Tax Rate Areas and AAIs for Suspended VAT

To process suspended VAT, you must set up a tax rate with a special GL Offset to post the suspended VAT amounts to a suspense account.

When you receive payment and run the Suspended VAT Generation program, the system uses the tax rate for VAT payable to reclassify the suspended VAT amount and to post the recognized VAT to a VAT payable account.

For example, you could set up these tax rates for suspended and payable VAT:

• Tax rate SOSP20 for suspended VAT with a GL offset of SOSP and a tax rate of 20 percent.

• Tax rate IVA20 for VAT payable with a GL offset of VATB and a tax rate of 20 percent.

You must set up the RTxxxx automatic accounting instructions (AAIs) for the GL offsets. For the current example, you could set up RTSOSP for object account 1241 (a suspended VAT account), and RTVATB for object account 4431 (a VAT payable account).