Negative Sales Tax - Wrong Calculation

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Posted on by Zeeshan.Rahim

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Dear All,

On Accounts Payable > Invoice > Invoice Journal > Setup > Sales Tax. I enable Amount Include Sales Tax which is very important in my scenario because I am facing this issue when amount include sales tax option is on.

Example: I have created vendor invoice journal with amount of 1000 and applied 15% sales tax. System calculate sales tax of 130.43 (So far so good).

Wrong Calculation: When I apply Negative sales tax of -15% on same invoice then system is calculating 176.47 but it should give 130.43.

Setup: This is the sales tax code setup for negative sales tax.

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SouravDam 11,730 on at

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Hello Zeeshan.Rahim,

1 query.

How come 15% sales tax is calculating on amount of 1000 and giving result as 130.43 ? It should be (1000 * 15%) = 150.00 right !

Is there any other additional tax % linked ?

This tax structure is for which country / region specific ?

Best regards,
Sourav Dam

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Zeeshan.Rahim 151 on at

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Hi Sourav,

With reference to start of my question, I enable Sales Tax Inclusive option (see screenshot) due to which it is calculating as 1000*15/115=130.43. If I turn off Sales Tax inclusive option then system will calculate as 1000 * 15% = 150.

Accounts Payable > Invoice > Invoice Journal > Setup > Sales Tax

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MM-20051452-0 on at

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Hi Zeeshan,

Can you share with us the setup on sales tax group & the tax localization country?

Thanks in advance.

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Zeeshan.Rahim 151 on at

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Hi Momen,

I am using UK localization. Sales tax group setup is given below for you information.

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MM-20051452-0 on at

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Hi Zeeshan,

First I do not know why you have the extra -20% tax code which is also set as Reverse charge, Can you validate on the Sales tax codes calculation on this voucher? and the item sales tax group as well?

And also, have you followed the official documentation for UK reverse charge setup?

docs.microsoft.com/.../united-kingdom

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Liana 135 on at

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Hi Rahim,

is the amount from 1000 with 15 % sales tax or without? If you have activate in Journal setup "Amount include sales tax" you must give in the invoice journal the brut amount. For example for Germany:

Invoice amount 119 € (net amount 100 + 19% VAT)

Now to your problem:

I create a VAT Code "VAT - 19%"

Sales tax Group:

Item sales tax group:

Create a new invoice journal:

Many regards from Germany

Liliana

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Zeeshan.Rahim 151 on at

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Hi Momen,

-20% code is also required in this group, user deduct -20% sales tax on top of 15% (VAT-15%BRA) when vendor is unregistered. This is the ultimate code due to which I posted this. Sales Tax codes, sales tax group and Item sales tax groups setups are given below for your information. Secondly, Lets ignore reverse charge, I unchecked reverse charge option. System is calculating same sales tax when reverse charge option is not selected.

Sales Tax Group Setup (PK-BRA)

1. Item Sales Tax Group Setup (BRA15% WHT)

1.1 Sale Tax Code (BRA15% WHT)

2. Item Sales Tax Group Setup (BRA-15%)

2.1 Sales Tax Code (VAT-15%BRA)

3. Item Sales Tax Group Setup (BRA20%@15%)

3.1 Sale Tax Code (BRA20%@15%)

1. Transaction (Case 1)

Invoice Journal: Correct Calculation when using 15% tax

Item Sales Tax: BRA-15%

Invoice Journal: Wrong Calculation when using -15%

Item Sales Tax: BRA15% WHT

System should calculate 1000*15/115=130.43 however it is calculating 176.47

2. Transaction (Case 2)

Now lets talk about the -20% code which is the ultimate goal to achieve correct calculation for.

Invoice Journal: Wrong Calculation when using 15%-20%

Item Sales Tax: BRA20%@15%

System should calculate 1000*15/115=130.43 however it is calculating 133.93.

This is because system is using wrong amount origin, it should be 869.56 instead of 892.86.

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Zeeshan.Rahim 151 on at

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Hi Liana,
Thank you for the suggestion, I am aware that if we use net amount for the invoice then system calculate correct sales tax. This is same as, If we turn off 'Amount include sales tax' option and add net invoice amount. But this solution is not giving desired result when we apply complex code. For example with reference to Transaction 2 (Case 2) in my last reply, lets apply 15%Tax-20% code.
Invoice amount 115 (Net amount 100 + 15% VAT)

System is calculating 13.39 sales tax which is wrong, it should calculate 15. Secondly, Amount origin should not 89.29. It should be 100.

Lastly, user receive invoices including sales tax. They don't want to use calculator to get net amount for each invoice and then enter in the system. That's why we need solution to be able to enter invoice amount with sales tax.

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MM-20051452-0 on at

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Hi Zeeshan,

Thanks for your patience, I succeeded to reproduce the issue with -15WHT item sales tax group on our standard environment.

Action Plan

1- I will check internally with our Engineering team for validation.

2- Could you please let me know as you are using UK localization, why you are using -ve sales tax as Withholding tax and do not use the standard functionality localization for Withholding tax calculation for UK????

Regards,

Momen

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Zeeshan.Rahim 151 on at

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Hi Momen,
Standard functionality only have option to apply withholding tax on Net amount or Gross amount of Invoice balance however our requirement is to apply percentage on Sales tax amount (not invoice amount). This is why I am not able to use standard functionality of UK localization.

Standard Functionality of Withholding Tax which apply percentage on Invoice amount:

Requirement is to withheld sales tax amount by applying percentage on sales tax amount (Not invoice amount) this is why I am using negative sales tax code

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