactions involving goods or freight service transactions, this is used to determine the VAT treatment. This field is applicable only in a VAT environment that tracks the tax by regional subunit of a country, such as a province or state.

VAT Service Specific Defaults

This region displays only when the transaction is for a service.

Service Type	Displays the VAT service type of Freight or Other. The value in this field determines whether or not the special rules for freight transport within the European Union apply. The value comes from the VAT default hierarchy.
Place of Supply Driver	Displays the usual place of supply (meaning,. the place where VAT is usually liable) for the service. This value is used to help determine the place of supply country and the VAT treatment. Options are: Buyer's Countries, Supplier's Countries, or Where Physically Performed. The system derives the value from the VAT default hierarchy.

VAT Registrations

Reporting Country	Shows the country for which this VAT will be reported. This is the VAT Entity or VAT registration country and determines many of the VAT defaults.
Defaulting State	If the reporting country requires that VAT be tracked by state or province, this field displays the state within the reporting country that is used to retrieve values from the VAT Defaults table.
Vendor Registration Country and Vendor Registration ID	Registration country and ID of the vendor taken from the vendor information.
Exception Type	Where applicable, exception granted for the VAT entity. Options are: None, Exonerated or Suspended. This value is obtained from the VAT entity registration for the VAT reporting country.
Certificate ID	If applicable, displays the ID of the VAT exception certificate that may have been issued to the VAT entity.

VAT Controls

Calculate at Gross or Net	Shows how VAT is calculated. The default value comes from the VAT entity driver. Options are: Gross: The system calculates VAT before it applies any early payment discounts. Net: The system calculates VAT after it deducts early payment discounts. If there are two percentage discounts, the system uses the larger of the two when it calculates VAT. The system will not use discount amounts, only discount percentages.
Recalculate at Payment	If you are calculating VAT at gross, select this check box to enable VAT recalculation at payment time to allow for any early payment discounts. This causes the system to adjust the VAT amount at the time of payment if the discount has been taken. This value is set on the VAT entity driver and defaults from the VAT hierarchy.
Calculation Type	Indicates the type of VAT calculation. Options are: Exclusive: The VAT amount is stated separately from the merchandise amount on the invoice, and is added to the total merchandise amount to obtain the voucher gross amount. The total VAT amount is entered on the voucher header. Inclusive: The VAT is included in the merchandise amount specified for each line and is not stated separately. No separate VAT amount is entered on the voucher header. This value is set on the AP Options driver and defaults through the VAT hierarchy (voucher origin, control group, vendor, and vendor location.)
Declaration Point	For a good or a service, shows when you want VAT transaction information to be recognized for reporting purposes. Options are: Invoice: VAT is recognized at time of invoice. Payment: VAT is recognized at time of payment. Delivery: VAT is recognized on delivery. This value is set on the VAT entity registration driver and defaults through the VAT hierarchy (Payables business unit options, voucher origin, control group, vendor, and vendor location.)
Declaration Date	Shows the date on which the VAT is recognized. It defaults from the invoice date when the Declaration Point is Invoice or from the shipment date, receipt date, or invoice date, in that order, when the Declaration Point is Delivery. You may override this date when VAT is declared at invoice or delivery.
VAT Rounding Rule	Shows the VAT rounding rule. The value comes from the VAT country driver and defaults through the VAT hierarchy. Options are: Natural Round: Amounts are rounded normally (up or down) to the precision specified for the currency code. For example, for a currency defined with two decimal places, 157.4659 would round up to 157.47, but 157.4649 would round down to 157.46. Round Down: Amounts are rounded down. For example, for a currency defined with two decimal places, 157.4699 would round down to 157.46. Round Up: Rounds up and limits rounding precision to one additional decimal place. For example, for a currency defined with 2 decimal places, 157.4659 would round up to 157.47, but 157.4609 would be rounded down to 157.46.
VAT Non-Recovery Charge	Shows the charge code for the non-recoverable VAT. The values default from the Procurement Control - Non-Merch Charges page.
Calc on Advance Payments (calculate on advance payments)	Select for the system to calculate VAT on advance payments for vouchers of the Prepaid Voucher voucher style. The value is derived from the VAT entity registration driver. Important! You must specify the correct declaration point option when defining VAT defaults for the system to automatically and correctly perform this calculation. On the VAT Defaults Setup page for the VAT driver type Entity Registration, select the VAT for Advance Payment check box.
Include Freight	If selected, the system includes any freight amounts in the VAT basis by calculating VAT on the merchandise amount plus any freight amount. This option is only available for exclusive VAT calculation. The value comes from the VAT entity registration driver.
Include Miscellaneous	If selected, the system includes any miscellaneous charge amounts in the VAT basis by calculating VAT on the merchandise amount plus any miscellaneous charge amount. This option is only available for exclusive VAT calculation. The value comes from the VAT entity registration driver.
In Reporting Currency	Select to enter the VAT amount in the VAT reporting currency. You enter the VAT amount by clicking the Enter Reporting Amounts link to open the VAT Reporting Currency Amounts page, where you can enter the total VAT amount and the total VAT applicable amount in the reporting currency, and the applicable exchange rate. The system automatically calculates the VAT based on this exchange rate on saving the page. The In Reporting Currency value comes from the VAT entity registration driver. Note. This option is only available if the Amounts in Reporting Currency option for the VAT entity registration driver in the VAT Defaults table is set to Y. Additionally, the VAT Treatment Group for the voucher must be Domestic Purchases and the transaction currency for the voucher must be different from the VAT reporting currency
Enter Reporting Amounts	Click to open the VAT Reporting Currency Amounts page on which you can enter the total VAT applicable amount and the total VAT amount in the VAT reporting currency. The system automatically calculates the exchange rate.
Allocate Non-Recoverable	This check box is applicable only when non-recoverable VAT is not being prorated. When non-recoverable VAT is not being prorated, the system obtains the account and alternate account for the non-recoverable VAT accounting entry from the VAT accounting template associated with the VAT code. If this check box is selected, the other, non-account ChartFields will be obtained based on the ChartField inheritance options that have been defined for non-recoverable VAT. For each ChartField, these options allow you to specify whether the ChartField value is inherited from the expense distribution line, whether the value comes from the business unit defaults, or whether the value comes from the VAT accounting template. If this check box is not selected, the other, non-account ChartFields are all obtained from the VAT accounting entry template. The value of this check box comes from the Procurement Control component.

