11 Tax Requirements

This chapter contains these topics:

• Section 11.1, "About Tax Requirements"

• Section 11.2, "Entering Journal Entries with Tax"

11.1 About Tax Requirements

J.D. Edwards solutions for tax requirements in Italy include the following tasks:

• Entering journal entries with tax

• Printing the EU Sales Listing

• Working with Intrastat requirements

• Printing monthly IVA reports

• Working with annual IVA reports

• Printing IVA by tax area code

• Working with summary IVA

• Working with withholding tax

• Working with suspended IVA

11.1.1 About Value Added Tax (VAT or IVA)

Value added tax (VAT), or Imposta sul valore aggiunto (IVA), is a noncumulative tax that Italian tax authorities impose at each stage of the production and distribution cycle.

If you work with value added tax, you should understand the following terminology and principles:

Term	Description
Output VAT	Suppliers of goods and services must add VAT to their net prices. They must record Output VAT for goods on the date that they issue invoices and for services on the date that they receive payment.
Input VAT	Input VAT is the VAT paid by the purchaser of goods and services. If the purchasers are subject to Output VAT, they can offset the Input VAT they owe against any Output VAT that they owe. The purchaser can recover Input VAT by offsetting it against Output VAT. When Input VAT exceeds Output VAT, the purchaser can obtain a cash refund.
Nonrecoverable Input VAT	Input VAT cannot be recovered for: Goods and services that are not necessary for running the business Expenses that are related to business entertainment Transport of persons Oil-based fuels and lubricants that are transformed and then resold Goods that are provided free of charge or at a substantially reduced price Purchase of cars Services related to goods that are normally excluded from the right of recovery
VAT Returns	VAT returns must be completed for each month on a special form and filed with the local tax office between the 15th and 24th day of the following month. You must pay any excess Output VAT over Input VAT at the time of filing.
VAT Exemptions	To be exempt from VAT, your business must work within the following guidelines: Goods must be physically moved to another EU-member country Customers must have VAT identification codes Invoices must show applicable VAT numbers Goods cannot be of a special category, such as vehicles

11.2 Entering Journal Entries with Tax

Navigation:

From General Accounting (G09), enter 27

From G/L Advanced & Technical Operations (G0931), choose Journal Entry With Tax

When you enter a journal entry with tax, you might know the gross amount or you might know the taxable amount of the entry. If you enter the gross amount, the system calculates the taxable amount and the tax. If you enter the taxable amount, the system calculates the gross amount and the tax.

For journal entries with tax, the system calculates the tax based on the tax area. The following restrictions apply to journal entries with tax:

• The system posts each journal entry with tax to a single tax authority.

• You cannot create model or reversing journal entries with this type of journal entry.

• This type of journal entry can be used only for transactions that have a tax explanation code of V or VT.

Entering journal entries with tax consists of the following tasks:

• Entering a tax-inclusive journal entry

• Entering a tax-exclusive journal entry

11.2.1 Before You Begin

• Set up the applicable tax rates, areas, and authorities. See Setup Activities in the JD Edwards World Tax Reference Guide.

11.2.1.1 Example: Journal Entry with Tax

If you have tax on a bank charge, your journal entry might look like this:

Figure 11-1 Example: Journal Entry with Tax

Description of "Figure 11-1 Example: Journal Entry with Tax "

The resulting entry to the general ledger would look like this:

Account Number	Description	Amount
7001.8810	Bank Charges	1000
70.1240	Tax	60
70.1110.BBL	Bank Account	1060-

11.2.2 Tax-Only Journal Entries

To enter a journal entry for tax only, provide a tax amount and a tax explanation code of VT. Do not enter a gross taxable amount.

To enter a tax-inclusive journal entry (with tax)

On Journal Entry With Tax

Figure 11-2 Journal Entry With Tax screen

Description of "Figure 11-2 Journal Entry With Tax screen"

