Reconciling and Declaring VAT

This document explains how you:

Outcome

All transactions included in a confirmed, printed VAT report are labeled with additional information numbers 005 (VAT report number), and additional information numbers 020 (VAT template report number) if a VAT report template has been used on the VAT run. A printed VAT report is confirmed when a VAT declaration voucher is created. Transactions included in the confirmed electronic VAT report are labeled with additional information number 029 (electronic VAT report number). The confirmed electronic report is saved as described in the data model below. For a detailed description of the impact on M3, see the corresponding instruction.

For a detailed description of the outcome, refer to the See also section.

Use reconciling and declaring VAT when you want to do one of these:

Common starting conditions

Settings specific to electronic reporting

Workflow

Follow these steps

  1. Initiate VAT run

    Usually you begin by creating a VAT run - a VAT report proposal - in 'VAT Run. Open' (TXS100). VAT transactions are selected based on these search path and priorities:

    1 - Selected country code

    2- Selected VAT date limits

    3 - Transactions that do not have status 9 (VAT reported) in the general ledger detail table, FGLEDX. The status is displayed for each transaction in 'General Ledger. Display Transactions' (GLS211/G).

    4 - Transactions on accounts of VAT account type 1 and 2 and that are not marked as suspense accounts in 'Accounting Identity. Open' (CRS630).

    If you declare VAT based on the payment date instead of the invoice date or accounting date, the VAT transactions are recorded on a VAT suspense account. Since suspense accounts are not included in the VAT run, you begin the process by transferring VAT transactions from this suspense account to a regular VAT account in 'VAT on Payment. Create Voucher' (TXS115). After this procedure, you create a VAT run.

    Note:  This is a periodic routine performed only once per reporting period, which means that a VAT declaration voucher should be created (see step 7) before running (TXS115) again for the next period. Also note that a preliminary journal can be printed using F15 on the F panel in order to preview the transactions that will be transferred.
  2. Print VAT report

    You can print four types of paper reports, two of which can be printed with detailed or summarized values and the other two can consist of several layouts. The VAT template report, a report based on a user-defined VAT template, is used as a basis for declaring VAT, while others are used for internal analysis and reconciliation purposes. For a description of the reports, see Print VAT Report. You can, for example, use them as a basis for correcting transactions in 'General Ledger. Display Transactions' (GLS211/G) or to create corrective journal vouchers, as described below. For audit purposes, you can include vouchers with a specified variance between calculated and recorded VAT when printing the report in (TXS100).

    Since a report can consist of several hundred pages, depending on your selections, the report is not printed automatically when you create a VAT run.

  3. Correct transactions online

    You can create an online adjustment table for the VAT run in (TXS100). The table is displayed in the subprogram 'VAT Online Adjustment. Open' (TXS120) and lists all transactions that match your selections. By selecting a transaction in the table, you can scroll down directly to the general ledger and correct any VAT-related values that do not affect the recorded VAT amount in 'General Ledger. Display Transactions' (GLS211/G).

    Corrections are usually only made for manually specified VAT and transactions from scanned invoices. Changing the VAT code or VAT rate in (GLS211/G) results in an updated calculated VAT, depending on the VAT account type. The recorded VAT (the amount booked in the general ledger) is not adjusted automatically.

  4. Record corrective journal vouchers

    To correct the recorded VAT amount for a transaction, reverse the entire voucher as described in Reverse Voucher, or specific accounting lines as described in Create Corrective Voucher in the General Ledger, and then specify the voucher again.

  5. Create electronic VAT report

    After you have created and verified a VAT run as described above, you can create a proposal for an electronic report by selecting option 'Create electronic report' for the VAT run in (TXS100/B). The selection criteria on the E panel are the same as for printed VAT template reports: base country, a range of From and To countries, a range of VAT dates, and a VAT report template.

    You define the information to include in the report header on the J panel. If a fiscal representative is defined for the base country in 'Fiscal Representation. Open' (TXS030), most of the values proposed are retrieved from the internal supplier selected for the fiscal representative. The recorded transaction amount will also be converted to the local currency of the fiscal representative in the report. If an alternative address is defined using additional field 505, the address information will either be retrieved from the internal customer or the address type and number of the internal customer. The values for address type and number are specified as optional information in additional field 506.

