VAT Processing on the Purchase Order

To use VAT processing, establish the VAT environment and enable the business units for VAT. You can then create purchase orders that include tax amounts, exceptions, recoverable amounts, and rebate amounts. The PeopleSoft General Ledger business unit associated with the PeopleSoft Purchasing business unit must be established in the VAT entity setup in order for purchase orders to be eligible for VAT processing.

The ship from country and seller's VAT registration information appear by default from the supplier. The ship to country and buyer's VAT registration information by default come from the ship to location on the purchase order, which normally appears by default from the buyer. Key components used in VAT calculations (such as the VAT entity, applicability, exception types, transaction types, and treatments) are derived from the VAT setup.

You can view and modify default VAT information on the PO Header - VAT Information (purchase order header - value-added tax information) page. These defaults apply only to new lines. From this page, you can change either the seller's VAT registration country or the buyer's VAT registration country.

Most of the information that the system uses to retrieve and calculate VAT information is established on the purchase order schedule. This may appear by default from the header in combination with the VAT setup. From the schedule, you can view or modify default VAT information. Any changes made to the schedule affect only new distributions.

From the purchase order schedule, you can change the seller's VAT registration country, the buyer's VAT registration country, or the VAT treatment. To update the VAT default fields affected by any of these changes, click the Adjust Affected VAT Defaults button. Click the Reset All VAT Defaults button if you want the system to reset all of the VAT defaults, including any VAT default fields that you may have changed previously. The system calculates VAT at save time or upon request by clicking the Calculate button on the purchase order header.

The system calculates actual VAT amounts and stores this data on the purchase order distribution record. The system computes the VAT amounts in both the supplier's currency and the base currency on the PeopleSoft General Ledger business unit linked to the purchase order. The system adds VAT amounts for both goods and services to the merchandise amount as long as these amounts are not self assessed. VAT amounts are considered part of the purchase order total amount to be invoiced by the supplier.