PeopleSoft Expenses 9.1 PeopleBook

Processing Value Added Tax Transactions in PeopleSoft Expenses

This chapter provides overviews of how to process value-added tax (VAT) transactions in PeopleSoft Expenses, and VAT calculations, and discusses how to:

Set up VAT driver defaults for PeopleSoft Expenses.
Enter VAT information on expense reports.

Understanding How to Process VAT Transactions in PeopleSoft Expenses

PeopleSoft Expenses enables you to record and report VAT information associated with expense reports. The system loads the VAT information from expense reports into the VAT transaction table and then into the VAT reporting tables, which you use to create VAT returns and other VAT reports. Before you record and report VAT, set up your VAT environment and enable your business units for VAT. Oracle's PeopleSoft applications accommodate a number of methods to calculate VAT based on the countries where your organization is located or with which it conducts business.

Set up VAT for PeopleSoft Expenses and other PeopleSoft applications that process VAT transactions using the VAT and Intrastat components and pages. VAT setup and the associated system pages are described in detail in the PeopleSoft Global Options and Reports PeopleBook.

Set up VAT for PeopleSoft Expenses at the expense type and expense business unit levels. Both of these levels are represented by a VAT driver created by the PeopleSoft system. You can set up the VAT defaults for PeopleSoft Expenses in a central VAT location by selecting the VAT driver for expense type or expense business unit.

The global VAT default routines provide a centralized mechanism for the storage and retrieval of VAT information. PeopleSoft Expenses obtains VAT defaults by calling the global VAT default routines. The basic elements that we refer to in the VAT default routines are:

VAT Driver: An entity for which you can define VAT defaults, such as expenses business unit and expense types.
Driver Keys: Application-specific key fields that identify a VAT driver instance.

For example, the keys that identify the expense types VAT driver are setID and expense type. Driver keys are pulled from transactions from the VAT default routines.
VAT Defaults: Fields for which the common VAT default routines supply default values. The system determines VAT defaults by:
- Using algorithms.
  
  Complex algorithms determine some field values, such as VAT registration country or VAT treatment.
- Using the VAT Default table.
  
  The system obtains some VAT default fields through a hierarchy of defaults from the common VAT Defaults table. The levels in the hierarchy represent the default source and are identified by the VAT driver (such as expense type, expenses business unit, and VAT entity). This information is centralized into a single table, and the values are available through the common VAT default routines.

The following table lists the VAT drivers and associated VAT driver keys in VAT default hierarchy sequence from most specific to least specific for the VAT Defaults component. No PeopleSoft Expenses drivers apply to the Services VAT Treatment Defaults:

Note. The VAT drivers that appear in this table include only those that apply to PeopleSoft Expenses. They appear in the order of the hierarchy that PeopleSoft Expenses uses to process defaults.

VAT Driver	VAT Driver Keys	PeopleSoft Application	Country	State	Applicable to Regular VAT Defaults	Applicable to Services VAT Treatment Defaults
Expense Type	Set ID Expense Type	Expenses	Optional	Optional	Yes	No
Expenses Business Unit	Business Unit	Expenses	Optional	Optional	Yes	No
VAT Entity Registration	VAT Entity Country	All	Required	Optional	Yes	No
VAT Country	Country	All	Required	Optional	Yes	No

Understanding VAT Calculations

VAT calculations on expense reports occur when you:

Click the Calculator button (frequent user) or Calculate VAT button (occasional user).
Access the VAT Information for Expense [type] page.
Access the VAT Accounting Detail page.
Click the Save for Later button.

VAT is calculated for each expense line where VAT was not previously calculated.
Click the Submit for Approval button.

VAT is calculated for each expense line where VAT was not previously calculated.

You can manually enter a VAT amount in the Override VAT Amount field if the VAT amount shown in your receipt does not match the VAT amount calculated by PeopleSoft Expenses.

Managers and auditors can access the Expense Report - VAT Information (TE_SHEET_VAT_SUM) page to review a summary of VAT calculations. This page is not available when you create or edit an expense report and have not submitted it for approval.

Examples of VAT Calculations

This table is an example of VAT calculations:

Expense Line	VAT Code	Reimbursement Amount
1	10%	110 EUR
2	15%	230 EUR
3	20%	300 EUR

PeopleSoft Expenses always uses an Inclusive VAT calculation method. PeopleSoft Expenses subtracts any VAT amount calculated or entered from the reimbursement amount to obtain the VAT basis amount.

