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Is there a parameter to change this logic on the vendor prepayment invoice to not include sales tax ?
Why is this parameter ticked on automatically? And it is not coming from the PO nor the vendor.
So if I put 100$ of prepayment, my invoice comes as 90$ + 10$ Tax = 100$. What I want is to put 100$ of prepayment and the invoice calculated 110$ total invoice.
Thanks Sourav,
That is the answer I was looking for.
My understanding in this context is as per the following;
--- Just because this is a prepayment invoice; therefore by default, system set the Prepayment check box enabled in prepayment invoice header. If you place your cursor on this, information on this field will popup explaining the same.
--- For example; PO amount = 1000.00 and tax = 100.00; So total PO value is 1100.00. Now when you are creating prepayment invoice in the PO, system is actually considering how much of the total PO value, you are booking the prepayment invoice. And here total value including tax is 1100.00 due to which by default ERP is setting the Price include sales tax check box enabled in prepayment invoice.
Let's take another example in this context. Suppose; you make a payment to the vendor of 2200.00 through payment journal. At the time of booking the invoice, you recorded this as per the following;
Invoice amount = 2000.00
Tax amount = 200.00
Total invoice amount = (2000.00 + 200.00) = 2200.00
Now when you make a payment to the vendor, either you can make a full or partial payment against this invoice. But nowhere in payment journal you can define that you are actually making a payment excluding tax. It should be always a payment including the tax value even it is a full or partial payment.
I think system is validating same approach while creating prepayment invoice in PO too; as ultimately you have to make a payment against this prepayment invoice which is including sales tax amount.
Let me know if you have any query or concern so that we can analyze it further.
Best regards,
Sourav Dam
Kindly mark this thread 'Yes' if this is answered your query which may help other community members in this forum.
Good Morning Veronika,
Now I got what you referred to :-)
You are right with your investigation that the tax is always calculated out of the total prepayment amount recorded and not on top.
Unfortunately, there is no setup for this that would allow you making a change to this functionality.
Yet, please reconsider whether this is the right approach for recording prepayments because in my home country this standard approach of recording prepayments is problematic from a tax perspective.
I documented this once here:
What might be better an easier in my opinion is the use of special prepayment service items, which are described in one of the related posts.
Best regards,
Ludwig
Hi,
I simply created a PO with a procurement category and any vendor. Confirm the PO.
Add a prepayment to the PO of 10%.
Go to Invoice tab - Invoice the prepayment.
Open the Invoice form and go to the header of the invoice. That is from where I took my print screen showing the parameter grayed out.
If you go back on the PO header, you will see the same parameter will be switched off.
I saw same questions on the forum, but no answers.
Hope that helps. Let me know.
Hi Veronika,
Can you help me a bit. In my case this does not seem to be 'hard coded'.
What steps did you execute until you arrived at this form with the parameter value grayed out?
Many thanks,
Ludwig
Hello Ludwig,
Our process is that we receive a formal invoice for the prepaid amount + taxes.
I can create the prepayment for the total amount with taxes.
I'm just wondering why was that designed this way that we would need to add the taxes in the prepayment and we don't have the option, to decide, the way we want to hand the taxes. The only option is to calculate or not, by changing the sales tax group on the invoice. But the fact that it is hard coded to be 'price includes sales taxes' is that it could have been designed to be flexible.
It creates a disruption in the process. Normally, when invoicing a PO, the line amount is unit price x qty, before tax.
Where with a prepayment, the AP clerk needs to be vigilant now and think:
-Am I invoicing a prepayment ? - Yes = the line must show unit price including taxes
- No = the line must show unit price before sales tax
From a day to day life this creates confusion.
-
André,
I do want the taxes to be calculated but on top of the prepayment amount, not deducted from it.
I don't understand why MS would hard code this logic to be deducting only?
It would have been nice to have a choice.
The regular PO invoice calculates taxes on top of the PO amount, as should be. Why would the prepayment be hard coded differently.
Hi Veronika,
What's the regulation in your country? Do you receive formal prepayment invoice documents that you record and then pay? Or do you simply record a payment as 'prepayment' that you deduct later on? Can you deduct the sales tax at the time you make the payment or is the sales tax just treated like any other expense?
Best regards,
Ludwig
Hi Veronika,
What's the regulation in your country? Do you receive formal prepayment invoice documents that you record and then pay? Or do you simply record a payment as 'prepayment' that you deduct later on? Can you deduct the sales tax at the time you make the payment or is the sales tax just treated like any other expense?
Best regards,
Ludwig
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