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Release 372: New Gross-Gross method for Tax and Discount calculation

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Background

Exact Globe 2003 did not support Gross-Gross method for Tax and Discount calculation. After some final confirmation from the Dutch Tax authorities on the validity of this method, it has been built in.

What has been changed

In 372, this new method of Tax and Discount calculation has been added. It is known as "Tax calculated over gross invoice amount". This functionality is available for all countries listed below:

  • Netherlands
  • Belgium
  • Luxembourg
  • Czech Republic
  • Malaysia
  • Middle East
  • International
  • Philippines
  • Portugal
  • Vietnam
  • United Kingdom
  • Ireland
  • Morocco
  • Poland
  • Hungary
  • Romania
  • Italy
  • Slovakia
  • Russia

Hence in General ledger settings, a new option "Tax calculated over gross invoice amount" has been added in the dropdown list of options for Tax and Discount calculation. This option is only visible for countries listed above.

Screen 1:

For Belgium and Luxembourg, this option is not only added in the General ledger settings but also in the dropdown list of options for Purchase invoice in the Payment condition maintenance screen. The option defined here is only applicable for purchase invoices when this payment condition is used. (Note: Please refer to release note Batch 360: VAT calculation on purchase invoice over net invoice amount excluding or including discount in payment condition (Belgium) for more details.)

Screen 2:

To what extent this functionality is supported:

  • Only applicable in Single tax environment. When "Use tax module" is enabled in the General ledger settings, option for this method "Tax calculated over gross invoice amount" will not be visible in the General ledger settings (Screen 1) and also Payment condition maintenance screen (Screen 2).
  • Only applicable to Discounts and not for Credit surcharge.
  • When a database runs the Repair tool after the option is set to "Tax calculated over gross invoice amount", data entered prior to the setting change will be repaired based on this new setting.
  • For entries created prior to the setting change, editing old data will cause data to be generated based on the new setting.

Gross-Gross calculation method

Calculation of the VAT and Discount amount can be seen in the diagram below when "Tax calculated over gross invoice amount" is used. For example:

Enter amount for the invoice = 100 USD

VAT = 19% (can be excluding or including)

Discount = 2% (defined in payment condition)

  On time payment   Late payment  
Scenario 1        
VAT including        
VAT basis 84.03  [Invoice amount / 1 + (VAT%/100)] 84.03  
Discount 1.68  VAT basis * (Discount%/100) 0.00 No discount
Amount after discount 82.35  VAT basis - Discount 84.03  
         
VAT amount 15.97  VAT basis * (VAT%/100) 15.97  
Invoice amount 100.00  VAT basis + VAT amount 100.00  
Receivables/Payables 98.32  Amount after discount + VAT amount 100.00  
Scenario 2        
VAT excluding        
VAT basis 100.00  [Invoice amount / 1 + (VAT%/100)] 100.00  
Discount 2.00  VAT basis * (Discount%/100) 0.00 No discount
Amount after discount 98.00  VAT basis - Discount 100.00  
         
VAT amount 19.00  VAT basis * (VAT%/100) 19.00  
Invoice amount 119.00  VAT basis + VAT amount 119.00  
Receivables/Payables 117.00  Amount after discount + VAT amount 119.00  

At the entry screen of Sales or Purchase journals, the VAT amount is displayed as shown in Screen 3.1 and 4.1. The same applies when multiple sub lines are entered with same or different VAT codes. When press on the <Conditions> button in the entry screen, the Discount amount is displayed as shown in Screen 3.2 and 4.2.

Screen 3.1 - Scenario 1:

Screen 3.2 - Scenario 1:

Screen 4.1 - Scenario 2:

Screen 4.2 - Scenario 2:

At the entry screen of General journal, the VAT amount is displayed as shown in Screen 5 and 6. The same applies when multiple sub lines are entered with same or different VAT codes. When press on the <Terms> button in the entry screen, the Discount amount is displayed as shown in Screen 3.2 and 4.2. This functionality does not applied for Bank to Cost / Revenue entries via Cash flow, Bank / Cash or General journal.

Screen 5 - Scenario 1:

Screen 6 - Scenario 2:

There is no change in the existing functionality for Matching, Deduction management or Collective payment. For example if we enter receipt or payment of 98.32 USD to match with the invoice in Scenario 1, the "Write off : Discount" screen will be prompted for us to write off the discount. Likewise if there is an amount difference during matching, the "Process" screen will be prompted for us to write off the amount difference.

For Sales orders in Order module, the amount for the VAT including or VAT excluding displayed in the Sales orders entry application is similar to the option "Tax calculated over net invoice amount excluding discount". Therefore, there are no differences when using "Tax calculated over net invoice amount excluding discount" or "Tax calculated over gross invoice amount".

Gross-Gross method is applied when come to Invoice module, either sales invoices generated from Order module or directly entered in Sales invoices entry screen. For sales invoices, it is also possible to enter phantom items such as extra charges. These items are also taxable and the Gross-Gross method will be used to calculate the tax amount, if this method is defined in the administration. For example:

Sales price = 100.00 EUR

VAT = 19% including

Discount = 2% (defined in payment condition)

Extra charges = 20.00 EUR (VAT = 19% including)

Press on the <Specific> button in the the entry screen, the Discount / Extra charges is displayed as shown in Screen 7.

Screen 7:

In the above scenario, calculations for the invoice is as follows:

Net : 84.03 EUR [100 / 1 + (VAT%/100)]

Taxes : 19.16 EUR [(84.03 + 16.81) * (VAT%/100)]

Specific : 16.81 EUR [20 / 1 + (VAT%/100)]

Total : 120.00 EUR (84.03 + 16.81 + 19.16)

Discount : 2.02 EUR [(84.03 + 16.81) * (Discount%/100)]

Press on the <Conditions> button in the entry screen, the Discount amount is displayed as shown in Screen 8.

Screen 8:

In summary the affected areas for Invoice module are:

  • Logistics calculation module
  • Phantom line generation
  • Invoice entry
  • Processing invoice

Sames goes to Purchase order (PO) or Purchase invoice entered with PO when Gross-Gross method is defined in the administration. Now for PO, generation of terms follow the setting. (Note: Please refer to release note Release 372: Purchase order support for "Tax & Discount calculation" setting  for more details.) For example:

Purchase price = 100.00 EUR

VAT = 19% including

Discount = 2% (defined in payment condition)

Hence calculations for the PO is as follows:

Net : 84.03 EUR [100 / 1 + (VAT%/100)]

Taxes : 15.97 EUR [84.03 * (VAT%/100)]

Total : 100.00 EUR (84.03 + 15.97)

Discount : 1.68 EUR [84.03 * (Discount%/100)]

Press on the <Conditions> button in the entry screen, the Discount amount is displayed as shown in Screen 9.

Screen 9:

In addition, changes has been done on Revaluation function as well as XML module in order to support this new functionality. Gross-Gross method is applied when revalue the invoices or import the financial entries, if this method is defined in the administration. For instance, revalue sales invoice in Screen 3.1 from 1.188920 to 1.288920. Amount in default currency has been updated and is displayed in the debtor's card as shown in Screen 9.

Screen 10:

Last but not least, this new functionality has not yet been designed or supported in the following area:

  • Processing of Recurring entries

     
 Main Category: Support Product Know How  Document Type: Release notes detail
 Category: Release Notes  Security  level: All - 0
 Sub category: Details  Document ID: 14.425.873
 Assortment: Exact Globe  Date: 09-05-2017
 Release: 372  Attachment:
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