Using the expense line 2 from the previous example, you calculate the VAT basis amount as follows:

(VAT Basis Amount) = (Reimbursement Amt) / (1 + (VAT Code / 100))

(VAT Basis Amount) = (230 EUR) / (1 + (15/100)) = 200 EUR

If a receipt has a VAT amount of 35 EUR, enter 35 EUR in the VAT Override Amount field and click the Calculate button. The system recalculates the amounts as follows:

(VAT Basis Amount) = (Reimbursement Amt) − (VAT Override Amount)

VAT Basis Amount = (230 EUR) − (35 EUR) = 195 EUR

The VAT amount remains 35 EUR in this example.

The following table displays how all VAT amount fields are treated when you save for later or submit the expense report:

Expense Line	Reimbursement Amount	VAT Code	VAT Calculated Amount	VAT Override Amount	VAT Basis Amount
1	110 EUR	10%	10	-	100
2	230 EUR	15%	30	35	195
3	300 EUR	0%	-	-	300

Setting Up VAT Driver Defaults for PeopleSoft Expenses

The VAT drivers for PeopleSoft Expenses are:

Expense Types
Expenses Business Unit
VAT Entity Registration
VAT Country

This section discusses how to:

Set up VAT driver defaults for expenses business units.
Set up VAT driver defaults for expense types.

Pages Used to Set Up VAT Drivers for PeopleSoft Expenses

Page Name	Definition Name	Navigation	Usage
VAT Defaults Setup (VAT Driver: Expenses Business Unit)	VAT_DEFAULTS_DTL	Set Up Financials/Supply Chain, Common Definitions, VAT and Intrastat, Value Added Tax, VAT Defaults, VAT Defaults Sub-Search, VAT Defaults Setup Set Up Financials/Supply Chain, Business Unit Related, Expenses, Expenses Definition, VAT Options Click the VAT Default link on the Expenses Business Unit Definitions – VAT Options page.	Access the VAT defaults for expenses business units.
VAT Defaults Setup (VAT Driver: Expense Type)	VAT_DEFAULTS_DTL	Set Up Financials/Supply Chain, Common Definitions, VAT and Intrastat, Value Added Tax, VAT Defaults, VAT Defaults Sub-Search, VAT Defaults Setup Set Up Financials/Supply Chain, Product Related, Expenses, Purchase, Expense Type Click the VAT Default link on the Expense Types 1 page.	Access the VAT defaults for expense types.

Setting Up VAT Driver Defaults for Expenses Business Units

Access the VAT Defaults Setup page for expenses business unit VAT Driver (Set Up Financials/Supply Chain, Common Definitions, VAT and Intrastat, Value Added Tax, VAT Defaults, VAT Defaults Sub-Search, VAT Defaults Setup).

The VAT Defaults Setup page is a common page used to set up VAT defaults for all Oracle's PeopleSoft products that process VAT transactions. On this page, you define PeopleSoft Expenses defaults as applicable for each PeopleSoft-defined Expenses VAT driver.

See Working with VAT.

Setting Up VAT Driver Defaults for Expense Types

Access the VAT Defaults Setup page for expense type VAT Driver (Set Up Financials/Supply Chain, Common Definitions, VAT and Intrastat, Value Added Tax, VAT Defaults, VAT Defaults Sub-Search, VAT Defaults Setup).

The VAT Defaults Setup page is a common page used to set up VAT defaults for all Oracle's PeopleSoft products that process VAT transactions. On this page, you can define PeopleSoft Expenses defaults as applicable for each PeopleSoft-defined Expenses VAT driver.

See Working with VAT.

Entering VAT Information on Expense Reports

This section provides an overview of VAT information and discusses how to:

Select VAT options and calculate VAT on expense reports.
Enter VAT accounting details.

Understanding VAT Information

After entering an expense transaction line on the Expense Report Entry page, select the VAT tab (VAT must be enabled) and then click the VAT Information button to access the VAT Information For Expense Type page. The system defaults appear the first time you access the VAT Information For Expense Type page. You can easily change values and recalculate VAT.

