Understanding Base Prices for Free Goods
The supplier and the Chinese government agree on the base price of free goods to calculate VAT on those free goods. Use the Free Goods VAT Base Price program (P75C4106) to maintain item base prices that are used to calculate VAT on free goods. The system stores VAT on free goods in the Chinese Free Goods VAT base price (F75C4106) table.
When you enter a sales order, the adjustment schedule sets the pricing unit of measure for the free goods line (UOM4) with the same transaction unit of measure that is defined in the free goods rules. When calculating VAT, the system first retrieves the price that is defined in the pricing unit of measure from the F4211. If the price is not defined for the pricing unit of measure, the system then retrieves the price by using the primary unit of measure.
When you enter base prices in the Free Goods VAT Base Price program, enter the prices with the same item unit of measure that is defined on the free goods adjustment schedule, the item primary unit of measure, or both.