Process to Offset VAT for Capital Goods

To offset VAT for capital goods:

1. Define the item category relationship in the Item Category Relationship program (P75I2140) as a capital item.

   You assign a VAT category code by business unit and item number. For capital goods, you must set up a value of C in the Vat Tax UDC table (75I/VT) and assign that code to the item.

2. Use the State / Business Unit Cross Reference program (P75I2139) to map the business unit to a state.

   Because the period over which you recover VAT for capital goods is established at the state level, you must associate the business unit with the state in which you recover the VAT amount.

3. Use the Retention Percentage program (P75I220) to set up the retention percentage and deferred period for each state in which you recover VAT.

4. Create a purchase order for a capital item and attach a VAT cost rule to it.

   You select a cost rule from the Landed Cost Rule (41/P5) UDC table.

5. Receive the order and complete the voucher match.

6. Run the VAT - Purchase Update program (R75I210).

   This program prints a list of purchase orders that are applicable for VAT for a specific date range.

7. Run the Set Off of Capital Goods program (R75I211).

   This program calculates the VAT offset amount for capital goods.

8. Run the Calculation of VAT Payables for Capital Goods program (R75I212).

   This program prints a list of the purchase orders for which deferred amounts were calculated.