Posted by: IS | December 30, 2011

Standard Rate VAT Changes for 2012 – Ireland Standard Rate increase to 23%


Its VAT Rate change time again. Irish Standard Rate VAT is increasing from 21% to 23% on 1st January 2012.  (Hungary is also increasing 2% to 27%, and there will be others).

So, what’s the best approach to cater for these changes in GP, and what should you look out for? The good news is that the change takes effect at the start of a fiscal year – so there will be no need to report at the different rates as there was the last time Irish VAT increased.

At its simplest, changing the %age rate in your standard rate tax detail (Tools >> Setup >> Company >>Tax Details) after you have entered all 2011 transactions and before you enter any 2012 transactions, will suffice for those users using just Dynamics GP Financials (RM, PM and GL).

Slightly more complicated, but best for POP and SOP users – set up two new tax details, one for sales at 23% and one for purchases at 23%. Then set up two new Tax Schedules (Tools >> Setup >> Company >> Tax Schedules) – again one for sales and one for purchases at 23%…and assign one of the two new tax details above to each (Remember to tick Auto Calculate in each if the ‘Auto Calculate’ box is visible).

For most Irish users – you will have Tax Schedules already created called ‘SALL’ and ‘PALL’ (or some derivative). Add the relevant new tax detail into these as well.

Depending on how your system is set up and how it calculates the VAT payable / receivable…you will now need to update your master records. Look at your Item set up – if your inventory items are set to ‘Use Customer’ and ‘Use Vendor’ for their default tax schedules – then you will need to update your customer and supplier records. Any customer or supplier who is set to the current Standard Rate Tax Schedule, will need to be updated to use the new Standard Rate Tax Schedule (the 23% ones you just set up).

If your Inventory Items use their own Tax Schedule (i.e. they are not calculating VAT by reference to the customer or vendor ones) then you will need to update your Inventory records.

If you are lucky – updates can be rolled down by class ID. Or you could run a SQL query to update your master files (Update XXX set Tax Schedule ID = ‘new’ where Tax Schedule ID = ‘old’…something like that!).

You need to be aware of a few things.

  • Sales Orders entered in December 2011 will have defaulted to the old rate (21%). When these orders get transferred to Invoice – this rate will follow through. If they are transferred to Invoice in January 2012 – you will need to manually update the Tax Schedules on each.
  • If you process a return in 2012 for a sale that happened in 2011 – the return will default to the new 23% rate. You may have to manually change it back to the 21% rate.
  • You will need to edit your VAT Dayooks to include the new tax schedule in the standard rate box. (Leave the old rate there as well – since you may enter sales returns etc. at the old rate in 2012.)
  • The above will apply to Purchase Order transactions as well.

Responses

  1. Hi Ian,

    Another alternative would be to use the Tax Detail Effective Dates feature in GP 2010 R2 (where installed).

    This would allow GP instead of the user to worry about the tax to be applied based on the date.

    Ian

    • Thanks Ian. Yes of course!! Effective tax dates in GP2010 R2. I’ve created a new post about this. Thanks for the reminder.

  2. […] Comments 0 Ian Steward has coverage of Standard Rate VAT Changes for 2012 – Ireland Standard Rate increase to 23% […]


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