    For the user-defined electronic report, you can also select whether to include previously VAT reported transactions or only transactions not yet included in the report. When you press Next on the J panel, 'Taxation Reporting. Open Report Fields' (TXS035) automatically displays any company-defined fields with additional information to include in the header of the electronic report. A proposal for the electronic report is created when you click Close in (TXS035).

    There are six MI transactions for electronic VAT reporting: LstVATDetails, LstVATInvPerLn, LstVATInvoice, LstVATLine, LstVATUserDef, and LstVATUserDef2. Transactions generated by LstVATLine can be printed in one summary report showing totals for each VAT template line (TXS107) and one detailed report showing the individual transactions for each VAT template line (TXS110). Transactions generated by LstVATInvoice and LstVATInvPerLn can be printed in one report sorted by customer/supplier, VAT registration number and invoice number (TXS117). For these reports, M3 retrieves VAT generating amounts (VAT base amounts) and VAT payable and VAT receivable amounts from the general ledger based on the definitions of the lines in the VAT report template; the template columns do not affect the selection. M3 stores the values with one amount for each report line in separate tables, as described in the program flowchart below. So if you correct any transactions in the general ledger after you created the electronic report, you need to recreate it to get the updated values. You can print the electronic report by selecting the Print option in (TXS100/B).

    On the G panel, you select whether to print the report in summarized or detailed form. Transactions generated by LstVATUserDef and LstVATUserDef2 can be displayed by selecting the Display User Defined option in (TXS100/B). The transactions included in the VAT report can be put on hold and the amount on a transaction can be changed so that the transaction is only partially VAT reported. M3 retrieves VAT generating (VAT base amounts), VAT payable and VAT receivable amounts from the general ledger based on the definitions of the lines and columns in the VAT report template. M3 stores the values according to the key fields, alphanumeric, numeric, and date fields in separate tables, as described in the program flowchart below.

    You approve the report by selecting option 'Confirm electronic report' on the B panel. API program TXS100MI retrieves the values from these tables: FVATHE, FVATLI, FVATIN, FVATDT and FVTUDL; see the data model below. Any company-defined header fields in (TXS035) are automatically retrieved using API program TXS035MI. For the user-defined electronic VAT report, the general ledger will be updated with a status to indicate whether a transaction has been VAT reported, partially reported, or put on hold.

    Send the electronic file according to your company's previous agreement with the tax authorities, such as by mail or on a disk. Since all transactions that M3 uses as a base for the electronic report are labeled with additional information number 029, you can afterwards display all transactions for each VAT report number in 'General Ledger. Display Additional Info' (GLS250).

  6. Review and correct user-defined electronic VAT report

    You can review and correct transactions included in a user-defined electronic VAT report. The user-defined electronic VAT report is displayed in the subprogram 'VAT Run. Open User-Defined Lines' (TXS118). By selecting a line, you can scroll down to 'VAT Run. Open User-Defined Details' (TXS119) where the detailed transactions connected to the VAT report line are displayed. A transaction or even a line in the VAT report can be put on hold and included in another VAT run. The reported amount on a transaction can also be changed so that only a part of the VAT is reported. The remaining amount will then be included in another VAT run. Note that only the amount columns containing an amount will be displayed in (TXS118) and (TXS119) if the VAT report template has a column ID above 15. Otherwise, all amount columns are displayed.

  7. Declare VAT

    Continue by creating a VAT declaration voucher in (TXS100), which means that M3 transfers VAT totals to accounts for VAT payable and VAT receivable. Populate the VAT declaration form with the relevant values from the voucher and send it to the tax authorities. Note that a VAT declaration voucher should not be created when online VAT reporting is used.

  8. Update ledgers with VAT paid/received

    Once the tax authorities have confirmed the VAT declaration, you recover any incorrectly charged VAT and record refunded VAT in 'Journal Voucher. Open' (GLS100). Finally, you update the General Ledger with the received or paid VAT by creating a VAT payment voucher in (TXS100/B). This clears the VAT payable and VAT receivable accounts.

Tables in electronic reporting

This data model illustrates the tables used in creating an electronic VAT report.

Program flowchart

When you create the electronic report, function TXS114 retrieves header information from the selections in the FVATRH table, and from the general ledger totals for each VAT template line and detail transactions. When you confirm the report, (TXS100) labels the detail transactions as reported in the general ledger and creates an MBM initiator to make the data available to the Infor Enterprise Collaborator.

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