Entering Offset Taxes
Use offset taxes to record zero-rated taxes on invoices. Record offset taxes by entering a negative-amount tax distribution for each tax distribution, such as a VAT tax, that you want to offset. For example, the invoice has a $5 VAT tax distribution you want to offset. If the invoice also has a -$5 offset tax distribution, you will pay no VAT tax, but you will record the $5 VAT tax so you can report it later. If you are a member of the European Union (EU), you can report on these zero-rated taxes using the Intra-EU VAT Audit Trail report.
To enter offset taxes:
You can create offset tax distributions automatically or manually:
- You can assign a sales or user-defined tax, and an offset tax to a supplier site. Payables will automatically create for that supplier's invoices a positive tax distribution, and a negative tax distribution that exactly offsets the positive tax distribution. See Setting Up Supplier Tax Information. In the Distributions window you can review or override the tax distributions Payables creates.
- If you do not have default taxes set for your supplier site, enter the VAT tax in the Invoices window, and enter the offset tax distribution in the Distributions window. See: Entering a Single Tax.