VAT Treatments

Place of Supply Country

Displays the country in which the VAT is liable. This field appears only when the transaction is for services.

Treatment Group

Displays the appropriate VAT treatment group. Options are: Domestic Purchases, European Union Purchases, Imports, No VAT Processing, and Out of Scope.

Within PeopleSoft, detail VAT treatment values on the transaction lines, which come from complex algorithms, are used for applying the precise defaults applicable to the transaction lines. Each of these detail VAT treatment values are associated with a VAT treatment group. The system tracks the VAT treatment group on the header enabling individual transaction lines to be grouped together into invoices during batch processes and to validate the detail line VAT treatment values on the transaction lines.

Adjust/Reset VAT Defaults

Any changes you make to fields on this page may affect VAT defaults on this page. For accuracy and consistency, use the following fields and buttons to adjust affected VAT defaults or to reset all VAT defaults. Adjusting or resetting VAT defaults will only affect fields within the VAT Defaults group box.

Adjust Affected VAT Defaults	Click this button to have the system adjust the VAT defaults that are affected by your changes, after you have selected the affected levels. All changes you have made to VAT Defaults on this page that affect other VAT Defaults on this page will be retained. We recommend that you always click the Adjust Affected VAT Defaults button after changing any defaults on the VAT page. As values that appear lower down on the page can be dependent on values that appear higher up on the page, you should work from top to bottom and click the Adjust Affected VAT Defaults button in the Adjust/Reset VAT Defaults collapsible region as needed. This avoids updating values that you have already overridden.
	Click the List of fields to be selected icon to view a list of all of the fields whose values will be adjusted if you click the Adjust Affected VAT Defaults button.
Levels	Before you click the Reset All VAT Defaults button, select the levels to which you want the action to apply: All lower levels: reset the VAT defaults for the voucher line and the voucher distribution line. This and all lower levels: reset the defaults for the voucher header, the voucher line, and the voucher distribution line. This level only: reset the defaults for the voucher header only.
Reset All VAT Defaults	Click to reset any fields that you may have overridden on this page (including those that you changed by clicking the Adjust Affected VAT Defaults button) back to the original defaults before you save the page. Depending on your selection in the Level field, the VAT default values will be reset for the voucher header, the voucher line, the distribution line, or all three. Note. Reset completely redetermines the VAT defaults. If you have changed a VAT driver field, resetting VAT defaults does not necessarily return the original default values. Rather, it resets all of the default values based on the new driver value.

