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VAT POSTINGS ISSUES ON INVOICE JOURNAL

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Posted on by Matthew Ireti

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Good day,

I have a specific request where my VAT posting should not be in this form.

The clients wants the VAT Postings to be in credit to the VAT Accounts. Reason is they are public sector and remit tax on behalf of the vendors.
The Amount posted to the Vendor Account (aka Trade creditors) should be the (Invoice amount - VAT) and not the Full invoice amount registered on the line. Reason is the amount on the line is VAT inclusive
The Amount debited from the offset should be the gross amount entered on the invoice line. So just like switching the current voucher transactions.
(Optional) Lastly is it possible to setup up a deduction of witholding tax. Not necessarily using the Witholding tax codes but maybe a variant of Sales tax code with posting configurations for the Witholding accounts and the deduction also follows the normal witholding tax payment.

All these are what i need to achieve. I have tried several approaches but i did not get the first 3 requests to work.

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Ludwig Reinhard Microsoft Employee on at

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Good morning Matthew,

Some notes below:

For No 1:

Based on the example that you shared above in your screenprint, can you draft / describe what posting you expect instead of the one shown?

For No 2:

Can you check how your invoice journal is setup? Is the parameter for amounts incl VAT active?

For No 3:

I don't understand that one. Can you elaborate and provide some additional information?

For No 4:

Withholding tax is posted with the payment. What I understand is that you post the invoice. Can you describe in more detail, what you are looking out for here?

Many thanks,

Ludwig

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Matthew Ireti 250 on at

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Good Morning Ludwig,

1. Find below the expected postings

2. Find below my Sales tax setup in the General Ledger

and also the VAT tax code setup in the Sales tax

For the 3rd request. I have captured that in the expected posting snapshot above.

We can leave item 4 out for now. I fully understand that witholding tax is processed at payment.

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Ludwig Reinhard Microsoft Employee on at

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Good Morning Matthew,

Can you double check the first screenprint that show the expected postings.

It is confusing because the amount in transaction currency column and the amount column show different values.

Many thanks for the help and update.

Best regards,

Ludwig

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Matthew Ireti 250 on at

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My bad,

The amount in transaction currency is the valid posting we want ignore the Amount column.

Thanks

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SouravDam 11,730 on at

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Hello Matthew Ireti,

Not sure but can you try by changing the sale tax direction in the tax code which is recorded in the document and see if this helps you!

Kindly replicate the same in UAT and then check.

Best regards,
Sourav Dam

Kindly mark this thread 'Yes' if this is answered your query which may help other community members in this forum.

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Matthew Ireti 250 on at

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Can you point me into the direction of achieving this.

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SouravDam 11,730 on at

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Hello Matthew Ireti,

The sales tax direction is determined by the combination of main account type and sales tax code.

You can refer to below links which could be helpful for you.

https://docs.microsoft.com/en-us/dynamics365/finance/general-ledger/sales-tax-calculation-on-general-journal

Also below link from this Forum itself.

https://community.dynamics.com/ax/f/microsoft-dynamics-ax-forum/130121/sales-tax-direction

Kindly check and provide us feedback.

Best regards,
Sourav Dam

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Ludwig Reinhard Microsoft Employee on at

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Hello Matthew,

Many thanks for the confirmation.

So, the amount that is posted on the vendor summary account is then the net amount and you want to post the gross amount as expense on the water rates account.

Right?

Just tested this in the DEMF contoso environment from MS and the following could work.

Please check and confirm:

1. Open a GL journal in DEMF and disable the 'include sales tax' parameter

2. Enter a vendor invoice for example for 800 EUR.

3. Select an expense account and the item sales tax group FULL.

4. Select the tax group AP-EU

5. Post the invoice.

What you will get is something that looks as follows:

What you have to make sure is that your 'use tax receivable' account points to an expense account; the one that you use for water rates.

In other words, the account 130750 needs to be replaced with an expense account.

Then you can have the gross amount expensed.

The credit side is also ok.

The only things that might be a bit strange is the sales tax posting type that would be used for posting the additional expense on the water rates account but I don't think that this should be an issue.

Would be great if you could double check/replicate and let us know if this fixes your issue.

Best regards,

Ludwig

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SouravDam 11,730 on at

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Hello Matthew Ireti,

Is this sorted out?

Could you kindly go through the suggestions made on this thread and provide us an update.

Have you checked the tax direction as explained?

Best regards,
Sourav Dam

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Matthew Ireti 250 on at

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Thanks Ludwig,

I tried out your suggestion. It works but with some limitations which will not make us to implement it.

The tax group has ''Use tax enabled" therefore it creates the ledger entry in the desired format but this poses a limitation of changing the account on the tax posting every time because we have more than one expense account to be used

When using the "Use tax option". the amount on the invoice should always be net amount. because it doesn't obey the rule of activating "Amount includes sales tax"

We are still experimenting along your line of thoughts to see what can be done to get the desired result.

I must say that using tax direction on the Main Account legal entity override for the expense accounts also does not have an effect on the posting.

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