PeopleBook summary for VAT setup in PeopleSoft Payables
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PROCESSING VALUE ADDED TAX (VAT) IN PEOPLESOFT PAYABLES PeopleSoft Payables enables you to record and report VAT information associated with vouchers. Before you can do this, you must set up your VAT environment and enable your business units for VAT. The system calculates VAT based on the information you enter during setup (for example, VAT codes which determine the VAT rates that the system uses). Understanding Accounts Payable VAT Calculations and Accounting Entries Exclusive VAT Calculation for Vouchers In the case of exclusive VAT vouchers, when you save the voucher, a VAT confirmation process takes place. The system calculates the VAT amount for each line based on entered VAT values and stores that amount on the distribution line. Inclusive VAT Calculation for Vouchers (Occurs with low monetary value invoices) In this case, the amount of VAT is not explicitly detailed on the voucher, but is included in the merchandise amount for each voucher line. The system calculates the amount of VAT for the voucher and stores the amount for reporting purposes. The system calculates the VAT at the line level and stores the sum of all VAT amounts, on all lines, on the voucher header. Vouchers with a VAT Exemption When your organization is VAT exempt, the VAT Exception Type is Exoneration. In this case, the transactions are treated as taxable at a zero-rate. This means that the transaction line would have a taxable type VAT Applicability (X) and a VAT code with a zero rate should be specified on the line. When the good or service is VAT exempt, the voucher line is flagged with a VAT Applicability of Exempt, and there is no VAT code on the line. In this case, you are not allowed to enter a VAT amount on the header if all lines are flagged as exempt. However, it is possible for a voucher to contain a mixture of taxable and exempt lines, in which case you can enter a VAT amount on the header. Another type of VAT exemption occurs when you have been granted a temporary suspension from paying VAT. In this case the transaction line has a taxable-
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PROCESSING VALUE ADDED TAX (VAT) IN PEOPLESOFT PAYABLES
PeopleSoft Payables enables you to record and report VAT information associated with vouchers. Before you can do this, you must set up your VAT environment and enable your business units for VAT.
The system calculates VAT based on the information you enter during setup (for example, VAT codes which determine the VAT rates that the system uses).
Understanding Accounts Payable VAT Calculations and Accounting Entries
Exclusive VAT Calculation for Vouchers
In the case of exclusive VAT vouchers, when you save the voucher, a VAT confirmation process takes place. The system calculates the VAT amount for each line based on entered VAT values and stores that amount on the distribution line.
Inclusive VAT Calculation for Vouchers (Occurs with low monetary value invoices)
In this case, the amount of VAT is not explicitly detailed on the voucher, but is included in the merchandise amount for each voucher line. The system calculates the amount of VAT for the voucher and stores the amount for reporting purposes. The system calculates the VAT at the line level and stores the sum of all VAT amounts, on all lines, on the voucher header.
Vouchers with a VAT Exemption
When your organization is VAT exempt, the VAT Exception Type is Exoneration. In this case, the transactions are treated as taxable at a zero-rate. This means that the transaction line would have a taxable type VAT Applicability (X) and a VAT code with a zero rate should be specified on the line.
When the good or service is VAT exempt, the voucher line is flagged with a VAT Applicability of Exempt, and there is no VAT code on the line. In this case, you are not allowed to enter a VAT amount on the header if all lines are flagged as exempt. However, it is possible for a voucher to contain a mixture of taxable and exempt lines, in which case you can enter a VAT amount on the header.
Another type of VAT exemption occurs when you have been granted a temporary suspension from paying VAT. In this case the transaction line has a taxable-type VAT Applicability (S), and a VAT code with a zero-rate should be specified on the line.
Finally, when a transaction line is outside the scope of VAT, VAT calculation simply ignores the transaction.
VAT Accounting Entries in PeopleSoft Payables
VAT accounting entries are created by voucher posting and payment posting, when applicable, for each combination of general ledger business unit, VAT code, and VAT transaction type that exists in the voucher distribution. Several factors affect how VAT can be accounted for, as follows:
If you are recording input VAT only, where VAT is included on the invoice and the VAT amount is payable to the vendor, the VAT amount is included in the accounts payable entry during voucher posting.
If you are recording both input and output VAT, where VAT is not included on the invoice and you may be liable for VAT, but it is not payable to the vendor, the system creates a separate VAT liability entry during voucher posting.