1. Access the gross amount format by pressing F2 if needed.

2. Follow the steps to enter journal identifiers for a basic journal entry.

3. For each G/L distribution, complete the following fields:

   • Account Number

   • Gross Amount

   • Tax Amount

   • Tax Explanation Code

   • Tax Area

4. To add the record, press Enter.

   Field	Explanation
   Gross Amount	A number that identifies the actual amount. Type debits with no sign or a plus sign (+). Type credits with a minus sign (-) either before or after the amount. You can use decimals, dollar signs, and commas. The system ignores non-significant symbols. Screen-specific information If you enter the gross amount in this field, the system calculates the tax and taxable amount for you.
   Tax Amount	This is the amount assessed and payable to tax authorities. It is the total of the VAT, use, and sales taxes (PST). Screen-specific information Leave this field blank to have the system calculate the tax. Also, leave this field blank on the offsetting entry, where the Amount field includes the amount and the tax amount from the preceding lines. Enter the tax in this field for tax-only journal entries.
   Tax Explanation Code	A user defined code (00/EX) that controls how a tax is assessed and distributed to the general ledger revenue and expense accounts. Screen-specific information Enter V, VT, or a user defined code beginning with V. V+ is not a valid code.
   Tax Rate/Area	A code that identifies a tax or geographic area that has common tax rates and tax distribution. The tax rate/area must be defined to include the tax authorities (for example, state, county, city, rapid transit district, or province), and their rates. To be valid, a code must be set up in the Tax Rate/Area file (F4008). Typically, U.S. sales and use taxes require multiple tax authorities per tax rate/area, whereas VAT requires only one simple rate. The system uses this code to properly calculate the tax amount. Screen-specific information You can post only to a single tax authority. The system allocates all VATs to the tax authority associated with the first tax area listed. If the tax areas you enter are associated with more than one tax authority, the system does not allocate the VAT correctly.

   
   

To enter a tax-exclusive journal entry (with tax)

On Journal Entry With Tax

Figure 11-3 Journal Entry With Tax screen

Description of "Figure 11-3 Journal Entry With Tax screen"

1. Access the taxable amount format by pressing F2 if needed.

2. Follow the steps to enter journal identifiers for a basic journal entry.

3. For each G/L distribution, complete the following fields:

   • Account Number

   • Taxable Amount

   • Tax Amount (optional)

   • Tax Explanation Code

   • Tax Area

4. To add the record, press Enter.

   Field	Explanation
   Taxable Amount	A geographic area with common tax rules for rate and distribution. A tax area must include a tax authority such as a state, county, city, and so on. This field is used for sales tax accounting.

   
   

To enter a tax-exclusive journal entry (with VAT)

On the G/L Advanced & Technical Operations menu (G0931), choose Journal Entries with VAT.

On Work with Journal Entries with VAT

1. Click Add.

   Figure 11-4 Journal Entries with VAT screen

   
   Description of "Figure 11-4 Journal Entries with VAT screen"
   
   

2. On Journal Entries with VAT, complete the following fields:

   • G/L Date

   • Explanation

3. Complete the optional fields in the header area as necessary, including the following field:

   • Address Number

   If you do not enter a document type, the system uses a default of JE.

4. For each G/L distribution, complete the following fields:

   • Account Number

   • Taxable Amount

   • Tx Ex

   • Tax Area

5. If necessary, complete the following field in the detail area:

   • Address Number

6. Review the calculated tax in the following field:

   • Tax

7. Complete the G/L distribution for offsetting entries as needed.

   • Click OK.

11.2.2.1 What You Should Know About

Topic	Description
Sales/Use/VAT Tax file (F0018)	When you enter transactions using the Journal Entry with Tax program (P09106), the system automatically updates the Sales/Use/VAT Tax file. The system ignores the tax processing options that you set up for the post programs.
Automatic accounting instructions	The AAIs for journal entries with VAT are in the format GTyyyy, where yyyy is the G/L offset for the tax authority. If you do not specify a business unit in the AAI, the system uses the business unit of the account number from the first line item of the journal entry.
Model journal entries	Although you cannot create model journal entries on Journal Entry With VAT Tax, you can access Index of Model Journal Entries to select a model. The system displays the model information on Journal Entry With VAT Tax, and you can add the VAT information.

See Also:

• Entering Basic Journal Entries (P09101) in the JD Edwards World General Accounting I Guide

11.2.2.2 Processing Options

See Section 41.24, "Processing Options for Journal Entry with Tax (P09106)."

See Section 41.25, "Processing Options for Journal Entries with VAT (P09106)."

11.2.2.3 What You Should Know About

Topic	Description
Processing option 3	You can set the default format for this screen. Leave this processing option blank to display the taxable amount (the amount exclusive of tax) on the first line, or enter 1 to display the gross amount (the amount inclusive of tax). The system calculates the value that you do not enter and the tax.