Pages Used to Enter VAT Information

Page Name	Definition Name	Navigation	Usage
VAT Information For Expense [type]	TE_SHEET_VAT_INFO	For frequent users, enter an expense line on the Expense Report Entry page, select the VAT tab, and then click the VAT Information link. For occasional users, enter an expense line on the Expense Report Entry page, click the Detail link, and then click the VAT Information link.	Select VAT options and calculate VAT for the expense item.
VAT Accounting Detail	TE_SHEET_ACCTG_VAT	For frequent users, enter an expense line on the Expense Report Entry page, click the Accounting Detail button on the Overview tab, click the VAT Amounts tab on the Accounting Detail page, and then click the VAT Accounting Detail button. For occasional users, enter an expense line on the Expense Report Entry page, click the Detail link, click the Accounting Detail link, click the VAT Amounts tab, and then click the VAT Accounting Detail button.	View or change VAT accounting details.

Selecting VAT Options and Calculating VAT on Expense Reports

Access the VAT Information For Expense [type] page (enter an expense line on the Expense Report Entry page, select the VAT tab or click the Detail link, and then click the VAT Information link).

Physical Nature

Physical Nature	Indicates whether an expense type is a good or a service. Many countries require that the sale or purchase of goods is reported separately from that of services. PeopleSoft Expenses uses this field to retrieve values from the VAT Defaults table.
Change Physical Nature	Click to override the default physical nature for this expense. The system resets all the VAT defaults.

VAT Locations

Consumption Country

Enter the country where you incurred the VAT. PeopleSoft Expenses uses this field to retrieve values from the VAT Defaults table.

The initial default value for this field comes from the location that you enter on the expense transaction line. If you do not enter a location on the expense transaction line, PeopleSoft Expenses uses the default location from the expense report header.

Consumption State

If the consumption country requires that you track VAT by state or province, enter the state, province, or geographic region within the country where you incurred the VAT. PeopleSoft Expenses uses this field to retrieve values from the VAT Defaults table.

VAT Defaults - VAT Controls

Rounding Rule	Select the VAT rounding rule that you want to use. The initial default value comes from either the VAT entity registration or VAT country VAT driver within the VAT Defaults table. Values are: Nat Rnd (natural round): Rounds amounts normally (up or down) to the precision that is specified for the currency code. For example, for a currency that is defined with two decimal places, 157.4659 would round up to 157.47, but 157.4649 would round down to 157.46. Up: Rounds up and limits rounding precision to one additional decimal place. For example, for a currency that is defined with two decimal places, 157.4659 would round up to 157.47. Down: Rounds amounts down to the precision that is specified for the currency. For example, for a currency defined with two decimal places, 157.4659 would round down to 157.46.
Use Type	Enter a value to categorize the use of a good or service by the tax status of the activity in which it is used—the tax status of the goods or services that is ultimately produced from those procured. VAT use is one of the main determinants in the recoverability of input VAT. The initial default value comes from the expense type or Expenses business unit VAT driver within the VAT Defaults table.
No VAT Receipt	Select if the employee did not submit a VAT receipt for a VAT expense item that requires one. If selected, PeopleSoft Expenses sets the recovery percentage and rebate percentage fields to zero. You can set up approval and audit rules so that expenses with VAT but without VAT receipts require approval and auditing; in many countries, you cannot claim tax credits for the VAT without a VAT receipt. By default, this check box is not selected.
Prorate Non-Recoverable	PeopleSoft Expenses generates an accounting line for non-recoverable VAT. Deselect this check box to charge non-recoverable VAT to the non-recoverable VAT account that is designated in the VAT code. Select this check box to charge non-recoverable VAT as an expense to ChartFields that are indicated in an expense report accounting split. The initial default value comes from the Expenses Definition - VAT Options page.
Allocate Non-Recoverable	This check box is applicable only when non-recoverable VAT is not being prorated. When non-recoverable VAT is not being prorated, the account and alternate account for the non-recoverable VAT accounting entry will always be obtained from the VAT accounting template associated with the VAT code. Select this check box to allow the other, non-account ChartFields to be obtained based on the ChartField Inheritence Options that have been defined for non-recoverable VAT. For each ChartField, these options allow you to specify whether the ChartField value is inherited from the expense distribution line, whether the value comes from the business unit defaults, or whether the value comes from the VAT accounting template. Deselect this check box to allow the other, non-account ChartFields to all be obtained from the VAT accounting entry template. The value of this check box defaults from the Expenses Definition - VAT Options page.

