VAT + Use Tax (B) - Purchase Order to Voucher

When you enter a purchase order using tax explanation code B for VAT + use tax, the system calculates the tax amount and makes two entries to the general ledger when you post the transaction: one for the use portion of the tax and one for the VAT portion of the tax.

The examples that follow display the AAIs that the system uses and the tables and accounts that the system updates when you run the program specified. All of the examples are for a purchase order in the amount of 1,000 USD with a 7 percent VAT and 3 percent use tax rate. The system was set up to create the journal entries in detail.

Note:

If you use tax-on-tax calculations, which you specify in the tax rate/area by activating the Compound Tax field, the system uses this formula to calculate the tax amount:

(Taxable + VAT) x use tax rate = Tax

(1,000 + 70) x .03 = 32.10