Steps to Setting up and Working in a VAT Environment

1. Set up basic system decodes (optional)

a. VAT type codes on category 024. System Defaults are:

S = Suspended

E = Exonerated

R = Partially Recoverable

N = Non-Recoverable

C = Surcharge

P = Postponed

Blanks = Normal

b. Set up VAT declaration point codes on category 022. System Defaults are:

1 = Invoice Time

2 = Payment Time

2. Define system-wide option on category 133:

· Use ESL/SSD

3. Define options for each company/location on category 132;

· VAT vs. US tax processing vs. GST processing

4. Define the Member State flag for each country on category 007.

5. Define options for Accounts Payable

a. Define VAT codes on category 230

b. Define VAT processing information for each company/location on 229

· Authorization number (for exonerated or suspended VAT)

· Suspended amount or date limit (for suspended VAT)

· Display VAT Delay flag

c. For each warehouses registered in a European Community country, enter the VAT registration number in the VAT Reference ID field on the Warehouse Description File.

d. Define system-wide vendor defaults on category 206

· VAT declaration point

· VAT included flag

e. Define information for each vendor (defaults from category 206)

· VAT declaration point (defaults from category 206)

· VAT calculation method

· VAT included flag (defaults from category 206)

· VAT surcharge (for normal VAT)

· VAT code

· Vendor type

f. Enter information for each invoice/payment header

· VAT included flag (defaults from Vendor Master File)

· VAT code (defaults from Vendor Master File)

· Authorization number (for exonerated or suspended VAT; defaults from 229)

· Time delay for VAT declaration

g. Enter information for each invoice/payment line

· VAT code (defaults from header)

6. Define options for Accounts Receivable and Order Processing

a. Define VAT codes on category 308

b. Set system-wide flags on category 307

· Clear Customer Master File VAT Code field when limit is reached

· Post VAT adjustments for write-offs

· Limit below which VAT will not be displayed separately on invoices where VAT is included.

c. Define customer defaults on category 300

· Home/export flag

· VAT Included flag

· VAT on gifts flag

d. Define information for each customer

· Home/export flag (defaults from category 300)

· Authorization number (for exonerated or suspended VAT)

· Limit amount or date (for suspended VAT)

· Default VAT code (for exonerated or suspended VAT)

· VAT included flag (defaults from category 300)

· VAT on gifts flag (defaults from category 300)

· VAT declaration point (defaults from category 132)

e. Enter information on each sale/invoice header

· VAT on gifts flag (defaults from Customer Master File)

· Vat included flag (defaults from Customer Master File)

· VAT declaration point (defaults from Customer Master File)

· Authorization Number (for exonerated or suspended VAT; defaults from Customer Master File)

· Home/export flag (defaults from Customer Master File)

f. Enter information on each sale/invoice line

· VAT code

VAT Quick Reference Guide

This guide documents how VAT is calculated in Order Processing

	VAT Included				VAT Not Included
		Recalculation	Gross	Net	Recalculation	Gross	Net
VAT Rate (VR)		VR	VR	VR	VR	VR	VR
Cash Discount Rate (CR)		CR	CR	CR	CR	CR	CR
Line Extended Amounts (EA)		EA	EA	EA	EA	EA	EA
Sales Amount (SA)		EA/(1+VR)1	EA/(1+VR)1	EA/(1+VR-(VR*CR))1	EA1	EA1	EA1
VAT Amount (VA)		SA*VA3	SA*VA3	(SA-CA)*VR3	SA*VR2	SA*VR2	(SA-CA)*VR2
Cash Disc Amt (CA)		(SA+VA)*CR	SA*CR	SA*CR	(SA+VA)*CR	SA*CR	SA*CR
Net Sales Amt		SA+VA-CA	SA+VA-CA	SA+VA-CA	SA+VA-CA	SA+VA-CA	SA+VA-CA

Key:

1 or 2 Calculation is rounded at the order level to the appropriate decimal precision.

1 Calculation is performed at the line level, where rounding is done to the appropriate decimal precision.

2 Calculation is performed at the VAT code level, where rounding is done to the appropriate decimal precision.

3 Calculation SA + VA = EA is always true, even if VA has to be adjusted to handle rounding errors.

Example. Assume Suspended VAT and Exonerated VAT do not apply to this order, and currency is Belgian Francs (zero decimal).

Line #	Extended Amt	VAT Code	VAT Rate	Cash Disc Code	Cash Disc Rate	Apply Disc
001	100.00	V1	0.10000	P1	0.05	Y
002	50.00	V1	0.10000	P1	0.05	Y
003	220.00	V1	0.10000	P1	0.00	N
004	310.00	V2	0.33333	P1	0.05	N
005	175.00	V2	0.33333	P1	0.05	Y
006	225.00	V3	0.10000	P1	0.05	Y

		VAT Included				VAT Not Included
	Recalculation		Gross	Net	Recalculation		Gross	Net
Sales Amount (V1)	336.00		336.00	337.00	370.00		370.00	370.00
VAT Amount (V1)	34.00		34.00	33.00	37.00		37.00	36.00
Sales Amount (V2)	364.00		364.00	366.00	485.00		485.00	485.00
VAT Amount (V2)	121.00		121.00	119.00	162.00		162.00	159.00
Sales Amount (V3)	205.00		205.00	205.00	225.00		225.00	225.00
VAT Amount (V3)	20.00		21.00	20.00	23.00		23.00	21.00