See Also

Establishing VAT Defaults

Reviewing and Overriding Voucher Line VAT Defaults

Access the Invoice Line VAT Information page.

Note. Because complex algorithms are used to obtain the VAT defaults, avoid overriding these values whenever possible. If you do change any values on this page, be aware that values that appear lower down on the page can be dependent on values that appear higher up on the page. For example, if you override VAT applicability, the VAT code and transaction type will also have to be changed. You should therefore work from top to bottom and click the Adjust Affected VAT Defaults button in the Adjust/Reset VAT Defaults collapsible region as needed. This automatically updates any dependent values that appear on the page, and avoids updating values that you have already overridden.

Physical Nature

The fields displayed are the same as those described for the Invoice Header VAT Information page.

VAT Locations

The fields displayed are the same as those described for the Invoice Header VAT Information page.

VAT Service Specific Defaults

Service Type	If the transaction is for a service, displays the VAT service type of Freight or Other. The value in this field determines whether or not the special rules for freight transport within the European Union apply. The value comes from the VAT default hierarchy.
Place of Supply Driver	If the transaction is for a service, displays the usual place of supply (meaning,. the place where VAT is usually liable) for the service. This value is used to help determine the place of supply country and the VAT treatment. Options are: Buyer's Countries, Supplier's Countries, or Where Physically Performed. The value comes from the VAT default hierarchy.

VAT Registrations

Many of these fields are the same as those described for the Invoice Header VAT Information page. Others include:

Reporting Country	Shows the country for which this VAT will be reported. This is the VAT Entity VAT registration country and determines many of the VAT defaults.
Defaulting State	If the reporting country requires that VAT be tracked by state or province, this field displays the state within the reporting country for which an associated value is retrieved from the VAT defaults table.

VAT Controls

Use Type

Determines the split between recoverable (taxable) and nonrecoverable (nontaxable) VAT.

For the Canadian public sector, the use type also determines the rebate of the nonrecoverable VAT. VAT rebates are calculated based on statutory rebate rates that are established for each Public Service Body.

The value comes from the VAT default hierarchy—specifically, Payables Options, voucher origin, control group, vendor location, and item.

VAT Treatments

Place of Supply Country

Displays the country in which the VAT is liable. The value comes from complex algorithms. This field appears only when the transaction is for services.

Treatment

The value comes from complex algorithms. Select the appropriate VAT treatment, but only if the algorithms did not return the correct value. Options are:

Domestic Goods Purchases: This refers to the purchase of goods where the supplier and customer are located in the same country.

Domestic Services Purchases: This refers to the purchase of services where the supplier and customer are located in the same country.

EU Goods Purchase: This refers to goods purchased within the European Union (EU).

EU Service Purchase: This refers to services purchased within the European Union (EU).

No VAT Processing: No VAT is processed for this voucher line.

Outside of Scope: This is outside the scope of VAT.

Self-Assess Goods Import: This refers to imported goods for which the customer is self-assessing the VAT. The vendor is not registered to collect VAT but the customer is liable to pay VAT to the VAT authority.

Self-Assess Service Import: This refers to imported services for which the customer is self-assessing the VAT. The vendor is not registered to collect VAT but the customer is liable to pay VAT to the VAT authority.

Zero-rated Goods Import: This refers to imported goods subject to zero-rate VAT.

Within PeopleSoft detail VAT treatment values on the transaction lines are used for applying the precise defaults applicable to the transaction lines.

