Recording Nondeductible Input Tax
Supplementary Tax Calculation SuiteApp is not compatible with the SuiteTax feature. If the SuiteTax feature is enabled in your NetSuite account, please do not install this SuiteApp.
You can apply nondeductible tax on vendor bills, expense reports, checks, and vendor bill credits in NetSuite. Purchase orders are not included because they are nonposting transactions. Cash basis tax reporting for nondeductible tax is also not supported.
Overview of nondeductible input tax
Supplementary Tax Calculation SuiteApp is not compatible with the SuiteTax feature. If the SuiteTax feature is enabled in your NetSuite account, please do not install this SuiteApp.
A VAT-registered business can usually reclaim VAT on purchases and payments made to VAT registered suppliers. However, there are expenditures that are disallowed for VAT purposes. Input VAT on the purchase of motor cars cannot be reclaimed, but VAT on vans or other vehicles solely for the purpose of the business use are reclaimable. Other expenses where input taxes are not reclaimable are business entertaining expenses and, in some countries, capital goods. The nondeductible VAT element has to be treated as an expense of your business.
For example, in Italy, the deductible portion of VAT on fuel purchases is only 40%. Therefore, if a bill has a value of 100,00 Euros and the VAT rate applied is the standard rate of 21%, then the deductible VAT amount is 8,40 Euros and the nondeductible VAT amount is 12,60 Euros.
For more information, read the following topics:
Related Topics
- Setting Up Nondeductible Input Tax
-
Granting Permissions to Use Supplementary Tax Calculation
- Applying Nondeductible Input Tax on Transactions
- Recording Nondeductible Input Tax for Reverse Charge Transactions
- International Tax Reports