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Tax Model Implementation - Confucius - 07-05-2018

Hi Everyone,

I am experiencing some difficulty implementing the best practice applicable to the following situation.
• The current sales tax is 15% on taxable items and 0% on exempted items.
• The business is currently a non VAT vendor, and does charge not sale tax.
• The suppliers are both VAT and Non VAT vendors, so some charge the 15% VAT.
• Future growth will include exports.

It would be fair to assume that the business turnover will grow to levels where it will become compulsory for the business to charge the appropriate sales tax in the future.

Current tax set up:
Tax Authorities
Receiver of Revenue VAT
Output VAT GL Code – 2300.
Input VAT GL Code – 2310.

Tax Categories
Taxable Item 15%.
Exempted Item 0%.
Non VAT Vendor 0%.
Freight 0%.

Tax Categories
Local Sales
Export Sales

Tax Provinces
Default Tax province

I would like to enter supplier prices excluding and let the system add the applicable rate i.e. zero if not a VAT vendor or the exempted and 15%, currently, if it is a registered VAT vendor. When the rate changes the rate must just be amended and not recalculated and entered manually.

Basically the same applies to the sales not subject to VAT as the business is not currently registered for VAT but the system needs to compute the correct VAT when the business is registered as a VAT vendor.

The item is linked to a tax category,

I looked at the help file and some forum and other blog posts, but I am not getting it right.

Your help is appreciated.


RE: Tax Model Implementation - TimSchofield - 07-05-2018

Hi, what is going wrong when you use this setup?

Tim


RE: Tax Model Implementation - Confucius - 07-13-2018

Tim, I believe it more an implementation issue than a system issue.

No VAT is added to the VAT vendor supplier's purchase order items when I process an order.

Currently no VAT is added to any sale or purchase no matter the settings.

Thanks for your time and help.


RE: Tax Model Implementation - TimSchofield - 07-13-2018

The VAT should be added when the invoices are processed. Isn't this happening?

Tim


RE: Tax Model Implementation - Confucius - 07-13-2018

No Tim,

Remember I am not charging VAT, as I am not a VAT Vendor. However I pay VAT on items ordered from some VAT Vendor suppliers. I want the system to add the applicable VAT rate when I place an order with such a supplier. That is also not happening.


RE: Tax Model Implementation - TimSchofield - 07-13-2018

You don't mention where you are based so I am unsure of the rules there. In the European union VAT must be charged at the point the goods are shipped not when they are ordered. Here we wouldn't ever put the VAT on an order.

Tim


RE: Tax Model Implementation - Confucius - 07-13-2018

Sorry Tim it is South African based business and customers.


RE: Tax Model Implementation - TimSchofield - 07-13-2018

I have had a quick glance at the SA regulations and I still don't understand why you would want the VAT to appear on the order documentation. If you are buying from a supplier then the legal obligation to calculate and show the VAT falls on the supplier at the point when they ship the goods (or perform the service), hence showing it on the invoice (produced by the supplier) rather than the order (produced by the buyer). This is why most if not all accounting systems do not display VAT on orders, just on the invoice.

For instance you could have raised an order when the VAT rate was 14%, and then the government raises the rate to 15% before the goods are supplied, so the VAT on the invoice would be different to the VAT on the order.

Tim