VAT Details

Applicability	Shows the VAT status. Options are: Taxable, Exempt (not subject to VAT), and Outside of Scope of VAT. The value comes from an algorithm that uses the VAT Applicable default, the treatment, and the exception type.
VAT Code	Shows the VAT code that defines the rate at which VAT is calculated for this line. The value comes from an algorithm that uses the treatment and applicability to retrieve the applicable VAT Code default from the VAT default hierarchy.
Transaction Type	Shows the code that categorizes and classifies this transaction for VAT reporting and accounting. The value comes from an algorithm that uses the treatment and applicability to retrieve the applicable Transaction Type from the VAT default hierarchy.
Record Output VAT	Select this check box to enable voucher entry when VAT is not included on the invoice but is payable to your VAT authority rather than the vendor. In this case, you will be accounting for both input and output VAT for the purchase. This will be the case for an Intra-EU Acquisition or when you must account for output VAT on a service supplied by a foreign supplier. This is also referred to as self-assessing for VAT. The value comes from an algorithm that uses the treatment and applicability to retrieve the applicable value from the PeopleSoft delivered VAT system setup data.

Adjust/Reset VAT Defaults

The fields displayed are the same as those described for the Invoice Header VAT Information page. If you select a Level value of This and all lower levels, the reset action will apply to the voucher line and the voucher distribution line. If you select a Level value of All lower levels, the reset action will apply only to the voucher distribution line.

Intrastat

This group box appears only for adjustment vouchers in a VAT environment. You use this information to record financial adjustments to transactions involving the movement of goods within the European Union.

Nature of Transaction 1 and Nature of Transaction 2	Enter the Nature of Transaction 1 and Nature of Transaction 2 codes applicable to the financial adjustment.
Fiscal Regime	For countries that require Fiscal Regime on the Intrastat return, enter the Fiscal Regime applicable to the financial adjustment

See Also

Establishing VAT Defaults

Setting Up and Running Intrastat Reports

Reviewing and Overriding Voucher Distribution Line VAT Defaults

Access the Voucher Distribution Line VAT Information page.

VAT Defaults

Use Type	Determines the split between recoverable (taxable) and nonrecoverable (nontaxable) VAT. For the Canadian public sector, the use type also determines the rebate of the nonrecoverable VAT. VAT rebates are calculated based on statutory rebate rates that are established for each Public Service Body. The value comes from the VAT default hierarchy — specifically, Payables Options, voucher origin, control group, vendor location, and item.
Apportionment Control	The default value comes from the Payables Business Unit driver. Select the option to be used when searching for VAT apportionment information: Dist GL BU (Distribution GL Business Unit): If you select this value, the system uses the general ledger business unit on the distribution line to search for the taxable and exempt percentages. Txn BU (Transaction Business Unit): If you select this value, the system uses the Payables business unit for the voucher to search for the taxable and exempt percentages Txn GL BU (Transaction GL Business Unit): If you select this value, the system uses the general ledger business unit to which the Payables business unit is mapped to search for the taxable and exempt percentages.
Recovery Source	Select one of the following values: Automatic: The system determines which percentages to use based on the VAT use type on the voucher line. Use the Recalculate button to calculate the VAT recovery percent. Manual: Select if you want to override the percentage that defaults from the VAT use type. You can enter the percentage of VAT entered that is recoverable. For both options, the system-calculated percentage is based on the VAT use type and VAT apportionment for the ChartFields on the distribution line. The availability of this field is dependent on the Allow Override Recovery/Rebate option specified on the AP Options VAT driver in the VAT Defaults table.
(CAN) Rebate Source	Select one of the following values: Automatic: The system determines which percentages to use based on the VAT use type that has an associated Public Service Body code. Use the Recalculate button to calculate the VAT rebate percent. Manual: Select if you want to override the percentage that defaults from the VAT use type. When you do, you can enter the percentage that is used to calculate the rebate. For both options, the system-calculated percentage is based on the VAT use type and VAT apportionment for the ChartFields on the distribution line. The availability of this field is dependent on the Allow Override Recovery/Rebate option specified on the AP Options VAT driver in the VAT Defaults table.
Treatment	Displays the VAT treatment. This defaults from the invoice line.
Transaction Type	Categorizes VAT amounts by business transaction types (for example, a domestic purchase, an import from another VAT country, or a purchase for resale). These codes are required for reporting purposes and default onto the distribution line through the VAT defaulting hierarchy.
Recovery Percent	If you set the recovery source to Manual, enter the percentage in this field.
(CAN) Rebate Percent	If you set the rebate source to Manual, enter the percentage in this field.

