Sales tax direction

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Posted on by CapsLock

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Hi there,

Anyone has any idea of what can be wrong in my setup to get different sales tax directions in different invoices from the same invoice journal??

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Ramit Paul 22,797 Most Valuable Professional on at

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Hi,

This seems you are using one code with minus and one code with Plus, in this case system consider payable and receivable as per your sales tax posting profile.

Can you share what is your expected result and entry?

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André Arnaud de Cal... 301,109 Super User 2025 Season 2 on at

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Hi CapsLock,

In addition to the reply from Ramit (expected result), can you explain the purpose of each Sales tax code, Sales tax group and Item sales tax group?

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CapsLock 1,419 on at

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Hi,

Please find the explanation here:

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Ramit Paul 22,797 Most Valuable Professional on at

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Hi,

Thanks for the info.

For reverse charge, two tax code can not be same

For reverse charge setup we need to have two code

1: With positive value/amount

2: with negative value/amount

For positive value code, if you use incoming invoice, it should say tax receivable

For negative value code, if you use incoming invoice, it should say tax payable.

Please check your sales tax posting profile, there is the sales tax direction is setup.

if you want you can share with us, we can help you.

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Ludwig Reinhard Microsoft Employee on at

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Hi CapsLock,

Can you clarify the problem and what you are looking out for?

I see that discussions are going on about the tax setup for reverse charge, which can be made in multiple ways but discussions seems kind of lose track of what you need to get fixed.

It would be great if you could also let us know for which country/region you need this setup and what problem you have exactly.

Many thanks,

Ludwig

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CapsLock 1,419 on at

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Hi Ludwig,

I really don't know how to clarify the problem more than I did above.

I'm trying to understand how the sales tax direction works. I posted different vendor invoice journals and they have many different sales tax directions. In the first post you can see the journals with the tax postings and tax directions.

For reverse charge, it does the two postings, positive and negative but to the same ledger account (which may be fine) and with the same sales tax direction (which may be fine as well? I´m not sure this is what I'm trying to understand here).

From what we see on the screenshots above it seems that sales tax direction doesn't work well or there's something wrong with the setup. I shared the VAT setup in my last post.

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Ramit Paul 22,797 Most Valuable Professional on at

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Hi,

Sales tax direction and its posting works by the setup in "Ledger posting Groups"

Can you share how did you setup that?

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CapsLock 1,419 on at

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Hi, it's not about which ledger account are setup in ledger posting groups that makes sense. But to put another example:

This is a vendor invoice journal. The scenario is that I'm purchasing two items in the same invoice. They have separate tax codes even if both are import because we need to separate the imports that are investments or fiixed assets (BI). Therefore I have two lines one with the normal import (ROW-GENERAL) and another for the fixed asset (ROW - BI):

If I go to sales tax totals, the sales tax direction is different for both lines - this I don't understand:

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Ramit Paul 22,797 Most Valuable Professional on at

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HI,

TAX Free purchase means, this is marked as "Exempt" in the tax code

Sales receivable means that is correct for Vendor INVOICE.

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Gaurangkumar Jani 4,534 User Group Leader on at

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Hi There,

As per my experience, you have done setup two different code for reverse charge one with positive and 2nd with negative rate. (As well as you have provided details)

In this case system will show both as payable with different sign. It’s standard behaviour.

What you are expecting?

Let’s assume both are showing different as Receivable and payable, what benefits you are expecting from that?

In my past experience, i have simply provided different ledger positing profile to both code so in 1st it will reflect as required payable and in 2nd i have provided receivable account in payable field to get required voucher entry in my financials.

Other option: use “USE Tax” of you are doing configuration for European companies.

Thanks

Gaurangkumar Jani

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