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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Modifying the VAT%
Finance | Project Operations, Human Resources, ...
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Modifying the VAT%

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Posted on by oldman.logan 557

Our VAT rate is  being changed to 15% from the previous 5%. 

We use AX 2009 at work and have implemented VAT with a combination of Sales Tax Group, Item Sales Tax Group and Item Sales Tax Group, under sales tax code named 5%. 

Now for the new VAT rate, I have created a 15% sales tax code with value 15%. 

Now my questions are,

1) Should I create a new Sales Tax Group to use the new Sales tax Code? Or should I just add the new sales tax code under the old Sales Tax Group. 

2) If I am going to use the old sales tax group, should I remove the 5% sales tax code from under it? Or is there a way to disable it, because I don't want people still posting things under 5%. 

3) Also, I want to be able to enable 5% in certain cases manually when an invoice has to be posted for customers who have contract supply (contracts signed before a May 2020 are eligible for 5% VAT until end of contract or July 2021, whichever is earlier). 

Appreciate your support on what is the best option here. Thanks!

  • JK-03091756-0 Profile Picture
    JK-03091756-0 on at
    Modifying the VAT%
    It’s important to check in the AX General Ledger parameters VAT setup calculation date type to be Invoice date when invoicing open orders which are inserted with old VAT rate, but new VAT rate should be applied in invoice.
  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Modifying the VAT%

    Good morning,

    Some short comments:

    In your third sentence you mention 'sales tax group'. I was referring to the item sales tax group that helps you differentiating the 5% and 15% rates / sales tax codes.

    In your last sentence you mentioned the date range. You can of course make use of that as additional safeguard.

    Hope this makes things clear.

    Best regards,

    Ludwig

  • oldman.logan Profile Picture
    oldman.logan 557 on at
    RE: Modifying the VAT%

    Thanks Dr. Ludwig for your points. So I summarize that it is better to create a new sales tax code for 15%. 

    I can use the same old sales tax group and use the new 15% sales tax code so I don't have to change anything for the vendors / customers. 

    Then I can create a new special sales tax group for using the old sales tax code 5% and use the special sales tax group only for selected customers. 

    As a lock for preventing users from using the 5% sales tax code, I can use the date function to set it to a past date so no erroneous posting will be done until I manually modify the date. 

    Is this ideal? 

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Modifying the VAT%

    Good morning,

    Some feedback for your points:

    For 1:

    Personally, I would not create a new sales tax group. Use what you have an add the new code. Otherwise, additional setups might need to be changed (e.g. default sales tax group settings at the customer/vendor side)

    For 2:

    Instead of creating a new sales tax code you can go into the existing one with the 5% rate and click on the value button/form. Once this opens you can define a date range until which the old percentage is valid and when the new rate starts to apply. If you don't like that and want to go on with the new sales tax code, then the creation of a new item sales tax group might be useful to prevent that both - the old and the new sales tax code - are selected when posting transactions.

    For 3:

    To manually select the 5% for some exceptional cases, it might be the best way to work with specific item sales tax groups. That is, you just leave your 5% code in the existing item sales tax group and create a new item sales tax group to which you assign the new code. Then you can easily flip back and forth between the 5% and 15% code simply by changing the item sales tax group when you post a transaction.

    Best regards,

    Ludwig

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