VAT Calculations

Transaction Amount	Enter the amount of the transaction in the transaction currency. If the control total amount has been entered on the pending item, the system automatically populates this field with a value from the pending item for the first VAT line.
Transaction Amount Base	Displays the amount of the transaction in the base currency.
Basis Amount	Displays the amount on which the VAT is calculated in the transaction currency. If VAT is being calculated at Net, this amount is net of any discounts.
Basis Amount Base	Displays the amount on which the VAT is calculated in the base currency. If VAT is being calculated at net, this amount is net of any discounts.
Calculated Amount	Displays the system calculated VAT amount in the transaction currency.
Calculated Amount Base	Displays the system calculated VAT amount in the base currency.
Invoiced Amount	Displays the system calculated VAT amount recorded to the invoice.
Invoiced Amount Base	Displays the system calculated VAT amount recorded to the invoice, in the base currency.
Recovery Percent	Displays the system calculated VAT recovery percentage. If you set the recovery source to Manual, enter the percentage in this field.
(CAN) Rebate Percent	Displays the system calculated VAT rebate percentage. If you set the rebate source to Manual, enter the percentage in this field.
Recovery Amount	Displays the system calculated VAT recovery amount.
Recovery Amount Base	Displays the system calculated VAT recovery amount in the base currency.
Rebate Amount	Displays the system calculated VAT rebate amount.
Rebate Amount Base	Displays the system calculated VAT rebate amount in the base currency.
Non-recoverable Amount	Displays the non-recoverable system calculated VAT amount.
Non-Recoverable Amount Base	Displays the non-recoverable system calculated VAT amount in the base currency.
Recalculate	Click to recalculate the VAT for the line.

See Also

Establishing VAT Defaults

Setting Up and Running Intrastat Reports

Reviewing VAT Summary Information for a Voucher

Access the Invoice VAT Summary Information page.

The best approach for applying VAT to your vouchers is to wait until you have completed entering all other voucher information, and then either let the system apply the VAT defaults at save time or navigate to any of the VAT pages to allow the VAT defaults to be applied. However, at any point during voucher entry, you can use the VAT Summary page to review the VAT settings for the invoice. The top of the page displays the VAT header default settings and below that you can view the VAT settings by VAT code, VAT line, and VAT distribution line. You may navigate to the VAT Header, VAT Line and VAT Distribution Line pages from here as well.

If you edit VAT information on the VAT Header, VAT Line and VAT Distribution Line pages the system automatically recalculates the VAT amounts that display on the Invoice VAT Summary Information page.

Note. Many of the fields on this page are the same as those on the voucher VAT defaults pages. Only fields that do not appear on those pages or that behave in ways particular to this page are discussed here.

Transfer to VAT Header

Click to open the Invoice Header VAT Information page on which you can review and, if applicable, override VAT header default values.

VAT Information

The calculated fields that appear in this grid are the subtotals for each VAT Code on the voucher.

Percent	Displays the tax percentage applied to the transaction. The VAT percent defaults from the VAT code.
VAT Basis Amount	Shows the amount upon which VAT is calculated.
VAT Calculated	Shows the system calculated VAT amount. The system calculates the VAT amount based on your VAT transaction amount and the VAT percentage.
VAT Invoiced	Shows the amount of VAT on the invoice.
VAT Recovery	Shows the amount of VAT that is recoverable.
VAT Non Recoverable	Shows the amount of VAT that is non-recoverable.
(CAN) VAT Rebate Amount	Shows the VAT rebate amount. This is only for Canadian public service bodies.

Invoice Line VAT Information

This grid displays the VAT treatment, use type, applicability, code, and rate (percent), along with the VAT basis and calculated amounts for each voucher line. These fields are all defined either in the VAT Information section immediately above, or in the discussion of the Invoice Line VAT Information page.

Click the Transfer to Invoice Line VAT icon to access the Invoice Line VAT Information page, where you can review, and if applicable, override default voucher line VAT settings.

If a driver higher up in the default hierarchy, such as Ship to ID or Item, changes after the invoice line defaults have been applied, a red triangle icon appears instead.

Voucher Distribution Line VAT Information

This grid displays the VAT basis, calculated and invoiced VAT amounts for each distribution line, along with the recovery percentage, recovery amount, rebate percentage, and rebate amount. These fields are all defined either in the VAT Information section, above, or in the discussion of the Invoice Distribution Line VAT Information page.

