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Details of Non-deductible VAT Functionality in Multiple Tax Module
General ledger settings
The non-deductible VAT functionality is available for all legislations as long as the Non-deductible VAT check box is enabled and selected.
1. Standard functionality of VAT — Single approach
2. Multiple tax module — Only supports the first tax code (new feature)
VAT code maintenance
It is a prerequisite to define a special VAT code "N" with 0% before defining values for the non-deductible VAT percentage and non-deductible VAT account. This VAT code will be used for the non-deductible VAT.
To define the non-deductible VAT percentage and non-deductible VAT account in the VAT code maintenance, the transaction type Purchase must be selected.
1. Non-deductible VAT percentage — This allows users to define from values from 0 until 100. For example, 10% non-deductible means 90% of the VAT is allocated to the VAT to claim account and the remaining 10% will remain in the cost or non-deductible VAT account.
2. Non-deductible VAT account — This allows users to define another G/L account for the non-deductible VAT. This is used when users want to make a clear distinction in the balance sheet and income statement between the real cost, VAT and non-deductible cost.
Note: If the field is left blank, the non-deductible amount will remain in the same cost account. If the G/L account is filled, the non-deductible amount will automatically be entered into the respective account.
General ledger maintenance
The non-deductible VAT percentage and non-deductible VAT account can be defined in the G/L maintenance apart from the VAT code maintenance. The values defined in the G/L maintenance take precedence when both the G/L account and VAT code are used in the entry.
Purchase journal
The non-deductible VAT in the multiple tax module will generate the tax, non-deductible, and VAT (Tax) charged lines (if any), which are similar to the single VAT approach but only applicable to the first tax code. Some cases of standard and behavioral control (depending on legislations) are shown in the following:
Case 1: Tax code 21% excluding with non-deductible 12%
(a) Standard behavior
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
210.00 |
|
Tax line |
P21 |
184.80 |
1,000.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
25.20 |
0.00 |
(b) Controlled behavior for Spain
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
880.00 |
184.80 |
|
Tax line |
P21 |
184.80 |
880.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
120.00 |
25.20 |
(c) Controlled behavior for Italy
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
210.00 |
|
Tax line |
P21 |
184.80 |
880.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
120.00 |
25.20 |
(d) Controlled behavior for Belgium/Luxembourg
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
184.80 |
|
Tax line |
P21 |
184.80 |
1,000.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
25.20 |
0.00 |
(e) Controlled behavior for Belgium/Luxembourg/France (with VAT/Tax charged)
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
0.00 |
|
Tax line |
P21 |
184.80 |
1,000.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
25.20 |
0.00 |
|
Non-deductible line |
P21 |
-210.00 |
0.00 |
-210.00 |
(f) Controlled behavior for Denmark/Sweden
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
880.00 |
184.80 |
|
Tax line |
P21 |
184.80 |
880.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
25.20 |
0.00 |
(g) Controlled behavior for Denmark/Sweden (with VAT/Tax charged)
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
880.00 |
0.00 |
|
Tax line |
P21 |
184.80 |
880.00 |
184.80 |
|
Non-deductible line |
N |
25.20 |
25.20 |
0.00 |
|
Non-deductible line |
P21 |
-210.00 |
0.00 |
-210.00 |
Case 2: Tax code 21% excluding with non-deductible 100%
(a) Controlled behavior for Spain
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
0.00 |
0.00 |
|
Tax line |
P21 |
0.00 |
0.00 |
0.00 |
|
Non-deductible line |
N |
210.00 |
1,000.00 |
210.00 |
(b) Controlled behavior for Italy
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
210.00 |
|
Tax line |
P21 |
0.00 |
0.00 |
0.00 |
|
Non-deductible line |
N |
210.00 |
1,000.00 |
210.00 |
(c) Controlled behavior for Belgium/Luxembourg
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
0.00 |
|
Tax line |
P21 |
0.00 |
1,000.00 |
0.00 |
|
Non-deductible line |
N |
210.00 |
1,000.00 |
210.00 |
(d) Controlled behavior for Belgium/Luxembourg/France (with VAT/Tax charged)
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
1,000.00 |
0.00 |
|
Tax line |
P21 |
0.00 |
1,000.00 |
0.00 |
|
Non-deductible line |
N |
210.00 |
210.00 |
210.00 |
|
Non-deductible line |
P21 |
-210.00 |
0.00 |
-210.00 |
(e) Controlled behavior for Denmark/Sweden
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
0.00 |
0.00 |
|
Tax line |
P21 |
0.00 |
0.00 |
0.00 |
|
Non-deductible line |
N |
210.00 |
1,000.00 |
0.00 |
(f) Controlled behavior for Denmark/Sweden (with Tax charged)
|
Line level |
Tax code |
Amount |
Tax basis 1 |
Tax amount 1 |
|
Cost line |
P21 |
1,000.00 |
0.00 |
0.00 |
|
Tax line |
P21 |
0.00 |
0.00 |
0.00 |
|
Non-deductible line |
N |
210.00 |
1,000.00 |
0.00 |
|
Non-deductible line |
P21 |
-210.00 |
0.00 |
-210.00 |