Since by default, VAT is calculated only on the prepayment percentage / amount, is there a way we can record the VAT and WHTax from the whole purchase amount while processing only the 50% payment?
For example:
Total purchase is 112,000.00 including 12%VAT
VAT 12%: 12,000.00
Withholding Tax 1%: 1,000.00
Prepayment base is 56,000
Amount to prepay: 55,000
Entries Should be:
Advance to Vendors 44,000
Input VAT 12,000
Withholding Tax 1,000
A/P 55,000
We can book the entries manually, but this may result to inconsistencies in subledgers.
In standard Business Central, the prepayment invoice is designed to calculate VAT based on the prepayment amount/percentage, not on the full purchase order while paying only 50%, so your expected posting cannot be achieved cleanly by setup alone in most localizations. WHT also depends on the withholding tax setup and is normally calculated when posting/paying purchase documents, not as a separate “full PO tax but partial advance” logic. To avoid subledger inconsistencies, I would not recommend manual G/L entries unless finance accepts the reconciliation impact; the cleaner options are either post the full purchase invoice and pay only 50%, check whether your localization has a “full tax on prepayment” feature, or customize the prepayment posting logic/reporting if this is a legal requirement in your country.
Regards,
Oussama Sabbouh
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