Each distribution line number functions as a link to the Invoice Distribution Line VAT Information page for the distribution line. On this page you can review, and if applicable, override default distribution line VAT settings.

Click the Transfer to Distrib Line VAT icon to access the Voucher Distribution Line VAT Information page, where you can review, and if applicable, override default voucher distribution line VAT settings.

If a driver higher up in the default hierarchy, such as Ship to ID or Item, changes after the distribution line defaults have been applied, a red triangle icon appears instead.

See Also

Establishing VAT Defaults

Setting Up and Running Intrastat Reports

Entering Third-Party, VAT-Only Invoices

This section provides an overview of how to handle third-party, VAT-only invoices.

See Also

Entering Third-Party Vouchers

Understanding Third-Party, VAT-Only Invoices

Generally, a third-party, VAT-only invoice is received following a purchase imported from outside your country, or if you are located within the European Union, from outside of the European Union. A VAT-only invoice (perhaps with freight and miscellaneous charges as well) arrives after the purchase, usually from a customs agent of the country that received the goods.

This means that when you receive a VAT-only invoice from a third party, there is usually also an invoice from the original merchandise vendor to which the third-party invoice is related. Most often that original voucher will have been recorded as in Import transaction for VAT purposes, and you enter the third-party voucher to record the customs VAT payable on that purchase. You generally record the third-party VAT-only voucher as a Domestic transaction. The result is that you have two vouchers in the system with much of the same transaction information. As such, be careful not to report the purchase amount on the VAT return twice.

If the voucher lines are flagged as exempt, outside of scope, exonerated, or suspended, the VAT Transaction Loader selects them only from the original purchase voucher. No special handling is required for these. If you must include these voucher lines on your VAT return, create your VAT report definition so that you are selecting these transactions based on the information specified on the original purchase invoice.

However, if the voucher lines are flagged as taxable, the VAT Transaction Loader selects them from both the original purchase voucher and the third-party voucher and loads both into the VAT Transaction table. This can result in purchase amounts being reported twice. The way to handle taxable transactions for reporting purposes depends on the VAT reporting requirements in your country:

If your country requires that you report each transaction separately, you must report the taxable purchase amount from the voucher that records the import transaction and report the customs VAT applicable to that purchase from the third-party voucher. These may or may not appear on the same VAT return.
If your country requires that you report the taxable purchase amount from the customs invoice, rather than the original purchase invoice, you must report both the taxable purchase amount and the customs VAT amount from the third-party voucher.

In either situation, you can avoid reporting the taxable purchase amounts on these transactions twice by making the VAT transaction types for the third-party voucher lines different from the original voucher lines:

Define a default transaction type for import purchases at a level in the payables VAT default hierarchy that is appropriate for your organization.
Define a different default transaction type for domestic transactions that indicates customs VAT at a level in the payables VAT default hierarchy that is appropriate for your organization—usually the vendor.

Note. If you have also defined a default transaction type for domestic transactions at the item level, this value will override any value you define for the vendor. In this case, you must enter the customs VAT transaction type directly on the third-party voucher line, using the Invoice Line VAT Defaults page.

Then, when you create your VAT report definitions, indicate the transaction type that should be included on the report's line for total purchases:

If your country requires that you report the taxable purchase amount from the original purchase invoice, specify the VAT transaction type you set up for imports.
If your country requires that you report the taxable purchase amount from the customs invoice, specify the VAT transaction type for domestic purchases that you set up for customs VAT.

Example

Let's say an organization located in Canada purchases goods for 750.00 USD from the United States. The voucher for the original purchase invoice is recorded with a VAT Treatment Group of Import, and has two lines, one marked Import (IMP) and the second marked Exempt (EXMPT). The purchase amount is recorded as 990.00 CAD . The goods pass through Canadian customs and the customs authorities estimate that the goods are worth 1000 CAD. A customs invoice for 35.00 CAD is received and recorded as a third-party VAT-only voucher with a VAT Treatment Group of Domestic Purchase.

