Tax Zones and Categories: To Create a Tax Category and Tax Zone for VAT

By performing the following implementation activity, you will review tax categories and their settings and learn how to create a tax category and a tax zone for VAT.

Story

The SweetLife Fruits & Jams company provides advertising services that are subject to a 7% value-added tax (VAT). While two tax categories have been already created in MYOB Acumatica (TAXABLE and EXEMPT), no other tax configuration has been performed.

You need to assign the TAXABLE tax category to the needed non-stock item (ADVERT). You also need to create a tax zone associated with all VAT-registered vendors and customers in Canada. You will assign the TAXABLE category as the default tax category of the tax zone.

To make it possible for SweetLife Fruits & Jams to process pending VAT, you need to create a tax category for this type of VAT.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

• On the Enable/Disable Features (CS100000) form, the VAT Reporting feature has been enabled.
• On the Tax Categories (TX205500) form, the TAXABLE and EXEMPT tax categories have been configured.
• On the Non-Stock Items (IN202000) form, the ADVERT item has been configured.

Process Overview

In this activity, you will first review the tax categories on the Tax Categories (TX205500) form, and then assign the TAXABLE category to an item on the Non-Stock Items (IN202000) form. On the Tax Categories (TX205500) form, you will create a tax category for pending VAT. Finally, you will create the needed tax zone on the Tax Zones (TX206000) form, assigning the appropriate default tax category to it.

System Preparation

Before you begin to work with tax categories and tax zones, do the following:

1. As a prerequisite activity, configure a tax report as described in Tax Report Configuration: To Create a Tax Report for VAT.
2. Launch the MYOB Acumatica website, and sign in to a company with the U100 dataset preloaded.
3. To sign in as an implementation consultant, use the gibbs username and the 123 password.

Step 1: Reviewing Tax Categories and Assigning a Tax Category to a Non-Stock Item

To review the existing tax categories and assign a tax category to a non-stock item, do the following:

1. Open the Tax Categories (TX2055PL) list of records.
2. Review the existing tax categories—EXEMPT and TAXABLE.
3. Open the Non-Stock Items (IN202000) form.
4. In the Inventory ID box, select ADVERT. You will assign the appropriate tax category to this item, because the advertising services are taxable and you need to change the preconfigured tax category for this item.
5. On the General tab (the Item Defaults section), in the Tax Category box, select TAXABLE.

   This tax category will be inserted by default into the lines of documents in which this item is specified; however, you can override it.

6. On the form toolbar, click Save.

Step 2: Creating a Tax Category for Pending VAT

To create a tax category for pending VAT, do the following:

1. Open the Tax Categories (TX205500) form and create a new record.
2. In the Summary area, specify the following settings for the new tax category:
   • Tax Category ID: PENDING
   • Description: Pending VAT
3. On the form toolbar, click Save to save your changes.

   This category is empty because you have not added any taxes to it. You can then create a pending VAT and add it to this category.

Step 3: Creating a Tax Zone

To create a tax zone for VAT-registered customers and vendors in Canada, do the following:

1. Open the Tax Zones (TX206000) form and create a new record.
2. Specify the following settings in the Summary area:
   • Tax Zone ID: CANADA
   • Description: Canada tax zone
   • Default Tax Category: TAXABLE

   The specified tax category will be used by default for this tax zone in document lines in which an item is not specified.

3. On the form toolbar, click Save to save your changes.

   VAT can then be created and assigned to this tax zone.