Reconciling and declaring VAT

Outcome

• A paper report is printed or an electronic M3 Business Message is created. The electronic file is stored in the output folder selected when Infor Enterprise Collaborator (IEC) is set up.
• All transactions have correct VAT-related values such as VAT date, VAT code, VAT rate, and VAT registration number.
• If the VAT run was used to declare VAT to the tax authorities, the declared VAT is recorded on separate VAT accounts.
• Up to six different VAT reports are printed.

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 options:

• Use the VAT control report for auditing purposes.
• Use the reports to analyze VAT exposure and sources of VAT expenses.
• Use the VAT report number to identify all transactions included in the report for auditing purposes.

Common starting conditions

These are the common starting conditions when reconciling and declaring VAT:

• Transactions must be recorded based on VAT codes. These VAT codes are defined in 'VAT Code. Open' (CRS030) and determine, among other things, the VAT rate and VAT method.
• You have selected the date to use as basis for the General Ledger transactions in the 'VAT date type' field in 'Settings - General Ledger' (CRS750/F) or 'VAT Code. Open' (CRS030/E): accounting date, invoice date, due date, or delivery date. The 'VAT report from date', the date from which records are selected for VAT reporting, is updated automatically on the same panel but can be adjusted manually. Or, you have selected to base VAT reporting on the payment date of the transaction for each VAT code.
• A user-defined VAT report template that selects transactions based on local and global VAT requirements must be created in 'VAT Report Template. Open' (TXS005).
• For creating VAT vouchers, you must define FAM functions TX01 and TX02 in 'FAM Function. Open' (CRS405). For VAT calculated on the payment date, FAM function TX03 must be defined. These FAM functions determine which voucher numbers are assigned to the vouchers.
• You must define number series 64/A for the VAT control report numbers in 'Number Series. Open' (CRS165). For VAT template report numbers, you must define number series 64/B in the same program. The number is saved for each transaction in the FGLEDX table under additional information number 005 (VAT report number) or 020 (VAT template report number).
• Accounts for VAT receivable or payable must be defined in 'Accounting Identity. Open' (CRS630).
• Accounting rules TX01-119 and TX01-219 must be defined for the clearing account for VAT payable/receivable in 'Accounting Rule. Set' (CRS395).

Settings specific to electronic reporting

These are the settings specific to electronic reporting:

• Number series 64/D must be defined in 'Number Series. Open' (CRS165). This number series provides the unique VAT report number when the electronic report is confirmed. The number is saved for each transaction in the FGLEDX table under additional information number 029 and is also displayed for each VAT run in (TXS100/E).
• The API transactions used for electronic VAT reporting must be defined in 'VAT Reporting. Connect MI Transactions' (TXS001).
• The company has an agreement with the tax authorities for how electronic reports is transmitted.
• Fields of transaction type 2, that is, fields reserved for electronic VAT reporting, with any country-specific information to be included in the report header must be defined in 'Taxation Reporting. Open Report Fields' (TXS035). Since the legal requirements for reporting of EU sales differ between the EU member states, you might need to define your own fields to include information that is unique to your country in the report header (see the configuration guide for the message for fields required). The additional fields will be transmitted through API TXS035MI and included in the report header created as described below.
• Infor Enterprise Collaborator must be set up, as described in the technical documentation for that tool. Note that the MBM initiator that will initiate the generation of the electronic report using a business message is based on document 514 in 'Standard Document. Open' (CRS027) and in 'Document. Open' (CRS928). For details, see the design document for the message.

Workflow

Follow these steps

1. Initiate VAT run

   Usually, 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, accounting, or delivery date, the VAT transactions are recorded on a VAT suspense account when the invoice is specified. The transactions are included in the VAT report when VAT is moved from the VAT suspense account to the regular VAT account. This happens automatically when the invoice is paid.

   Note: For invoices that are recorded before the automatic process is available, begin the process by transferring VAT transactions from the suspense account to a regular VAT account in 'VAT on Payment. Create Voucher' (TXS115). After this procedure, create a VAT run.

2. Print VAT report

   You can print four types of paper reports, two of which you can print 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.

   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 is also 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 is either 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.

   You can also select whether to include previously VAT reported transactions or only transactions not yet included in the report. When you click 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 API transactions for electronic VAT reporting: LstVATDetails, LstVATInvPerLn, LstVATInvoice, LstVATLine, LstVATUserDef, and LstVATUserDef2. You can print transactions generated by LstVATLine 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). You can print transactions generated by LstVATInvoice and LstVATInvPerLn 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, select whether to print the report in summarized or detailed form. Select the Display User Defined option in (TXS100/B) to display the transactions generated by LstVATUserDef and LstVATUserDef2. 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.

   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. You can also change the reported amount on a transaction so that only a part of the VAT is reported. The remaining amount is then included in another VAT run. Note that only the amount columns containing an amount is 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, 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:

• FVATHE stores information to include in the header of the electronic VAT report. The table is used by API program TXS100MI.
• FVATLI stores VAT amounts for each VAT report line as defined in the VAT report template. The information is retrieved from the general ledger when you create the proposal. The table is updated when API transaction LstVATLine is defined in 'VAT Reporting. Connect MI Transaction' (TXS001) and used by API program TXS100MI.
• FVATDT stores detailed information for each customer/supplier and VAT registration number for each line in the VAT report template. The information is retrieved from the general ledger, accounts payable, and accounts receivable when you create the proposal. The table is updated when API transaction LstVATDetail is defined in 'VAT Reporting. Connect MI Transaction' (TXS001) and used by API program TXS100MI.
• FVATIN stores detailed information for each customer/supplier, VAT registration number and invoice for each line in the VAT report template. The information is retrieved from the general ledger, accounts payable, and accounts receivable when you create the proposal. The table is updated when API transaction LstVATInvoice is defined in 'VAT Reporting. Connect MI Transaction' (TXS001) and used by API program TXS100MI. The table is also used when the electronic report LstVATInvoice (TXS117) is printed.
• FVTUDL stores detailed information according to the key fields, columns, alphanumeric, numeric and date fields defined in 'VAT Report Template. Connect User-Defined Template' (TXS004). The information is retrieved from the general ledger, accounts payable, and accounts receivable when you create the proposal. The table is updated when API transaction LstVATUserDef and LstVATUserDef2 are defined in 'VAT Reporting. Connect MI Transactions' (TXS001) and used by API program TXS100MI. The table is also used when a user-defined electronic report is displayed in 'VAT Run. Open' (TXS001).
• FVATGL stores detailed information for each line in the VAT report template. The information is retrieved from the general ledger when you create the proposal. The table is used when electronic reports LstVATLine, Sum and LstVATLine, Det are printed.

Program flowchart

When you create the electronic VAT report (TXS114), header information is retrieved 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.