Understanding General Ledger VAT Setup and Processing

The hierarchy for VAT default options for PeopleSoft General Ledger is:

1. VAT Entity and VAT Country

2. Business Unit

3. Journal Source

4. Account

Therefore, VAT default options set up for the VAT entity or VAT country override the VAT default options set up for a business unit, journal source, or account level.

If there are no VAT default options set at the VAT entity or VAT country levels, then any VAT default options set up at the business unit level override any VAT defaults set up a the journal source or account levels.

If no VAT defaults are set at the VAT entity, VAT country, or VAT business unit level, then the VAT default options set at the journal source level override the VAT default options set at the account level.

When you enter a journal line, however, overriding of VAT default options works in the reverse order:

1. Account

2. Journal Source

3. Business Unit

When entering VAT at the journal line, if you established an option value at the account level, that value overrides a value set at the journal source and business unit levels. Likewise, if you have not established values at the account or journal source level, PeopleSoft General Ledger calculates VAT using the options set for the business unit, VAT entity registration, or VAT country levels.

The VAT defaults are controlled by VAT drivers at various levels of the hierarchy, and they are stored in a common set of tables provided by default. Depending on the driver, you can set certain fields and override them in a lower level of the hierarchy.

Two main components control the VAT defaults: the VAT Defaults Setup component and the Services VAT Treatment Setup component. For PeopleSoft General Ledger, only the VAT Defaults Setup component is applicable. You can access this component from the common VAT menu (Set Up Financials/Supply Chain > Common Definition > VAT and Intrastat > Value Added Tax) or from the applicable general ledger pages. If you access it from the VAT menu, the driver you select determines the fields that appear. If you access it from the application pages, the component from which you are accessing determines the fields that appear. For example, if you access the VAT Defaults Setup page from the VAT and IntraStat Common Definitions menu, and you select the GL Business Units (BUS_UNIT_TBL_GL) driver, then you see the same fields as you do when you click the VAT Default link on the GL Business Unit Definition - VAT page.

These VAT user overrides are set:

• Service Type, Place of Supply Driver, or both—a change to either protects both.

• Reporting Country, Defaulting State, or both—a change to either protects both.

• Bank/Customer/supplier Registration Country.

• Calc on Advance Payments.

• Place of Supply Country, Place of Supply State, or both—a change to either, where applicable, protects both.

• Applicability.

User overrides are reset to blank when the user:

• Clicks Change Physical Nature.

• Clicks Reset All VAT Defaults.

• Leaves the component and comes back in again.

See Accessing the Service VAT Treatment Defaults Setup Page.

PeopleSoft General Ledger processes VAT transactions originating from the following sources:

• PeopleSoft subsystems

• PeopleSoft General Ledger

• External systems

This diagram illustrates VAT processing in PeopleSoft General Ledger:

VAT Processing in PeopleSoft General Ledger

When you create a journal entry with VAT, the Journal Edit process calculates VAT, spreads the VAT amounts, if necessary, and, for an inclusive VAT transaction, subtracts the VAT amount from the journal line and then adds it back in for the journal balances.

You can also create a Standard Journal Entry (SJE) Model journal for VAT. However, Journal Edit does not perform any of the processes mentioned on the model journal. Instead, the SJE process copies the VAT lines to retain any user-entered information and Journal Edit processes VAT on standard journals created from the SJE process.

After creating general ledger journal entries, you can edit and post them online or you can process them in batches. You must run the VAT Transaction Loader process to load data into the VAT Transaction Table before you can run the VAT Report Extract process to enable you to print VAT reports. You run the VAT Transaction Loader process based on your organization's volume of VAT data. For example, you may only need to run this process once each week. You can select this process each time you produce reports or schedule it to run automatically. You then can run the VAT Report Extract process based on when you need to produce reports.

PeopleSoft delivers the General Ledger AE program, GL_JRNL_IMP, that you use to import VAT data to Journal tables from third-party systems. Since this program directly modifies and loads data into transaction tables, a database administrator or someone with detailed knowledge of the physical layout of the tables should run them. You must be aware which tables are affected by these programs and run the programs at the appropriate times.