VAT Accounting Entries in PeopleSoft Payables

VAT accounting entries are created by voucher posting and payment posting, when applicable, for each combination of general ledger business unit, VAT code, and VAT transaction type that exists in the voucher distribution. Several factors affect how VAT can be accounted for, as follows:

• If you are recording input VAT only, where VAT is included on the invoice and the VAT amount is payable to the supplier, the VAT amount is included in the accounts payable entry during voucher posting.

• If you are recording both input and output VAT, where VAT is not included on the invoice and you may be liable for VAT, but it is not payable to the supplier, the system creates a separate VAT liability entry during voucher posting.

• The VAT declaration point determines the date on which VAT is recognized.

  If VAT is declared at time of payment, intermediate VAT accounting entries are created by voucher posting. Payment posting reverses the intermediate entries and creates the VAT accounting entries against the final VAT accounts. If VAT is declarable at invoice, delivery, or accounting date, the VAT accounting entries for the final VAT accounts are created by voucher posting; no intermediate accounts are used.

• If VAT is initially calculated at gross and then recalculated at the time of payment, and a cash discount is being taken, adjusting VAT accounting entries are created by payment posting to reduce the amount of VAT that is recorded, based on the amount of the discount.

• Voucher posting and payment posting create separate entries for recoverable VAT and non-recoverable VAT.

  If you are prorating non-recoverable VAT, the non-recoverable VAT is applied to the expense accounts specified for each VAT-applicable line. If you are not prorating non-recoverable VAT, the non-recoverable VAT is applied to the non-recoverable VAT account specified for each VAT code and VAT transaction type. If the Allocate Non-Recoverable option is selected on the transaction, then the system looks to the ChartField inheritance options for each ChartField to determine whether the value is inherited from the associated expense distribution line, from the defaults defined for the business unit, or from the VAT accounting template. If the Allocate Non-Recoverable option is deselected, then the rest of the ChartFields default from the VAT accounting template.

• VAT can be recorded in the general ledger using the general ledger business unit associated with the accounts payable business unit on the voucher header or the general ledger business unit on the voucher distribution line, depending on the VAT interunit settings.