GL Considerations

For each type of tax rate code, you can set up specific General Ledger (GL) offsets. The system uses the GL offset, which is defined in the PTxxxx automatic accounting insurance (AAI), to post the journal entries to different VAT accounts in the chart of accounts. For example, you might have a Domestic VAT account and an EU VAT account.

You should also consider that some intracommunity VAT rates have a nonrecoverable portion for the input VAT. You must include this nonrecoverable portion in the GL amount to distribute (expense accounts): Amount to distribute = Taxable Amount + input nonrecoverable VAT.

In this case, the system debits the amount to distribute from the expense account and credits the trade account with the taxable amount. The system debits the input VAT account (tax rate +) with the recoverable tax amount and credits the output VAT account (tax rate –) with the negative tax amount. The calculation of the intracommunity nonrecoverable tax varies from a regular nonrecoverable VAT. On a regular VAT, the system calculates the nonrecoverable tax based on the total tax. For intracommunity VAT, the system calculates the nonrecoverable tax from the input VAT (tax rate +) only.

Taxable amount: 100,000

Tax amount: 0 = [100,000 * 10%] + [100,000 * –10%]

Gross amount: 100,000 = 100,000 + 0 + 0 (taxable amount + tax + nontaxable)

Nonrecoverable: 5,000 = 10,000 * 50% (tax 1st line * nonrecoverable tax)

Amount to distribute: 105,000 = 100,000 + 5,000 (taxable + nonrecoverable 1st line)

The system creates the following GL transactions:

Account Number	Debit	Credit	AAI
1. 1344 (Expense Acct)	105,000
1.4110 (A/P Trade)		–100,000	PC
1.4430 (Accrued VAT +)	5,000		PT+VATA
1.4431 (Accrued VAT -)		–10,000	PT+VATB