AP Tax Processing

It is sometimes necessary to capture VAT or other tax information during Accounts Payable Invoice Entry.  The two most common examples of this requirement are the payment of VAT (Value Added Tax) which is done outside of the United States) and the tracking of 1099 information - which is done inside the United States.

StreamV allows you to track VAT and other tax information in the accounts payable system.  A Taxcode field can be maintained for each vendor in the system.  The Taxcode from each vendor record is automatically defaulted into the AP Invoice Entry program each time an invoice is entered for the vendor.  The Taxcode from the vendor file can be changed as required for each invoice being entered.  The Taxcode selected for each invoice is also carried into each distribution line (journal entry line) created for the invoice during invoice entry, and the Taxcode can be changed at the distribution line level as required.

The Taxcode used on each invoice and distribution line is used to specify how the invoice or distribution line should be classified for tax reporting purposes.  The Taxcode records also store the rate (if applicable) that is associated with the Taxcode and the autopost of the general ledger account to be updated when tax amounts are processed for that taxcode.

The Taxcode used for each invoice and for each distribution line are recorded by the system in the transaction records.  If a rate has been assigned to the Taxcode record used for an accounts payable distribution line, the rate at the time the distribution line was created is also stored by the system. This information can be used to produce detailed tax reports.

Invoice Processing

During Accounts Payable Invoice Entry, the system loads the Taxcode from the selected Vendor into the program.  This Taxcode (displayed in the upper portion of the AP Invoice Entry program) can then be accepted or changed as required.  The AP invoice Taxcode is then used as the default for the distribution lines created for the invoice.  As each distribution line is entered, the Taxcode from the upper portion of the Invoice Entry program is defaulted into the line.  At this point, the operator can accept or change this taxcode as required and then save the line. As each distribution line is created, the system checks the Taxcode record used for the line to determine if a rate has been specified for the taxcode (this would normally be done in Europe where VAT paid must be recorded as invoices are processed).  The system then does the following.

     The system records the taxcode used on the distribution line and the rate that was assigned to the taxcode when the distribution line was saved.

      If the rate in the Taxcode record is not zero, the system calculates the amount of tax that applies to the line (this is based on the amount of the distribution line, the taxcode used, and the rate stored in the taxcode record).

     The system then checks to see if there is a distribution line already created for the VAT or other Tax account specified in the taxcode record. 

     If a VAT distribution line is found, the system adds the amount of VAT from the new (non-VAT) distribution line to the proper VAT distribution line.

     If no VAT distribution line is found, the system creates a distribution line for the VAT paid account specified in the taxcode record and it loads the line with the amount of VAT charged on the new line.

     As lines are edited, the system keeps track of the different taxcodes being used on the invoice and the amounts paid against each Taxcode (as specified in the non-VAT distribution lines) and it adjusts the VAT distribution lines as required.

More:

Multi-Currency Accounts Payable