Value-Added Taxes: To Create a Reverse VAT

By performing this implementation activity, you will learn how to configure a reverse VAT and a general VAT that will offset each other.

Story

Suppose that SweetLife Fruits & Jams needs to process AP bills to which a reverse VAT applies. The reverse VAT will be paid to the tax agency and the general VAT can be claimed from the tax agency. Acting as an implementation consultant, you need to create the following taxes:

  • A reverse VAT included in a reporting group of the Output type. This tax should be paid to the agency.
  • A general VAT included in a reporting group of the Input type. This tax can be claimed from the tax agency. This tax should have the same tax rate as the reverse VAT.

Configuration Overview

In the U100 dataset, the following configuration tasks have been performed to prepare the system for this activity to be performed:

Process Overview

In this activity, on the Tax Categories (TX205500) form, you will create a tax category for a reverse VAT. On the Taxes (TX205000) form, you will create a reverse VAT and specify its tax rate, tax category and tax zone. You will then create a general VAT with the same tax rate as the reverse VAT.

System Preparation

To prepare the system, do the following:

  1. Launch the MYOB Acumatica website, and sign in to a company with the U100 dataset preloaded. You should sign in as an implementation consultant by using the gibbs username and the 123 password.
  2. On the Company and Branch Selection menu, on the top pane of the MYOB Acumatica screen, select the SweetLife Head Office and Wholesale Center branch.
  3. As a prerequisite activity, be sure that you have created the CANADA tax zone on the Tax Zones (TX206000) form as described in Tax Zones and Categories: To Create a Tax Category and Tax Zone for VAT.
  4. As a prerequisite activity, in the company to which you are signed in, be sure you have configured a tax agency and a tax report as described in Tax Report Configuration: To Create a Tax Report for VAT Variations.

Step 1: Creating a Tax Category for a Reverse VAT

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

  1. On the Tax Categories (TX205500) form, create a new record.
  2. In the Summary area, specify the following settings:
    • Tax Category ID: REVERSE
    • Description: Reverse VAT
  3. On the form toolbar, click Save.

Step 2: Creating a Reverse VAT

To create a reverse VAT, do the following:

  1. On the Taxes (TX205000) form, create a new record.
  2. On the Tax Settings tab, specify the following settings:
    • Tax ID: REVVAT
    • Description: Reverse VAT
    • Tax Type: VAT
    • Reverse VAT: Selected
    • Include in VAT Taxable Total: Selected
    • Calculation Rule: Exclusive Line-Level
    • Cash Discount: Does Not Affect Taxable Amount
    • Tax Agency: VATVAR
  3. On the Tax Schedule tab, click Add Row on the table toolbar, and specify the following settings:
    • Start Date: 1/1/1900 (inserted by default)
    • Tax Rate: 7
    • Reporting Group: Reverse
  4. On the Categories tab, click Add Row on the table toolbar, and select REVERSE in the Tax Category column.
  5. On the Zones tab, click Add Row on the table toolbar, and select CANADA in the Tax Zone ID column.
  6. On the form toolbar, click Save.

Step 3: Creating a General VAT

To create a general VAT that will offset the reverse VAT, do the following:

  1. While you are still on the Taxes (TX205000) form, click Add New Record on the form toolbar.
  2. On the Tax Settings tab, specify the following settings:
    • Tax ID: GVAT
    • Description: General VAT
    • Tax Type: VAT
    • Include in VAT Taxable Total: Selected
    • Calculation Rule: Exclusive Line-Level
    • Cash Discount: Does Not Affect Taxable Amount
    • Tax Agency: VATVAR
  3. On the Tax Schedule tab, click Add Row on the table toolbar, and specify the following settings:
    • Start Date: 1/1/1900 (inserted by default)
    • Tax Rate: 7
    • Reporting Group: Standard-Rated Acquisitions
  4. On the Categories tab, click Add Row on the table toolbar, and select REVERSE in the Tax Category column.
  5. On the Zones tab, click Add Row on the table toolbar, and select CANADA in the Tax Zone ID column.
  6. On the form toolbar, click Save.