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To accommodate each country's tax reporting requirements, you should be able to:

• Display VAT for all taxable transactions.

• Identify taxable and tax amounts for each rate and transaction class.

• Prepare periodic VAT Returns, as required by each country, from your receivables and payables subledger transactions.

• Ensure the VAT liability for each tax code is posted to a separate general ledger account or sub-account. The activity for each of these VAT liability accounts, or sub-accounts, must equal the amount of output tax on each respective tax code.

• Ensure all VAT transactions have been posted to the appropriate VAT liability account and reported correctly.

• Reconcile your VAT returns to the tax liability accounts in your general ledger.

• Report VAT transactions on both an accrual calculation basis and a cash calculation basis.

Suggestion: To calculate the Input VAT for your VAT return, refer to the Accounts Payable Tax section in the Oracle Payables User's Guide.

Only the taxable and tax amounts of a given transaction associated with a particular tax code and general ledger account will be reported within that account. If you post multiple taxes per invoice line, the taxable amount will be multiplied by the number of taxes you post.

Note: Receivables lets you assign a unique general ledger account or sub-account for each tax code using the Tax Codes and Rates window. See: Tax Codes and Rates.

Additionally, the VAT Reconciliation Report provides you with all of the transaction detail from the Receivables subledger to enable you to reconcile the Output VAT portion of your VAT returns to the general ledger.

Warning: This report will only be accurate and allow you to reconcile transactions to your general ledger if you have not created any adjustments of type Line, Invoice, or Freight. The VAT Reconciliation Report only includes adjustments of type 'Invoice' and 'Charges' when you set the Include Adjustments parameter to Yes. See the Report Parameters section below for more information.

You can create manual journal entries to correct your Output VAT liability on Discounts, Adjustments, Miscellaneous Cash Receipts, and Receipt Applications. Where applicable, the total General Ledger Account Activity will be shown for each VAT account to assist you with your monthly VAT reconciliation.

Report Parameters

Suggestion: Define a VAT Reconciliation Report Set that includes the following reports to assist you in compiling the Output portion of your VAT return:

• VAT Reconciliation Report

• Customers with Invoices at 0 VAT and no VAT Registration Number

• VAT Exception Report

GL Date Low/High Enter the GL Date range for the period you wish to review. The default values for GL Date Low and High parameters are the start and end dates of the most recent accounting period. The general ledger activity of the VAT account is displayed if the GL Date range selected corresponds to a valid accounting period and no transaction date range is entered.

Transaction Date Low/High: The Transaction Date Range should be set to null. Otherwise, if the transaction date and GL date for a given transaction fall in different periods, your report will not balance to the general ledger for the requested GL Date Range.

VAT Account Low/High: Select the general ledger account range to review.

Suggestion: When defining your chart of accounts you should group your accrual basis tax accounts together and your cash basis tax accounts together. You can then use the distinct account ranges to define unique report sets for each type of tax basis.

Include Accruals: Choose whether to report on accrual transactions from the receivables subledger, which include the following transaction classes:

• Invoices

• Debit Memos

• Credit Memos

Include Discounts: Choose whether to report on Earned and Unearned Discount transactions.

Include Miscellaneous Cash: Choose whether to report on Miscellaneous Cash Receipts, including bank charges.

Include Receipts: Choose whether to report on cash receipts, including bank charges.

Posting Status: You can report on posted, unposted or all transactions. When you report on posted transactions only, the Unposted column will always display zero, while the Posted column will display zero when reporting on unposted transactions.

Detail Level: You can select various levels of details to report. The default level, Show Summary and all Detail, displays all transaction detail, while the Show Summary and Manual Transactions level will display all transactions except for accruals. You can also display transaction summary only by entering Show Summary Only.

Payment Date: If you choose to include receipts that would be required in cash basis reporting of VAT, you can control which date is used to report the receipt. You can select either the GL Date of the cash application or the Maturity Date of the cash receipt. The Maturity Date of the cash receipt may be appropriate when utilizing Bills of Exchange, as the Bill of Exchange may not mature until several weeks after the cash application.

