Understanding General Ledger VAT Setup and Processing

This section provides an overview of VAT in PeopleSoft General Ledger and discusses:

  • VAT default and override relationships in General Ledger.

  • VAT setup and defaults for General Ledger.

  • VAT transaction entry and processing in General Ledger.

This PeopleSoft application accommodates a number of methods for calculating VAT based on either the countries where your organization is located or the countries with which you conduct business. You can set up all of your VAT defaults and other VAT information in Setup Financials/Supply Chain, and then Common Definitions, and then VAT and Intrastat, and then Value Added Tax for each of your PeopleSoft applications. You must set up VAT for PeopleSoft General Ledger at the business unit, journal source, and account ChartField levels. Each of these levels is represented by a VAT driver, which is provided with the PeopleSoft application. You can set up the VAT defaults for PeopleSoft General Ledger in a central VAT location by selecting the appropriate VAT driver:

  • Account ChartField

  • Journal Source

  • GL Business Unit

When you click the VAT Defaults link on the General Ledger Business Unit Definition - VAT Defaults page, the appropriate page (Journal Source Definition page, Account ChartField page, VAT Defaults Setup page) appears, based on one of the VAT drivers for PeopleSoft General Ledger.

For example, when you click the VAT link on the General Ledger Business Unit - VAT Defaults page, the VAT driver for the VAT Defaults page is BUS_UNIT_TBL. When you click the VAT link on the Account page, the VAT driver for the VAT Defaults page is GL_ACCOUNT_TBL. Finally, if you click the VAT link on the Journal Source Definition page for Online Journal Entries (ONL), the VAT driver is SOURCE_TBL for the VAT Default page. Each VAT driver determines the appearance of the VAT Defaults page.

To process PeopleSoft General Ledger transactions, you must set the defaults and parameter controls that apply to VAT at the business unit, journal source, and account levels. The objective is to calculate and create a variety of VAT accounting entries to record not only the tax on goods and services, but also—simultaneously—record the recoverable, nonrecoverable, and rebate portions of the VAT at the journal line level.