VAT Defaults - VAT Treatments

Treatment

Displays the appropriate VAT treatment value. Within PeopleSoft, VAT treatment values on the transactions lines—which come from complex algorithms—are used to apply the precise defaults that are applicable to the transaction lines. Options are:

Domestic Goods Purchases: The purchase of goods where the VAT entity is registered in the consumption country.
Domestic Services Purchases: The purchase of services where the VAT entity is registered in the consumption country.
Foreign Goods Expense: The purchase of goods where the VAT entity is not registered in the consumption country and the Record Foreign VAT check box on the Expenses Business Unit definition is selected.
Foreign Service Expense: The purchase of services where the VAT entity is not registered in the consumption country and the Record Foreign VAT check box on the Expenses Business Unit definition is selected.
No VAT Processing: No VAT is processed for the expense line. The following scenarios illustrate this case:
- The consumption country and employee base country are the same, but the Expenses business unit is not VAT-enabled.
- The consumption country and employee base country are the same, but the VAT Entity is not registered in that country.
- The consumption country and employee base country are not the same and the consumption country is not defined as having a VAT system.
- The consumption country and employee base country are not the same, the Expenses business unit is not VAT-enabled, and the Record Foreign VAT check box on the Expense business unit is deselected.
- The consumption country and employee base country are not the same, the VAT Entity is not registered in the consumption country, and the Record Foreign VAT check box on the Expense business unit is deselected.

VAT Defaults - VAT Details

Applicability	Displays the appropriate status for VAT applicability. Options for PeopleSoft Expenses are Taxable, Exempt (not subject to VAT) and Outside (Outside of Scope of VAT). The value comes from an algorithm that uses the VAT Applicable default from the VAT default hierarchy (expense types, Expenses business unit, and VAT country VAT drivers) within the VAT Defaults table, the treatment, and the exception type.
VAT Code	Displays the rate at which the system calculates VAT for the expense line. The value comes from an algorithm that uses the treatment and applicability to retrieve the applicable VAT Code default from the VAT default hierarchy (expense types, Expenses business unit, and VAT country VAT drivers) within the VAT Defaults table.
Transaction Type	Displays a code that categorizes and classifies this transaction for VAT reporting and accounting. The value comes from an algorithm that uses the treatment and applicability to retrieve the applicable transaction type form the VAT default hierarchy (expense types, expenses business unit, and VAT entity registration VAT drivers) within the VAT Defaults table.

VAT Defaults - Adjust/Reset VAT Defaults

Adjust Affected VAT Defaults	Click this button to have the system adjust the VAT defaults that are affected by your changes. All changes you have made to VAT defaults on this page that affect other VAT defaults on this page are retained. Oracle's PeopleSoft recommends that you always click the Adjust Affected VAT Defaults button after changing any defaults on the VAT page. Since values that appear further down the page can be dependent on values that appear previously on the page, you should work from top to bottom and click the Adjust Affected VAT Defaults button in the Adjust/Reset VAT Defaults region as needed. This action avoids updating values that you have already overridden.
	Click the List of fields to be selected icon to view a list of the fields whose values will be adjusted when you click the Adjust Affected VAT Defaults button.
Levels	Before you click the Reset All VAT Defaults button, select the levels to which you want the action to apply. Options are: All lower levels only: Reset the VAT defaults for the expense distribution lines. This and all lower levels: Reset the defaults for the expense line and the expense distribution line. This level only: Reset the defaults for the only the expense line.
Reset All VAT Defaults	Click to reset VAT defaults that you overwrote to the original defaults before you saved the component. This action includes changes that you made when you clicked the Adjust Affected VAT Defaults button. The reset default values will be saved onto the expense line, the distribution line, or both levels, depending on your selection in the Level field. Note. Reset redetermines the VAT defaults. If you changed a VAT driver field, resetting VAT defaults does not return the original default values; it resets all of the default values based on the new driver value.

