Hi. Our consultant helped us setup VAT in our system (AX 2009) and we have been following the same for last 2 quarters 2018.
We have some gaps in our understanding about the VAT setup which I want to ask and clear, since we are not entirely clear with the consultant's explanation.
We use a combination of SalesTaxGroup and ItemSalesTaxGroup for the VAT setup in AX 2009.
There are 3 ledger accounts Input VAT, Output VAT and Settlement, and 1 vendor account for the Sales Tax Authority.
As default, VAT for domestic purchases go into Input VAT account, VAT for Sales goes into Output VAT account.
In case of foreign purchases, we post the VAT manually as a journal entry between SalesTaxAuthority and Input VAT Account. This is because, in foreign purchases, the VAT might be different due to charges and applicable VAT at the port. So we post 0% VAT when making the Purchase Invoices for foreign purchases and we do manual journal entry between SalesTaxAuthority & Input VAT Account.
This is the setup we are following.
When making a settlement using the "SalesTaxPayment" form by selecting the 'Update' option, we are noticing the following:
1) Input VAT account becomes Zero
2) SalesTaxAuthority is updated with SalesTaxPayment amount after (Output-Input).
3) Settlement Ledger Account is empty.
My questions are,
1) Are we following the correct setup?
2) Why are we using a vendor account for SalesTaxAuthority? How does the settlement usually work, what happens when we do the settlement? What are the accounts affected?
3) With our current setup, SalesTaxAuthority is having only the transactions that we posted manually (for foreign purchases) and no domestic purchases etc. Is this correct? If we are using a vendor account to determine how much we need to pay to the authority, shouldn't it have all the purchases?
4) Is it required that at the end of every quarter (our returns are filed every 3 months), the SalesTaxAuthority and InputVAT should be both Zero?
5) After we make physical payment (money transfer) to the Tax Authority, how do we update this payment in the system? Do we post a journal entry between SalesTaxAuthority and bank? My confusion here is, after settlement (Using SalesTaxPayment form), the system automatically updates the SalesTaxAuthority with the payment amount as 'SalesTaxPayment'. In that case, how do we post the payment made from bank?
I know you all might be pressed for time, but please help me understand this with replies as detail as you can give. I will be eternally grateful for your support. Please let me know if you need any further information. Thanks in Advance!
