VAT in PeopleSoft Receivables

As in all PeopleSoft applications that process VAT transactions, you set up VAT defaulting in PeopleSoft Receivables in one common VAT defaults table using VAT drivers, which control the VAT settings at the various levels of the VAT defaulting hierarchy. You access the VAT Defaults Setup pages either from the application pages (for example, the customer General Information component (CUSTOMER_GENERAL) or the Receivables Options component (BUS_UNIT_OPT_AR1) for business units or by means of the VAT Defaults setup component (VAT_DEFAULT_SEARCH), in which case you specify the driver that you want to define.

The VAT drivers make up all of the levels of the defaulting hierarchy, and the common default records store the hierarchical default data in such a way as to make retrieval of the appropriate defaults efficient. For example, a VAT default specified for a customer address sequence is used before a default for a receivables business unit. Furthermore, within each VAT driver, defaults specified by country and state are more specific and come before defaults by country only, which in turn are more specific and come before defaults in which both the country and state are omitted.

If you need to establish default values for the additional VAT treatment determinants that are specific for services, you can do this using the Services VAT Treatment Defaults Setup component (VAT_DEF_SER_SEARCH). Like the VAT Defaults setup component, this component uses VAT drivers to supply the default values at various levels of the hierarchy. For any applicable driver, you can define the usual place of supply of the service, or the place where the VAT is liable, whether it is the supplier's location, customer's location, or the place where the service is actually performed, depending on the type of service. You can also specify whether the service is freight transport or other.

The following table lists the VAT drivers and associated VAT driver keys used by PeopleSoft Receivables in the VAT default hierarchy sequence from most specific to least specific for the VAT Defaults component. The table lists the drivers that control defaults for the services VAT treatment:

The detailed description of the fields set at the various levels is discussed in the PeopleSoft Global Options and Reports documentation.

The Receivables Update Application Engine process (ARUPDATE) creates both regular accounting entries and VAT accounting entries.

For general ledger purposes, the system bases the VAT entries on the accounting date. For tax reporting purposes, the system also records and uses the tax declaration date, which may be the same as the accounting date. The declaration date is set during pending item entry, either on the VAT Header page or in your billing interface.

Here is how the system validates VAT information:

• It compares the totals of the entered VAT lines with the control totals on the pending item.

• It compares the VAT transaction amount and the VAT amount to the total item amount for items entered in PeopleSoft Receivables.

  If an item is interfaced from PeopleSoft Billing, PeopleSoft Billing calculates the amounts.

• It validates and tracks the VAT registration IDs of some countries.

You cannot post a pending item unless the first validation is successful. The sum of the transaction amounts for each VAT line must equal the control transaction amount, and the VAT amounts total must equal the control VAT amount. Also the VAT transaction amount and VAT amount for each item must equal the total amount of the item.

The system receives VAT information for external groups and edits both the entered and calculated totals for validity. If the calculated totals and the entered totals do not match, the system first checks the VAT tolerance percentage. If the difference exceeds the percentage, the system checks the tolerance amount. If both the percentage and the tolerance amount are exceeded, the system assigns the status Calc Error (calculation error). If the percentage is exceeded but the amount is not, the tolerance is met and the system assigns the item the status No Error. If you receive an error, you can review the VAT entries for the group and make corrections, as necessary.

You can enter a VAT Registration ID for an item online, receive an ID from an external billing system, enter an ID on the Identification page of the VAT Entity component, or enter an ID on the Customer VAT Info page of the General Information component as long as the country associated with the VAT Registration ID has been set up on the VAT Country Options page.

When you set up a VAT entity for a country, you must enter a VAT Registration ID. If you do not enter a Registration ID, the system displays a message informing you that this is a required field. Once you have entered a VAT Registration ID, the system validates whether the Registration ID is correct. If it is incorrect, the system displays another message, which instructs you to enter a correct ID.

