Understanding Journal Entries with VAT

If you do business in a country that assesses a recoverable value-added tax (VAT) or similar taxes, you might need to enter a journal entry with VAT. Use the Journal Entries with VAT (P09106) program when you want to record a taxable entry without updating the F0411 or F03B11 tables. For example, you would do this if you wanted to enter bank charges.

The system provides a field for the address book number, which you can use to associate the entry with an employee, supplier, customer, or company. Depending on the setting of the processing option, the system might require an address book number for each detail line (general ledger distribution). You can enter a default address book number in the header area. The system uses this number for address book numbers that you leave blank on detail lines.

When you enter a journal entry with VAT, you can specify either the taxable or gross amount. The system calculates the tax and the amount that you did not specify (gross or taxable) based on the tax rate/area. You must use a tax explanation code of V, V+ (tax on tax), or VT (tax only); the program does not accept any other tax explanation codes.

Because only one GL distribution line might be specified for taxes, the system does not use the default tax rate/area based on the business unit entered on the account; however, if the account is set up as taxable, the system will use the tax rate/area that is set up for the account if the tax rate/area is not specified on the form.

When you enter a journal entry with VAT, the system:

• Automatically updates the F0018 table.

  The system ignores the tax processing options when you post the journal entry.

• Creates Account Ledger records in the F0911 table for the tax account specified in the AAI item GTxxxx (where xxxx is the GL offset from the tax rate/area).

  Note:

  The system creates the offsetting tax entries when the journal entry with VAT transaction is entered, not when it is posted.

  The additional entries that the system creates based on the GTxxxx AAIs cannot be reviewed from the Journal Entries with VAT program. You must use the standard Journal Entries program (P0911) to review these entries. The system differentiates entries that you enter from those that the system creates by updating the ALT5 field in the F0911 table as:

  V: This code identifies the entry as the account entered in the Journal Entries with VAT program that has tax information specified.

  T: This code identifies the entry as the tax account that the system creates based on the AAI item GTxxxx.

  O: This code identifies the entry as the offset account entered in the Journal Entries with VAT program (P09106).

The system updates the Taxable Amount field even when you do not specify tax information. The system uses the gross amount as the taxable amount. The system does not update these journal entry lines in the F0018.

You can revise journal entries with VAT in the same way that you revise journal entries without VAT.

• If the journal entry is not posted, the system updates the existing record in the Taxes table.

• If the journal entry is posted, the system writes a revision record in the Taxes table.

You cannot create model or reversal journal entries using the Journal Entries with VAT program. You can, however, void reversal journal entries.