Expense purchase tax

Expense purchase tax

If an expense purchase tax code applies to a purchase invoice, the tax amounts on the invoice are considered as costs. LN posts the tax amount to the same account and dimensions to which the purchase receipt transaction is posted.

Expense purchase tax is not restricted to the sales tax functionality. That means that you can set up expense purchase tax codes independently of the selection of the Destination Sales Tax Applicable check box in the COM Parameters (tccom0000s000) session. In Europe, expense purchase tax only applies to cost invoices.

Posting expense purchase tax is performed during these processes:

  • Manual invoice approval in the Match/Approve Purchase Invoices (tfacp2107m000) session.
  • Self billing and generation of internal invoices in the Generate Self-Billing Purchase Invoices (tfacp2290m000) session.
North American expense purchase tax

In North America, specific rules apply to the posting of tax on purchase invoices.

To set up expense purchase tax handling:

  1. In the Tax Code by Country (tcmcs0136s000) session, select the Expense Purchase Tax check box.
  2. In the ACP Parameters (tfacp0100m000) session, select the North American Purchase Expense Tax check box and select a tax variance account and dimensions.

If you set up North American expense purchase tax handling, purchase invoices with an expense purchase tax code are handled as follows:

  1. The expense tax code of the invoice is replaced with the expense tax code of the order.
  2. During approval of the purchase invoice, the tax amount of the invoice is reversed and posted in the approval document.
  3. The tax of each matched order line is handled and posted in the approval document.

  4. Any difference between the total tax amount on the invoice, which was reversed, and the sum of the tax amounts on the matched order lines is posted to the Tax Variance Account that you select in the ACP Parameters (tfacp0100m000) session.

    The tax variance account is an interim account that is reversed if you process the inventory variances in Warehousing.

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