Dears,
I am facing an issue during posting the VAT (Sales tax) on the customer prepayment journal, I had filled the Advance payment posting profile, created a special sales tax code, sales tax group that it is unique for the prepayment (Invoice total incl. other sales tax amounts).
The financial entry for the prepayment is:
Dr: Bank 10,500 (VAT amount included)
Dr:VAT liabilities 500 (VAT amount)
Cr: VAT liabilities 500 (VAT amount)
Cr: Customer (Advance) 10,500 (VAT amount included)
In our nature of business we are recognizing the revenue in monthly transactions by dividing the payment amount on the period of the contract through GL and without adding the VAT in the transactions since it's already calculated in the prepayment journal in addition to the tax regulation that require delivering the tax amount at the point of receiving the payment.
the issue is appearing when settling between the revenue recognition and the prepayment transaction, the application is taking the amount of revenue recognition and considering part of the transaction as VAT and create the below transactions:
for instance the amount of monthly revenue recognition 3,333.34
Revenue transaction:
Dr: Customer 3,333.34
Cr: Revenue 3,333.34
When settling:
Dr: Customer Advance 3,333.34
Cr: Customer 3,333.34
Dr: VAT 158.73 (The amount is 3,174.61 X5%)
Cr: VAT 158.73(The amount is 3,174.61 X5%)
I am wondering why the application calculated the VAT again in the settlement specially we don't need to calculate the VAT on the revenue recognition, in addition while I checked the posted sales tax I found that the application is showing -500 sales tax payable and the un-needed 158.73 in positive which appeared during the settlement which indicate that we have to pay 341.24 to the tax authority.
appreciate your kind help in that.
