16 Work with Suspended IVA
This chapter contains these topics:
16.1 Understanding Suspended IVA for Italy
Italian law requires that businesses that sell goods to certain government-owned or controlled institutions, such as hospitals and schools, defer the booking of IVA payable until receipt of complete or partial payment for the invoice. This means that instead of booking IVA to an active IVA payable account at the time of the sale, the business must hold the IVA in suspense until payment is received. Typically, invoices that are subject to suspended IVA are for large amounts that are paid in installments over a long period of time.
In Italy, businesses report and remit taxes to the government on a periodic basis. The amount that a business owes is calculated as the difference between the IVA payable (generated in the Accounts Receivable system) and the IVA recoverable (generated in the Accounts Payable system) amounts. Because businesses that hold IVA in suspense do not recognize the tax payable until payment is received, the amount that they owe to the government more accurately reflects the tax liability.
You can use J.D. Edwards localized software for suspended IVA to:
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Identify which transactions are subject to suspended IVA
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Calculate and print IVA payable at the time of invoicing
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Hold the IVA payable in a suspense account until payment is received
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Generate the appropriate accounting transactions when payment is received
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Report on both IVA payable and suspended IVA
Working with suspended IVA consists of the following tasks:
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Generating suspended IVA amounts
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Printing the Invoice List Control report
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Printing the Monthly Suspended IVA report
16.1.1 Before you Begin
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Define user defined codes for suspended VAT document types (system 00, type DT, system 00, type DI, and system 74, type DT) and suspended VAT rates (system 74, type SP). See Section 1.3, "Set Up User Defined Codes for Italy"
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Set up automatic accounting instruction RTSOSP.
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Link your customers to the Suspense VAT G/L Offset temporary account by assigning them a special tax/rate area, such as SO19. See Entering Customers (P01053) in the JD Edwards World Accounts Receivable Guide.
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Link your customers to the Suspense VAT G/L Offset temporary account by assigning them a special tax/rate area, such as SO19. See Entering Customers in the JD Edwards World Accounts Receivable Guide.
16.2 Generating Suspended IVA Amounts
From EMEA Localizations (G74), choose Suspended IVA
From Additional Italian Tax Processing (G002131), choose IVA Generation
From the Additional Italian Tax Processing menu (G002131), choose Suspended IVA Generation.
You must identify and account for customer payments that are subject to suspended IVA. To do this, run the Suspense IVA Document Generation program. When you run this program, the system:
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Selects only the records in the Accounts Receivable Ledger (F0311) that are subject to suspended IVA and do not have matching records in the Suspended VAT Detail file (F74800). Records in the Accounts Receivable Ledger that are subject to suspense IVA have a specific user defined Document Type.
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Creates an internal document in the Sales/Use/VAT Tax file (F0018) and the Suspended VAT Detail file (F74800). This document uses the normal tax code, based on the tax rates and areas you set up for your system. The program uses the values in user defined codes table 74/SP to determine the correspondence between the suspense IVA code and the normal tax code.
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Creates journal entries in the Account Ledger (F0911). The journal entries credit the IVA suspense account and debit the IVA payable account.
The system also prints an internal control document that you can use as an audit trail of the new, system-generated entries in the VAT Tax file (F0018). The control document includes the following information:
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Invoice header with supplier address
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Identifier of the internal document (type, number, and G/L date)
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Suspense invoice reference (type, number, and G/L date)
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Totals by IVA rate, taxable amount, and tax
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Internal document totals
16.3 Printing the Invoice List Control Report
From EMEA Localizations (G74), choose Suspended IVA
From the Additional Italian Tax Processing menu (G002131), choose Invoice List Control Report.
You can print a list of suspended IVA invoices that still need to be paid. To do this, print the Invoice List Control report. When you print the report, the system verifies that the invoice has not been paid on the As Of Date you specify for the report, and calculates the open amount.
For each invoice, the report lists the following information:
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Identifying data (date, number, and pay item)
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IVA rate
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Original credit amounts (taxable, tax, and total)
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Advance receipts amounts and credit notes to be debited (taxable, tax, and total)
16.4 Printing the Monthly Suspended IVA Report
From EMEA Localizations (G74), choose Suspended IVA
From Additional Italian Tax Processing (G002131), choose Monthly Suspended IVA Report
From the Additional Italian Tax Processing menu (G002131), choose Monthly Suspended IVA Report.
You can run three different versions of the Monthly IVA report when using Suspended IVA:
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Sales IVA Register, for documents that are not subject to suspense IVA
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Sales IVA Register, for documents that are subject to suspense IVA
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Sales IVA Register, including new documents that were generated after receipt
The report includes an additional line to reference the internal system-generated document number.