Understanding VAT on Dispatch

Russian law states that VAT is payable on sales transactions when goods are dispatched (shipped). Often you recognize sales concurrently with the dispatch of goods. Sometimes, though, you might not recognize sales immediately upon dispatch; you postpone sales recognition.

Important: You must create invoices so that they include only one VAT scenario (postponed or concurrent) for the sales order lines on the invoice. If an invoice includes sales order lines for both scenarios, the system might not process the lines correctly.

Before you process sales transactions, you must set up your system so that the system can determine whether you recognize the sale concurrently with the shipment or whether you postpone the sales recognition. You set up your system by:

• Setting up a constant.

• Setting up sales order types and line types to use the concurrent or postponed method for sales recognition.

• Setting up associations between the GL offset account for sales order line tax areas and the GL class codes for the Transit VAT account.

See Setting Up Your System to Process VAT in Russia

Note: Create a credit memo to reverse VAT accruals. Do not use the Journal Entry (P0911) program to make adjustments to VAT accrual entries.