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Splitting of tax in Supplier/Vendor Invoices

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Posted on by 46
Good afternoon,
We have a scenario where we will need to split a Vendor Invoice Line, because some of the line content is taxable, and some is not. The Vendor Invoice Line is linked to a Purchase Order Line which is created from a Purchase Requisition (and based on a Procurement Category), but the end user is not aware of how the line should be split until the line is received.
For example:
  1. Purchase Requisition created for Procurement Category ABC with a line quantity of 5.
  2. Purchase Requisition goes through workflow, is approved, and then converted to a Purchase Order and confirmed.
  3. The PO is received and it is then established that a qty of 4 are taxable and a qty of 1 is not.
  4. Two separate receipts are generated for a qty of 4 and a qty of 1.
  5. The Vendor Invoice is generated from the Purchase Order, but it only shows 1 line with a quantity of 5.
At present they are manually splitting the line on the Purchase Order before receipting and this does return the desired outcome. However, it also means that the Purchase Order must be resubmitted to the approval workflow and so creates an unacceptable delay in waiting for the Purchase Order to be reapproved and requires an unacceptable amount of manual intervention.
The end user has ruled out manual adjustment of the tax because it is too vulnerable to mistakes.
What should be the process here?
Thanks in advance.
  • Verified answer
    saurabh bharti Profile Picture
    saurabh bharti 14,883 Super User on at
    Splitting of tax in Supplier/Vendor Invoices
    Hi Phil,
    I think the easiest way will be to override the Tax amount using sales tax adjustment feature based on actual tax applied by vendor for the invoice.
    I am assuming you are most clear on applicable tax when invoice is received. 
  • Verified answer
    Ramit Paul Profile Picture
    Ramit Paul 18,201 Super User on at
    Splitting of tax in Supplier/Vendor Invoices
     This is the concept of Breakdown of voucher, which is available in Invoice journal (Cost invoice), however not in PO invoice, I echo with Andreas Raithel, you can explore the reapproval policy which will cut down your waiting time.
  • Verified answer
    BillurSamdancioglu Profile Picture
    BillurSamdancioglu 13,156 Super User on at
    Splitting of tax in Supplier/Vendor Invoices
    There is no OOB process that you can proceed with for one line.
  • Verified answer
    andreasraithel Profile Picture
    andreasraithel 4,382 on at
    Splitting of tax in Supplier/Vendor Invoices
    Hy Phil,
    best practice would be to have the PR & PO created as it will be invoiced, means 2 lines with two different item tax codes. No effort with receipt and invoice.
    Otherwise the PO has to be changed, which causes manual intervention.
    To avoid effort because of rerun the PO Workflow, there are some options within the Procurement Policies to have seperate Workflow route in case of a required reapproval. You can find details here this blog post.
    Hopw this helps.
    Herzliche Grüße / kind regards,
    Andreas Raithel
    D365FO Solution Architect

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