You are not required to enter a VAT Registration ID for a country on the Customer VAT Info page. When you select the country on this page, a 2-character country code appears, as needed, next to the VAT Registration ID field. If you choose to enter a VAT Registration ID on this page for a country that has been set up on the VAT Country Options page, the system does not validate the VAT Registration ID that you enter for every country. The system will only validate the VAT Registration ID for the countries on this list:

• Australia — AUS

• Belgium — BEL

• Canada — CAN

• France — FRA

• Germany — DEU

• Ireland — IRL

• Italy — ITA

• Netherlands — NLD

• New Zealand — NZL

• Spain — ESP

• United Kingdom — GBR

PeopleSoft Receivables has the following transaction processing and reporting capabilities:

• Supports multiple VAT accounting entries per pending item.

• Moves VAT liability from an intermediate VAT account to a final VAT account at payment time (when using a Payment declaration point).

• Adjusts VAT liabilities at the time of payment for write-offs, discounts, drafts, direct debits, and bank receipts.

• Adjusts VAT liabilities, as needed, for advance payments and on-account payments.

• Rounds VAT amounts based on rules that you define.

  You can apply different rounding rules for each VAT country and override the default rounding options for each VAT entity, customer, or transaction. The rounding options are:

  • Normal rounding (to the nearest unit).

    For example, the system rounds down all values less than .49 and rounds up all values greater than or equal to .50.

  • Rounding up.

  • Rounding down.

The rounding options apply to VAT amounts in both the item VAT header and the individual VAT lines. The system adjusts any discrepancies between the VAT header amount and the total of the VAT lines in the larger of the two amounts.

The Payment Predictor process (ARPREDCT) calls the common VAT defaulting routines to update the VAT default values for prepayments and on-account items that it creates. If an error occurs, the process creates a payment worksheet so that you can correct the invalid information online.

You should run the VAT Transaction Loader Application Engine process (FS_VATUPDFS) periodically to update the VAT transaction table. Each time that the VAT Transaction Loader process runs, it picks up all VAT, regardless of the tax declaration date, that you have not already posted to the VAT transaction table. The system posts information to the VAT transaction table at a detail level to retain a complete history of VAT transactions.

From the VAT transaction table, you can run the VAT Reporting SQR process (VAT1001) to copy VAT transaction information to the VAT reporting tables. For each VAT report instance, you can then use the PeopleSoft VAT reporting capabilities to view the status of your VAT liabilities and prepare your VAT returns.

In the United Kingdom, specified categories of goods being traded between businesses are subject to a VAT accounting provision called the domestic reverse charge, which is applicable above a certain sale amount. The reverse charge only applies to sales within the United Kingdom where specified goods are purchased by a VAT-registered business for business purposes – sales to non-business customers are unaffected by the change and normal VAT rules continue to apply. For additional information about VAT domestic reverse charges see the PeopleSoft Global Options and Reports documentation.

To identify a transactions that includes a domestic reverse charge, PeopleSoft Receivables includes fields to record domestic reverse charges, including:

The following pages and components within PeopleSoft Receivables contain fields to record domestic reverse charges:

• The Receivables Options - VAT Defaults page defines the default values for VAT processing. Click the VAT Default link to access the VAT Defaults Setup page. This page includes the Domestic Reverse Charge field (enter a yes or no value to indicate the use of the domestic reverse charge provision) and the Domestic Reverse Charge Sales field to enter a VAT Transaction Type code for domestic reverse charges.

  See Receivables Options - VAT Defaults Page.

• Pending Item components. Several domestic reverse charges fields are located within the Pending Items components on the VAT Summary Information page and the VAT Lines page.

  See Understanding Pending Item Components.

• The VAT Detail page located within the Payment Worksheet component.

  See Applying Payments Using Payment Worksheets.

• The Item VAT Entries page within the View/Update Item Details component contains the Domestic Reverse Charge Goods check box, the Customer VAT Code field, the Customer VAT Rate field, and the Customer Amount field.

  See Item VAT Entries Page.

• The VAT Detail page located within the Draft Worksheet component.

  See Using Worksheets to Approve or Reject Drafts.

• The Correct Posting Errors components for online items, external items, and payments.

  See Correcting Posting Errors.