Direct Tax Payment: To Create a Tax Bill for a Tax Agency

The following activity will walk you through the process of creating a tax bill for a tax agency.

Story

Suppose that on 1/15/2024, the SweetLife Fruits & Jams company purchased office equipment in the amount of $750 from the Cartridge World Inc. company, which is located in Canada. Taxes on imported goods should be paid directly to a tax agency at the time of import; thus, the bill from the vendor does not include any taxes.

Further suppose that on 1/31/2024, SweetLife Fruits & Jams received a bill from the tax agency with a standard-rated VAT on the imported goods when the goods were released from customs.

Acting as a SweetLife accountant, you need to process the purchase of the office equipment, process the tax bill to pay this amount to the tax agency and record the claimable amount that you will later include in the tax report, and pay taxes on this purchase.

Configuration Overview

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

• On the Enable/Disable Features (CS100000) form, the VAT Reporting feature has been enabled.
• On the Tax Categories (TX205500) form, the TAXABLE tax category has been configured.
• On the Vendors (AP303000) form, the CARTRIDGE vendor account has been configured.

Process Overview

In this activity, you will first create a tax zone for foreign vendors on the Tax Zones (TX206000) form and create a tax category on the Tax Categories (TX205500) form. On the Vendors (AP303000) form, you will update the settings of the Canada-based vendor. On the Taxes (TX205000) form, you will create a value-added tax for imported goods. On the Bills and Adjustments (AP301000) form, you will create an AP bill to record the purchase of imported goods. On the Tax Bills and Adjustments (TX303000) form, you will create a tax bill for the tax agency and apply the AP bill to it. After releasing the tax bill, you will review the generated GL transaction on the Journal Transactions (GL301000) form. Finally, you will open the original AP bill from the Tax Bills and Adjustments form and review the VAT applied to it after the release of the tax bill.

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 accountant by using the johnson username and the 123 password.
2. In the info area, in the upper-right corner of the top pane of the MYOB Acumatica screen, set the business date in your system to 1/15/2024.
3. 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.
4. As a prerequisite activity, in the company to which you are signed in, be sure you have configured the VATTAX tax agency as described in Tax Agency: To Set Up a Tax Agency for VAT.
5. As a prerequisite activity, be sure that you have configured a tax report as described in Tax Report Configuration: To Create a Tax Report for VAT.
6. As a prerequisite activity, be sure that you have created a general VAT as described in Value-Added Taxes: To Create a General VAT and Exempt VAT.

Step 1: Creating a Tax Zone

To create a tax zone for foreign vendors, do the following:

1. On the Tax Zones (TX206000) form, create a new record.
2. In the Summary area, specify the following settings:
   • Tax Zone ID: FOREIGN
   • Description: Foreign tax zone
3. On the form toolbar, click Save.

Step 2: Creating a Tax Category for the Import Tax

To create a tax category for the import tax, 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: IMPORT
   • Description: Imported Goods and Services
   • Active: Selected
3. On the form toolbar, click Save.

Step 3: Updating the Vendor's Settings

To update the setting for CARTRIDGE vendor, do the following:

1. Open the Vendors (AP303000) form.
2. In the Vendor ID box, select CARTRIDGE.
3. On the Purchase Settings tab, select FOREIGN in the Tax Zone box.
4. On the form toolbar, click Save.

Step 4: Creating a Value-Added Tax on Imported Goods

To create a value-added tax on imported goods, 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: VATIM
   • Description: VAT on Imported Goods
   • Tax Type: VAT
   • Direct-Entry Tax: Selected

     This setting indicates that this tax should be calculated only in tax bills entered on the Tax Bills and Adjustments (TX303000), Bills and Adjustments (AP301000), Cash Purchases (AP304000), and Landed Costs (PO303000) forms.

   • Tax Agency: VATTAX
3. On the table toolbar of the Tax Schedule tab, click Add Row and specify the following settings for the added row:
   • Start Date: 1/1/2024
   • Tax Rate: 10
   • Reporting Group: Taxable Purchases
     Tip:

     Your company is allowed to reclaim the VAT paid on imported goods. Thus, you have selected the Taxable Purchases reporting group for the tax. The VATIM amount will update the Total Input Tax report line and will be included in the amount to be claimed from the tax agency. If your company is not allowed to reclaim taxes on imported goods, you have to create a separate reporting group that will not update the Tax Amount Payable report line.
4. On the table toolbar of the Categories tab, click Add Row and select IMPORT in the Tax Category column.
5. On the table toolbar of the Zones tab, click Add Row and select FOREIGN in the Tax Zone ID column.
6. On the form toolbar, click Save.

Step 5: Creating an AP Bill

To create an AP bill for the purchase of imported office equipment, do the following:

1. On the Bills and Adjustments (AP301000) form, create a new record.
2. In the Summary area, specify the following settings:
   • Type: Bill
   • Vendor: CARTRIDGE
   • Date: 1/15/2024
   • Post Period: 01-2024
   • Description: Office equipment (imported)
3. On the table toolbar of the Details tab, click Add Row and specify the following settings for the added row:
   • Branch: HEADOFFICE
   • Transaction Descr.: Office equipment (imported)
   • Ext. Cost: 750
   • Account: 50000 (COGS - Inventory)
   • Project: X (Non-Project Code)
   • Tax Category: TAXABLE
4. On the form toolbar, click Save.
5. On the Financial tab, review the Vendor Tax Zone box. The vendor is assigned to the FOREIGN tax zone, which has been copied to the bill.
6. Review the Taxes tab. Although the document line is assigned to the TAXABLE category and the vendor is assigned to the FOREIGN tax zone, no tax has been applied to the bill, because the VATIM tax has the Direct-Entry Tax check box selected. Consequently, this tax should not be paid to the goods supplier and is not automatically applicable to the document. The tax will be calculated later, when the tax bill is processed for the goods.
7. On the form toolbar, click Remove Hold and click Release to release the bill.

Step 6: Creating a Tax Bill

To create a tax bill, do the following:

1. On the Tax Bills and Adjustments (TX303000) form, create a new record.
2. In the Summary area, specify the following settings:
   • Type: Bill
   • Vendor: VATTAX
   • Date: 1/31/2024
   • Post Period: 01-2024
   • Description: VAT paid on imported goods
3. On the Apply Tax To tab, click Add Row and specify the following settings for the added row:
   • Orig. Tran. Type: Bill (inserted automatically)
   • Orig. Doc. Number: The reference number of the bill that you created in Step 5
   • Tax ID: VATIM

   The calculated tax amount is $75.

4. On the form toolbar, click Save.
5. On the form toolbar, click Remove Hold and click Release to release the bill.
6. On the Financial tab, click the Batch Nbr. link and on the Journal Transactions (GL301000) form, which opens, review the generated GL transaction.

   On release of the tax bill, the system generated the following entries:

   • The Accounts Payable account of the tax agency (20000) is credited in the tax amount that should be paid to the tax agency.
   • The Tax Claimable account (17000) is debited in the tax amount to be claimed from the tax agency.
7. On the Apply Tax To tab of the Tax Bills and Adjustments form, click the Orig. Doc. Number link in the table row to open the bill, and on the Bills and Adjustments (AP301000) form, which opens, review the Taxes tab.

   After you have released the tax bill, the VATIM tax has been applied to the bill. Notice that the bill's Tax Total and Amount have not changed.