Establishing VAT Defaults at the Line Level

This topic discusses how to obtain VAT defaults at the line level.

Page Name

Definition Name

Usage

Standard Billing - Line - VAT Info Page

BI_LINE_VAT

Review line VAT information.

When you enter a bill in a VAT Billing business unit, the system enables the Go To VAT Info button and VAT Info link (adjacent to the VAT Amount field on the Line-Info 1 page). Both the Go To VAT Info button and VAT Info link serve the same function. When you enter bill lines, the system determines the necessary physical nature and VAT locations that are used in obtaining VAT defaults. You can obtain line VAT defaults in two ways:

  • Click the Save button.

    When you click Save, the system applies VAT defaults to all bill lines.

  • Click the Get VAT Defaults button on the Line - VAT Info page that is for the associated bill line.

For you to obtain VAT defaults for bill lines, all required bill-line level VAT drivers, physical nature, and VAT locations must be populated on the bill lines.

Bill-Line Level Physical Nature and VAT Locations

This table lists all bill line VAT determinants:

Field Name

Initial Value

Changes When

Physical Nature

Appears by default from the billing VAT drivers based on the default hierarchy.

Changes when you update the Billing VAT driver keys on the transaction. Click the Change Physical Nature button on the Line - VAT Info page to change the value manually.

Location Country

Appears by default from the Billing business unit location.

Changes when you modify the value on the Line - VAT Info page.

Location State

Appears by default from the Billing business unit location.

Changes when you modify the value on the Line - VAT Info page.

Note: If you do not specify that VAT be tracked by province or state on the VAT country definition for the location country, no state values are applicable.

Customer Location Country

Appears by default from the bill-to customer location.

Changes when you modify the bill-to customer or location on the bill header. Also, you can change the value on the Line - VAT Info page manually.

Customer Location State

Appears by default from the bill-to customer location.

Changes when you modify the bill-to customer or location that is on the bill header. Also, you can change the value on the Line - VAT Info page manually.

Note: If you do not specify that VAT be tracked by province or state on the VAT country definition for the customer location country, no state values are applicable.

Services-Performed Country

The default value is determined by the value that you use to define the Where Service Performed field on the VAT drivers. Possible values include:

  • Ship-to country

  • Ship-from country

  • Buyer's location country

  • Supplier's location country

Changes when the VAT driver changes or when the driver's Where Service Performed value changes.

Also, you can change the value on the Line - VAT Info page manually.

Services-Performed State

The default value is determined by the value that you use to define the Where Service Performed field on the VAT drivers. Possible values include:

  • Ship-to state

  • Ship-from state

  • Buyer's location state

  • Supplier's location state

Changes when the VAT driver changes or when the driver's Where Service Performed value changes.

Also, you can change the value on the Line - VAT Info page manually.

Note: If you do not specify that VAT be tracked by province or state on the VAT country definition for the services performed country, no state values are applicable.

Ship-From Country

Bill line ship-from business unit location country. If this is not available, the default comes from the Billing business unit location country.

Changes when you modify the ship-from business unit. Also, you can change the value on the Line - VAT Info page manually.

Ship-From State

Bill line ship-from business unit location state. If this is not available, the default comes from the Billing business unit location state.

Changes when you modify the ship-from business unit. Also, you can change it on the Line - VAT Info page manually.

Note: If you do not specify that VAT be tracked by state or province on the VAT country definition for the ship-from country, no state values are applicable.

Ship-To Country

Bill line ship-to customer location country.

Changes when you modify the ship-to customer location. Also, you can change the value on the Line - VAT Info page manually.

Ship-To State

Bill line ship-to customer location state.

Changes when you modify the ship-to customer location. Also, you can change the value on the Line - VAT Info page manually.

Note: If you do not specify that VAT be tracked by state or province on the VAT country definition for the ship-to country, no state values are applicable.

Because the system uses complex algorithms to obtain the bill line VAT defaults, you should avoid changing these values manually. However, if the algorithms encounter problems in finding defaults, manual intervention is necessary. Consider the following rules and guidelines when manually changing line VAT defaults:

  • When you change a VAT location or a VAT default, consider how these changes may affect the existing transaction VAT defaults.

    Click the Information button that is adjacent to the Adjust Affected VAT Defaults button to generate a list of VAT defaults that are affected by the change. To adjust the affected VAT defaults that are on this page, click the Adjust Affected VAT Defaults button.

  • The following bill line fields must have the same values as the same fields on the bill header: ship-from country, ship-to country, supplier's VAT registration country, and customer VAT registration country.

  • The bill line's VAT treatment must belong to the VAT treatment group that is on the header.

  • When you modify VAT driver or VAT default data in bill entry, the system displays a warning if affected VAT defaults are not updated. Read the warning description and take the appropriate action.

  • You can reset any changes that are made manually or by the system by clicking the Reset All VAT Defaults button.

    This overwrites any manual changes that are made to the VAT defaults and reset defaults based on existing VAT driver, physical nature, and VAT location information.

The following table describes what you must do before the system saves a bill:

If VAT Applicability Equals

You must

Taxable, exonerated, or suspended

Enter a VAT code and VAT transaction type.

Enter a customer VAT code if the line is subject to VAT reverse charge.

Exempt or out of scope

Omit VAT code but enter a VAT transaction type.

Tax amounts that are on the bill line are broken down into both a VAT amount and a sales and use tax amount. The system tracks these amounts separately. Although having both a VAT code and a sales and use tax code on the same bill line is not common, in some countries both VAT and sales/use tax apply.

The bill line will also have a customer VAT amount if the bill line is subject to VAT reverse charge. The customer is liable for the customer VAT amount but the amount will not be added to the invoice total amount due.