Set Up VAT Accounts

Define separate VAT accounts for the normal VAT on Debits, and the VAT on Receipts and Payments in the chart of accounts. At the end of the reporting period, you need to create manual entries to compensate the VAT on Receipts and Payments accounts. For example:

• 44571.DEBIT, VAT Collected on Debits.

• 44571.ENC, VAT Collected on Receipts.

• 44551.DEBIT, VAT Deductible on Debits.

• 44551.DEC, VAT Deductible on Payments.

Define separate tax rates for the VAT on Receipts and Payments regime, and the VAT on Debits regime with distinct GL Offsets. For example:

• C206, AR VAT on Debits, GL Offset = COL.

• C206E, AR VAT on Receipts, GL Offset = ENC.

• D206, AP VAT on Debits, GL Offset = DED.

• D206E, AP VAT on Payments, GL Offset = DEC.

  Important: Set up the tax rates used only for VAT on Receipts and Payments, not for VAT on Debits, in user-defined code table (74/TX).

For example, in the previous list of tax rates, only these rates should be defined in user-defined code table (74/TX):

• C206E, AR VAT on Receipts.

• D206E, AP VAT on Payments.