VAT Calculations

Basis Amount	Displays the amount on which the VAT is calculated in the transaction currency.
Tax Rate	Displays the applicable VAT percentage.
Calculated Amount	Displays the system-calculated VAT amount in the transaction currency.
Override VAT Amount	Displays the manually entered VAT amount for the line when the calculated VAT amount is not equal to the VAT on the invoice being recorded; otherwise, this field is blank.
Recorded Amount	Displays the amount of VAT that will be recorded for this transaction in the transaction currency. If the calculated VAT amount has been overridden, this will be the entered override VAT amount; otherwise, this amount will be the calculated amount.
Recalculate	Click to recalculate the Basis Amount, Calculated Amount, and Recorded Amount fields based on the changes made to VAT defaults. This button performs the same action as the calculate button on the expense line grid.

Entering VAT Accounting Details

Access the VAT Accounting Detail page (enter an expense line on the Expense Report Entry page, click the Accounting Detail button on the Overview tab, click the VAT Amounts tab on the Accounting Detail page, and then click the VAT Accounting Detail button).

VAT Defaults - VAT Controls

Use Type	Displays the value from the VAT Information for Expense [type] page. You cannot modify this field.
Apportionment Control	Displays the default value from the PeopleSoft Expenses business unit VAT driver within the VAT defaults table. Select the option to use when searching for VAT apportionment information. Values are: Dist GL BU (distribution general ledger business unit): Select for the system to use the general ledger business unit on the distribution line to search for the taxable and exempt percentages. Txn BU (transaction business unit): Select for the system to use the expenses business unit associated with the employee to search for the taxable and exempt percentages. Txn GL BU (transaction general ledger business unit): Because PeopleSoft Expenses uses the general ledger business unit, this option has the same behavior as Txn BU.
Recovery Source	Select one of the following options: Automatic: Select for the system to calculate what percentages to use. This is the initial default value. Manual: Select if you want to override the percentage calculated by the system. You can enter the percentage of VAT entered that is recoverable.
Rebate Source	Select one of the following values: Automatic: Select for the system to calculate what percentage to use. This is the initial default value. Manual: Select if you want to override the percentage calculated by the system. When you do, you can enter the percentage that is used to calculate the rebate. Note. The availability of the Recovery and Rebate Source fields is dependent on the Allow Override Recovery/Rebate check box that you set on the expenses business unit VAT driver in the VAT Defaults table. For Automatic, the system-calculated percentages are based on the VAT use type or VAT apportionment for the ChartFields on the distribution line.
Reclaim Percent	When the expense line has a foreign VAT treatment, you can specify a VAT reclaim percent. VAT recovery and VAT rebate are not available for foreign VAT treatments, and you cannot modify those fields.

VAT Treatments

This section displays the VAT treatment, which is provided by default from the VAT Information For Expense [type] page.

VAT Calculations

Basis Amount	Displays the amount on which the VAT is calculated in the employee business unit's base currency.
Basis Amount Base	Displays the amount on which the VAT is calculated in the base currency for the business unit entered in the distribution line.
Tax Rate	Displays the applicable VAT percentage.
Recorded Amount	Displays the amount of VAT that will be recorded for this transaction in the employee business unit's base currency. If the calculated VAT amount has been overridden, this will be the entered override; otherwise, this amount will be the calculated VAT amount.
Recorded Amount Base	Displays the amount of VAT that will be recorded for this transaction in the base currency for the business unit entered in the distribution line. If the calculated VAT amount has been overridden, this amount will be the entered override VAT amount; otherwise, it will be the calculated VAT amount.
Recovery Percent	Indicates the rate used to recover domestic VAT.
Rebate Percent	Indicates the rate used to calculate the rebate amount.
Recovery Amount	VAT recovery amount calculated by the system based on the VAT recovery percentage.
Recovery Amount Base	VAT recovery amount in the base currency for the business unit entered in the distribution line.
Rebate Amount	The calculated rebate amount expressed in the employee business unit's base currency.
Rebate Amount Base	The calculated rebate amount expressed in the base currency for the business unit entered in the distribution line.
Reclaim Amount	The calculated reclaim amount expressed in the employee business unit's base currency.
Reclaim Amount Base	The calculated reclaim amount expressed in the base currency for the business unit entered in the distribution line.
Recalculate	Click to recalculate the recovery, rebate, and reclaim amounts.