VAT can be recorded in the general ledger using the general ledger business unit associated with the accounts payable business unit on the voucher header or the general ledger business unit on the voucher distribution line, depending on the VAT interunit settings.
If VAT is declared at time of payment, intermediate VAT accounting entries are created by voucher posting. Payment posting reverses the intermediate entries and creates the VAT accounting entries against the final VAT accounts. If VAT is declarable at invoice, delivery, or accounting date, the VAT accounting entries for the final VAT accounts are created by voucher posting; no intermediate accounts are used.
If VAT is initially calculated at gross and then recalculated at the time of payment, and a cash discount is being taken, adjusting VAT accounting entries are created by payment posting to reduce the amount of VAT that is recorded, based on the amount of the discount.
Setting Up the VAT Environment
To set up a VAT environment for PeopleSoft Payables, you need to access pages in the Set Up Financials/Supply Chain, Common Definitions, VAT and Intrastat menu. These pages, the VAT components, and VAT setup are described in detail in the VAT Global Setup manual.
As part of your setup you:
1. Define VAT transaction types.2. Set up VAT authorities, tax codes, and accounting information.3. Define VAT countries. 4. Set up VAT entities. 5. Establish VAT defaults.
Each piece of the setup builds on the next, so it is important to complete the setup in the recommended order.
Please refer to the VAT Global Setup manual.
Setting Up the Payables VAT Default Hierarchy
After you set up your VAT environment, you set up VAT defaults and options throughout the PeopleSoft Payables control hierarchy to determine how to process Payables VAT transactions. At the top of the control hierarchy are the VAT entity and VAT country. From here you default the processing options according to the following hierarchy.
General Ledger business unit. Payables business unit. Voucher origin. Control group. Vendor. Vendor location. Inventory item ID. Voucher. Voucher line.
The following table lists the pages on which you establish VAT options (with respect to Payables):
Payables Hierarchy
VAT Options Pages or Defaults Links
General Ledger business unit
Set Up Financials/Supply Chain, Business Unit Related, Procurement, Procurement Control - Non-Merch Charges
Payables business unit
Set Up Financials/Supply Chain, Business Unit Related, Payables, Payables Options - Tax Options
Set Up Financials/Supply Chain, Business Unit Related, Payables, Payables Definition - Tax Options
Payables Hierarchy
VAT Options Pages or Defaults Links
Voucher origin
Set Up Financials/Supply Chain, Product Related, Procurement Options, Vouchers, Voucher Origin - Tax Options
Payables Hierarchy
VAT Options Pages or Defaults Links
Vendors and Vendor Locations
Vendors, Vendor Information, Add/Update, Vendor, Vendor Information – Identifying Information
Accounts Payable, Vouchers, Add/Update, Voucher – Invoice Information, Voucher Line VAT Information
Entering Online Vouchers with VAT
Reviewing and Overriding Voucher Header VAT DefaultsVAT information for vouchers defaults through the PeopleSoft Payables control hierarchy. When you enter VAT-applicable vouchers online, you can review and override VAT defaults at the voucher header, voucher line, and voucher distribution line levels.
Reviewing and Overriding Voucher Line VAT Defaults
Page Name Navigation Usage
Invoice Line VAT Information
Click the Invoice Line VAT link in the Invoice Lines scroll area on the Invoice Information page.
Set/Override VAT Details
Reviewing and Overriding Voucher Distribution Line VAT Defaults
Page Name Navigation Usage
Voucher Distribution Line VAT Info
Click the VAT link on the VAT tab in the Distribution Lines scroll area on the Invoice Information page, then click the VAT link for the distribution line row
Set/Override VAT Details
Reviewing and Overriding Voucher Distribution Line VAT Defaults
Page Name Navigation Usage
Voucher Distribution Line VAT Info
click the VAT Summary link on the Invoice Information page
Set/Override VAT Details
Entering Vouchers With VAT and Withholding
It is common to have a voucher with both VAT and a portion that is withheld. When you are configuring withholding, you can specify whether VAT should be included or excluded from the withholding calculation.
You set up the parameters for calculating withholding on the Withholding Options page. Select the Apply VAT check box on this page if the VAT should form part of the basis for calculation. For example, let's say that the merchandise amount is 1000.00 PKR and the VAT is 70.00 PKR. If the withholding should be on 1070.00 PKR, you select this check box to achieve the correct calculation.
Page Name Navigation Usage
Withholding Options
Set Up Financials/Supply Chain, Product Related, Procurement Options, Withholding, Withholding Entities
