Posted by: IS | September 4, 2009

Update on Fourth Schedule VAT

To enable this feature you need to select the ‘Enable Reverse Charge Taxes’ option in Company Set up – (Microsoft Dynaics GP >> Tools >> Set Up >> Company >> Company…and click the Options button). Depending on your set up, you may also need to review the ‘Require Tax Detail Totals to Match the Pre-Tax Amount’ option in the same window.

This opens up interesting possibilities for accounting for European 4th Schedule VAT (or indeed any Sales Tax recording where you need to include an input and output  for a single transaction) .  Say you create a Purchase Tax Detail ID called ‘P4SCHED+’ and you set its tax percentage to be 20%. You then add another Purchase Tax Detail ID called ‘P4SCHED-‘, and set its tax percentage to minus 20%.

Then set up a Tax Schedule ID called ‘4SCHED’, and then add both tax details to it (tick ‘Autocalc’). Now, when you enter a transaction and assign this Tax Schedule to it, the net Tax calculated will be zero, however you will have two Tax Detail records – one for Plus 20%, and one for Minus 20%.

Add the 4SCHED+ tax detail to your Purchases Tax and the other to your Sales tax calculation / report. Hey presto – Fourth Schedule VAT accounted for correctly, and as per the Tax authorities requirements. Another example of the flexibility of GP along the lines of that other great discovery way back in 1999 that the Australian GST could be used for witholding tax calculations in Ireland (before the advent of that module in GP).

Previous musings of accounting for VAT here:

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