The original purchase voucher distribution lines are:

VAT Applicability	VAT Transaction Amount	VAT Basis Amount	VAT Amount	VAT Transaction Type	VAT Distribution Status
Taxable	495.00	495.00	0.00	IMP	Not yet
Exempt	495.00	495.00	0.00	EXMPT	Not yet

The third-party voucher distribution lines are:

VAT Applicability	VAT Transaction Amount	VAT Basis Amount	VAT Amount	VAT Transaction Type	VAT Distribution Status
VAT only	500.00	500.00	35.00	CSTMS	Not yet
Exempt	500.00	500.00	0.00	EXMPT	Ignore

In the VAT transaction table, the lines are recorded as:

VAT Document ID	VAT Transaction Amount	VAT Basis Amount	VAT Amount	VAT Transaction Type
1	495.00	495.00	0.00	IMP
1	495.00	495.00	0.00	EXMPT
2	500.00	500.00	35.00	CSTMS

To report the taxable purchase amount based on the customs invoice, define the VAT report with the following values:

VAT Report Line	VAT Transaction Types to be Included on Report Line	Amount Reported on VAT Return
Total purchases	CSTMS	500.00
Total recoverable input VAT on purchases	CSTMS	35.00

Currency Conversion for VAT-Only Third-Party Vouchers

Generally a VAT-only invoice is received following a purchase of goods from a foreign country, and this invoice is often in your local currency. Customs agencies generally use their own exchange rate to translate from a foreign currency to the local currency, therefore making it impossible for the PeopleSoft system to translate the line and distribution line amounts to the local currency accurately when copying those amounts from the original voucher to the third-party voucher. Therefore, the system does not copy an amount to the line when the source document and the third-party vendor’s currency differ.

In this case, the system copies all line information, but copies the amount on both the line and the distribution line as 0.00. The system issues a warning message indicating that 0.00 will be copied to the lines, because the currency of the source document does not equal that of the third-party vendor.

If the currency on the original voucher and the VAT invoice are different, you must manually translate the amount that is copied into the distribution from the original voucher to ensure that the VAT basis amount is correct.

Note. We recommend that you set VAT tolerance checking very high for a customs agent, and any other vendor that is typically third-party, to take into consideration the currency conversion differences between the import vendor and the customs agent

Unlinkable VAT-Only Vouchers

If you receive a VAT-only voucher that does not provide enough information to enable you to link it to the original purchase voucher, enter the following information on the third-party voucher:

Currency	Defaults in from the vendor.
Account	If you need to prorate non-recoverable VAT, miscellaneous, or freight, you must enter the appropriate expense account number. If you are not prorating, you do not need to changed the default account number.
Amount	To save the voucher and calculate a VAT basis amount, you must enter the distribution amount manually.

Here is what happens on the various VAT pages in the Voucher component:

The values on the Invoice Header VAT Information page default based on the defaulting hierarchy.
Once you have entered the freight, VAT and distribution line amounts, you can calculate the VAT on the Invoice Summary VAT Information page.
The VAT use type on the Invoice Line VAT Information page defaults from the vendor. To ensure that accounting entries are calculated correctly, you must also enter the VAT applicability as Taxable on this page.

See Also

Entering Third-Party Vouchers

Defining VAT Transaction Types

Establishing VAT Defaults

Generating VAT Reports

Processing Multiple Currencies

(CAN) Entering Vouchers with VAT and Sales Tax

To accommodate a situation where you have invoices with both sales tax and VAT, you must configure the sales tax calculation parameters to include VAT when you enter your voucher. You can do this by selecting the Include VAT check box in the Calculation Parameters group box on the Tax Code page when you set up your sales tax codes. You can also select the Include VAT option for an individual voucher in the Calculation Parameters group box on the Invoice Line Tax Information page.

See Also

Defining Tax Codes

Entering Voucher Line Tax Information

Entering Vouchers With VAT and Withholding

In the European Community, it is common to have a voucher with both VAT and a portion that is withheld. The amount that is withheld is calculated at the time of payment, rather than scheduling a separate payment for the amount that is withheld. When you are configuring withholding, you can specify whether VAT should be included or excluded from the withholding calculation.

You set up the parameters for calculating withholding on the Withholding Options page (which you access through the Misc. Setup (miscellaneous setup) link from the Withholding Entities page). Select the Apply VAT check box on this page if the VAT should form part of the basis for calculation. For example, let’s say that the merchandise amount is 1000.00 EUR and the VAT is 70.00 EUR. If the withholding should be on 1070.00 EUR, you select this check box to achieve the correct calculation.

See Also

Defining Withholding Options