Tax Processing

The Purchasing application allows US, VAT, GST, or other tax processing.

The tax processing to be used in each company/location is defined on Reference File category 132, Location Defaults.

A purchase order tax amount is calculated on the order recap screen if the order is taxable and a tax percent has been entered.  It is equal to the sum of taxable line extended prices multiplied by the tax percent.

US Tax Processing

When a purchase order is created during Purchase Order Maintenance, a taxable code default value is retrieved from the Vendor Master File.  This value can be manually overridden by the user with one of the three valid values:

Y - Tax required

A - Tax allowed

N - No tax allowed

If Y is entered, a tax amount or a tax percent must be entered on this purchase order header screen.  All the purchase order line taxable part flags must be equal to Y (yes).  If A is entered for the taxable code, a tax amount or a tax percent may be entered.  The taxable part flags may be equal to Y or N.  If N is entered for the taxable code, a tax amount or a tax percent must not be entered.  The taxable part flags must be equal to N.

When a purchase order line is created during Purchase Order Maintenance, a taxable part flag default value is retrieved from the Item/Vendor Relationship File and, if no relationship exists, from the Vendor Master File Taxable Code, as shown below:

This value can be manually overridden.

VAT Processing

When a purchase order line is created during Purchase Order Maintenance, a VAT code default is retrieved from the Item/Vendor Relationship File or, if no relationship exists, from the Vendor Master File.  This value can be manually overridden by the user with another valid VAT code.  VAT codes for use in Purchasing/Accounts Payable are defined on Reference File category 230.  A purchase order tax amount is calculated on the order recap screen.  It is equal to the sum of the line extended price multiplied by the tax percent related to the VAT code.

VAT may be suspended, exonerated, or postponed for purchases made by a company/location.  When you define VAT codes on category 230, you can specify that the code is suspended, exonerated, or postponed.  VAT that is postponed will always be calculated as zero.  Additional data related to exonerated/suspended/postponed VAT codes, as well as some defaults for how VAT is processed in Purchasing and Accounts Payable are defined on Reference File category 229.

Although VAT codes must be defined before purchase orders are entered, the majority of VAT processing occurs in the Accounts Payable module.  To understand the details of VAT processing, refer to the VAT Key Concept in the Accounts Payable User Manual.

GST Processing

The Canadian Goods and Services Tax (GST) and Provincial Sales Taxes (PST) are commonly applied to sales and purchases made in Canada.  To understand the details of GST processing, refer to the GST Key Concept in the Accounts Payable User Manual.

Generally, GST processing functions the same as that for Value Added Taxes (VAT).  Where applicable, the system changes the screen and report literals field names to reflect the type of environment, VAT or GST.  Like VAT, the system calculates GST amounts for each detail line of the transaction.

In the Purchasing module, the system determines the PST by province of receiving company/warehouse.  The system either calculates the PST amount automatically or you can enter the amount.  The PST taxable flag defaults from the vender file.