Show Ship To Address: Choose how you want to print this customer's ship to address on the report. Choose Country, Province, State, or None.

Column Headings

Detail Section

• Credit Memos

• Adjustments

• Receipt Applications

• Invoice, Credit Memo and Debit Memo

• Earned Discount

• Unearned Discount

• Miscellaneous Cash

• Adjustment

• Receipts Application

Warning: Any invoice line that posts multiple taxes (each with its own tax code) will display the full value of the taxable amount of the invoice line once for each general ledger account associated with the tax code. The duplication of taxable amounts will cause the report to overstate your total taxable amount for the period. To avoid this, ensure that each tax code posts to a distinct tax account.

Posted VAT: This column displays the VAT calculated by Receivables and posted to the general ledger.

Unposted VAT: This column displays the VAT calculated by Receivables and not yet posted to the general ledger.

VAT on Discounts: This column shows the VAT for Earned and Unearned Discounts. The tax is calculated based on the tax amount applied to the general ledger VAT account to which the tax on the original invoice is posted.

The VAT Reconciliation Report uses a consistent algorithm to calculate VAT on applied transactions regardless of the installment rule of the original transaction. This allows you to accrue and report VAT immediately, while still enabling you to manage your Output VAT by the applied Discount, Adjustment or Receipt.

VAT on Adjustments: This column shows the VAT for adjustments of type 'Invoice' and 'Finance.' The tax calculation is based on the tax code associated with the general ledger VAT account to which the tax on the original invoice is posted.

VAT on Cash: This column shows the VAT for Receipt Applications and Miscellaneous Cash Receipts. The tax calculation for the Cash Applications is based on the tax applied to the general ledger VAT account to which the original invoice is posted. The tax calculation for the Miscellaneous Cash Receipts is based on the tax code and rate assigned to the receipt in the Receipts window.

Summary Section

Transaction Class: This column displays a summary of the transaction classes displayed in the detail section of the report. The transaction class will be reported in the following order:

• Invoice, Credit Memo and Debit Memo

• Earned Discount

• Unearned Discount

• Miscellaneous Cash

• Adjustment

• Cash Application

Posted VAT: This column shows a summary of the Posted VAT column from the detail section per transaction class.

Unposted VAT: This column shows a summary of the Unposted VAT column from the detail section per transaction class. At the end of the reporting period, you should not have any unposted transactions.

Manual VAT: This column shows the sum of the Discounts, Adjustments and Cash columns from the detail section per transaction class. This value represents the sum of VAT transactions affecting your Output VAT not automatically posted to the specific VAT account. To reconcile your general ledger by VAT account to your Total VAT by tax code, you will have to post the value of this column to the appropriate general ledger account.

Total VAT: This column displays the sum of the Posted, Unposted and Manual VAT columns. This value represents your Output VAT for the reporting period and tax code as defined by the selected date range and VAT account parameters.

General Ledger Activity: The General Ledger Activity of the VAT account is displayed if the GL Date Range selected corresponds to a valid accounting period in General Ledger and no transaction date range is entered. The value reported in this column is the net of all general ledger activity posted to this account for the given period.

You can use this value to compare the Total VAT by account with your General Ledger. After posting any Manual VAT to the general ledger, the Total VAT for each account should equal the general ledger activity for the corresponding account. To review the details of the general ledger activity you should run the Account Analysis Report from within General Ledger. See: Account Analysis Report.

Warning: If you revalue the foreign currency transactions for your VAT accounts within the general ledger, the general ledger account activity shown will no longer balance to the subledger transactions in the detail section of this report. The functional amounts reported by the subledger for the transaction detail will be shown using the original exchange rate of the transaction, not the exchange rate used to revalue the general ledger account.

Row Headings

See Also

VAT Exception Report

Customers with Invoices at 0 and no VAT Registration Number

VAT Register Report

Receivables Standard Reports and Listings

Running Standard Reports and Listings