Sales Amount (Total)	905.00		905.00	908.00	1080.00		1080.00	1080.00
VAT Amount (Total)	175.00		176.00	172.00	222.00		222.00	216.00
Cash Disc Amt (Total)	28.00		24.00	24.00	32.00		28.00	28.00
Net Sales Amount	1052.00		1057.00	1056.00	1270.00		1274.00	1268.00

Example: Assume VAT is suspended for S1, currency is Belgian Francs (zero decimal), and suspension limit = 1,500, and year-to-date suspended amount = 500.

Line #	Extended Amt	VAT Code	VAT Rate	Cash Disc Code	Cash Disc Rate	Apply Disc
001	100.00	S1	0.10000	P1	0.05	Y
002	50.00	S1	0.10000	P1	0.05	Y
003	220.00	S1	0.10000	P1	0.00	N
004	310.00	S2	0.33333	P1	0.05	N
005	175.00	S2	0.33333	P1	0.05	Y
006	225.00	V3	0.10000	P1	0.05	Y

	VAT Included				VAT Not Included
		Recalculation	Gross	Net	Recalculation	Gross	Net
Sales Amount (S1)		336.00	336.00	337.00	370.00	370.00	370.00
VAT Amount (V1)		34.00	34.00	33.00	37.00	37.00	36.00
Sales Amount (V2)		364.00	364.00	366.00	485.00	485.00	485.00
VAT Amount (V2)		121.00	121.00	119.00	162.00	162.00	159.00
Sales Amount (V3)		205.00	205.00	205.00	225.00	225.00	225.00
VAT Amount (V3)		20.00	21.00	20.00	23.00	23.00	21.00

Sales Amount (Total)		905.00	905.00	908.00	1080.00	1080.00	1080.00
VAT Amount (Total)		175.00	176.00	172.00	222.00	222.00	216.00
Cash Disc Amt (Total)		28.00	24.00	24.00	32.00	28.00	28.00
Net Sales Amount		1052.00	1057.00	1056.00	1270.00	1274.00	1268.00

Example. Assume Suspended VAT and Exonerated VAT do not apply to this order/invoice (VAT surcharge is only associated to ‘normal’ VATs), and currency is Belgian Francs (zero decimal).

Line #	Extended Amt	VAT Code	VAT Rate	Surcharge Assoc	Surcharge Rate	Disc. Rate	Apply Disc
001	100.00	15	0.15	R2	0.03	0.07	Y
002	50.00	15	0.15	R2	0.03	0.07	Y
003	220.00	15	0.15	R2	0.030	0.07	N
004	310.00	18	0.18	R3	0.04	0.07	N
005	175.00	18	0.18	R3	0.04	0.07	Y
006	225.00	V1	0.175	-	-	0.07	Y

		VAT Included						VAT Not Included
	Recalculation			Gross		Net (1)	Recalculation			Gross		Net
Sales Amount (15)	313.00			313.00			370.00			370.00		370.00
VAT Amount (15)	47.00			47.00			56.00			56.00		54.00	(8)
VAT Sur Amt (15/R2)	10.00		(2)	10.00	(2)		11.00			11.00		11.00	(8)
Sales Amount (18)	397.00			397.00			485.00			485.00		485.00
VAT Amount (18)	71.00			71.00			87.00			87.00		85.00	(9)
VAT Sur Amt (18/R3)	17.00		(2)	17.00	(2)		19.00			19.00		19.00	(9)
Sales Amount (V1)	191.00			191.00			225.00			225.00		225.00
VAT Amount (V)	34.00		(2)	34.00	(2)		39.00			39.00		37.00	(10)
VAT Sur Amt (V1/-)	-			-


Sales Amount (Total)	901.00			901.00			1080.00			1080.00		1080.00
VAT Amount (Total)	152.00			152.00			182.00			182.00		176.00
VAT Sur Amount (Total)	27.00			27.00			30.00			30.00		30.00
Cash Disc Amt (Total)	38.00		(3)	32.00	(4)		44.00		(5)	39.00	(6)	39.00	(7)
Net Sales Amount	1042.00			1048.00			1248.00			1253.00		1247.00

(1) VAT included in NET environment is not allowed
(2) Amounts adjusted

(3)	(127+19).07]=10+[(127.03.07)]=0+[(143+26).07]=12+[(143.03.07)]=0+[(191+34)*.07]=16

(4) (85+42+143+191)*.07

(5)	[(153+23).07]=12+[(150.03.07)]=0+[(175+32).07]=14+[(175.03.07)]=0+[(225+39)*.07]=18

(6)        (100+50+175+225)*.07
(7)        [(100+50)*.07]=11+[175*.07]=12+[225*.07]=16
(8)        Base = 370 - 11
(9)        Base = 485 - 12
(10)       Base = 225 - 16

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Steps to Setting up and Working in a VAT Environment