Purchase Use Tax Configuration in Dynamics 365 Business Central

Applies to Product – Dynamics 365 Business Central

What’s happening?
The purchase use tax setup in Dynamics 365 Business Central is currently configured to add the tax amount to the purchase invoice. The client requires that this tax not be included in the invoice, as it will be paid directly to the tax authority rather than the purchase vendor.

Reason:
The current functionality of Dynamics 365 Business Central requires the "Tax Liable" option to be enabled for tax calculations to occur. When this option is enabled, the tax amount appears on the purchase invoice and is included in the Accounts Payable balance for the vendor.

Resolution:

• To modify the purchase use tax setup so that the tax amount is not included in the purchase invoice, the "Tax Liable" option can be turned off on the purchase invoice. This will remove the tax amount from the document.
• It is important to ensure that there are separate General Ledger (G/L) accounts set up for tracking use tax liabilities to the tax authority.
• The client can run a report to get the total tax amount to pay to the tax authority and create a manual invoice for the payment.