Tax Periods Overview
This topic provides an overview of tax reporting periods.
-
How do I define tax periods for my company and subsidiaries?
-
What happens if I create a transaction and the tax period is already closed?
-
What happens if I edit or delete a transaction and the tax period is already closed?
What is a tax reporting period?
NetSuite has two types of periods:
-
Accounting periods – for financial and management accounting purposes
-
Tax periods – for VAT/GST reporting and submission in your country of operations
A tax period defines a period of time over which your company tracks tax. A tax period can be a month, a quarter, or a year, depending on the frequency of your tax submissions or what your business has agreed with the local tax agency. You can run monthly, quarterly, or annual VAT/GST reports in NetSuite.
If you set up quarters without months, you will be able to run only quarterly tax reports. If you set up years without children, you will be able to run only annual tax reports. Consequently, you will not be able to run monthly tax reports in the event of internal or external needs such as tax audits, unless you have tax periods set up as months.
How are tax periods related to accounting periods?
In most cases, a company’s fiscal (financial) year is different from its tax year. The reporting period for tax can be monthly, bimonthly or quarterly. The frequency of submitting tax returns depends on each country’s rules and on the date your company first registered for VAT/GST.
To meet the reporting requirements of various countries, NetSuite provides separate accounting and tax periods. Tax reporting periods can also vary between subsidiaries for a company that has international operations.
In NetSuite, you can define tax periods independently of your accounting periods.
There are no tax periods in US edition and Canada edition accounts that are not OneWorld, so those editions use only accounting periods.
In a OneWorld account, you can have only one tax period setup across all subsidiaries, unless the Multiple Calendars feature is enabled.
What NetSuite editions use tax periods?
The following accounts can use accounting and tax periods:
-
Australia edition
-
Japan edition
-
UK edition
-
International edition
-
OneWorld (any edition, if there is a VAT/GST nexus)
The following accounts use only accounting periods:
-
U.S. edition (not OneWorld)
-
Canada edition (not OneWorld)
If your account is a U.S. edition or Canada edition OneWorld account, the Manage Tax Periods page will be accessible only when you add a subsidiary or nexus that uses VAT/GST. See VAT and GST Reporting Overview.
How do I define tax periods for my company and subsidiaries?
For information about how to create, edit, delete, and close tax periods, read the following topics:
-
Setting Up Tax Periods (for accounts without the Multiple Calendars feature)
What roles can manage tax periods?
The following roles can access the Manage Tax Periods page:
-
Administrator
-
Custom role with the Manage Tax Periods permission
The Manage Tax Periods permission with full access level enables you to set up, edit, close, reopen, and delete tax periods.
The Manage Tax Periods menu item is visible only if the role or user is in a subsidiary that has at least one VAT nexus.
When is a tax period closed or reopened?
You should close the tax period before running any tax reports, so that you prevent further postings to tax periods that have already been filed.
Closing a tax period for a subsidiary closes all prior tax periods for that subsidiary. Opening a tax period for a subsidiary opens that and all subsequent tax periods that have been set up for that subsidiary. See Closing Tax Periods.
Prior to paying the tax liability, make sure you run the VAT/GST on Sales and VAT/GST on Purchases summary and detailed reports, or the international tax report for that subsidiary (or nexus). See Paying Tax Liabilities - Non-U.S. Editions and Nexuses and VAT and GST Reporting.
If you need to make any adjustments, you can reopen the tax period and run the reports again.
If you use the International Tax Reports SuiteApp, you can click Adjust Return on the country tax report form. An alert message is shown if you click Adjust Return for a tax period that is already closed. If you want to make an adjustment for that period, you must reopen the period. See Making Adjustments on a VAT Return.
What happens if my tax period is not set up?
If you are creating an invoice and there is no open tax period in which the transaction can be reported, NetSuite prevents you from saving the transaction. This is true for all posting transactions that are taxable.
What happens if I create a transaction and the tax period is already closed?
If you create a transaction and the tax period is already closed, the tax for the transaction is reported in the next open tax period.
What happens if I edit or delete a transaction and the tax period is already closed?
If you have already submitted a tax report, editing or deleting past transactions may result in inconsistent GL impact and tax report values. Be aware that companies are audited by tax authorities for compliance. If you need to edit or delete a transaction in closed periods, both tax and accounting periods should be reopened. Then, after editing or deleting the transaction, you should submit an additional tax report to the tax authority to report the change in the tax amount.
How does the system determine a transaction’s tax period?
The tax period to which a transaction is posted is determined by the transaction date and the available open tax periods.
There is no Tax Period field on the transaction record. To see tax periods of transactions, you can customize transaction search results or customize the transactions list view to show the Tax Period column.
Tax period changes are saved on the System Information subtab of a transaction record.
The system does not track tax periods on deposits.
Example
In the following example, the current month is October 2015.
If you create a new transaction this month (October 2015), the tax period will also be this month if it is available (that is, if you have set up a tax period for October 2015).
-
Scenario 1 – If you edit the October 2015 transaction and change its date to the previous month, the tax period will change to September 2015 if it is still open. However, if September 2015 tax period is already closed, the tax period will still be October 2015.
-
Scenario 2 – If you edit the October 2015 transaction and change its date to a future month, the tax period will change to match the new transaction date if the future tax periods are available.
How do I set up and use tax periods?
To have a better understanding of how to set up and use tax periods in NetSuite, read the following topics: