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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / Sales Tax calculation ...
Microsoft Dynamics AX (Archived)

Sales Tax calculation includes customer retention as well on Project invoice proposal.

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Posted on by Jiwannawij 50

Dear Experts,

I have created a invoice proposal for 10000$ with retention of 500$, now i expect the system to generate a sales tax of 10% on 9500$, but the system has calculated tax on 10000$. Is there any setup for this ? 

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I have the same question (0)
  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hi,

    Your invoice is for $10000, right?

  • Jiwannawij Profile Picture
    Jiwannawij 50 on at

    Hi Ludwig,

    Yeah it is 10000$ with retention 500$ in it

    Thanks

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hi Jiwan,

    If your invoice is for $10000 then the tax that is applied on this amount is correct in my opinion.

    That is because the retain functionality simply says that the customer reserves the right to withhold some dollars until specific criteria have been fulfilled e.g. complete delivery.

    From a taxation perspective, withholding some money does, however, not make a change to the tax - at least not in my home country and the EU countries I am familiar with - because the tax is calculated and needs to be paid on the price that has been agreed upon ($10000). It does thus not matter in the first place when you customer actually makes the payment from a taxation point of view.

    I am not sure in which country you operate AX but from a German/EU-taxation perspective, everything seems ok with this standard behavior.

    Is this different in your country?

    Best regards,

    Ludwig

  • RSK_VIE Profile Picture
    RSK_VIE 10 on at

    Hello Mr. Reinhard!

    I do have with D365 excatly the other problem, that customer retention is correctly deducted (and posted) but unfortunately the VAT is the calculated on the reduced amount (same as a simple rebate). looks like the customer retention is not an item for VAT ?

    Thanks for a potential answer.

    Best regards,

    Robert Skreing

  • Syed Tahseen Hussain Profile Picture
    Syed Tahseen Hussain 30 on at

    I want this behavior for calculating VAT. But my dynamics setup is calculating VAT on $9500 instead $10000.

  • Suggested answer
    faiz7049 Profile Picture
    faiz7049 2,430 on at

    Hi Syed,

    VAT should be calculated based on invoice amount.

    Example:

    Suppose you want to invoice $100 to customer with 50% retention and VAT is 10%.

    So invoice will be $55 including VAT(10%).

    When you post invoice for retention it will be same $55 including VAT(10%).

    Thanks,

    Faiz

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