Value-Added Tax for Third-Party Vendors 

Use

Some transactions related to indirect billing transactions require third-party vendor information to be displayed on the value-added tax (VAT) report instead of the vendor master information that would normally be contained on the invoice.

A company employee takes a prospective customer to dinner. In this case, the employee pays the bill, including VAT. The restaurant issues the official receipt to the employee. Now the employee wants to claim this expense from the company.

The company posts an invoice with the employee as the vendor. But because the employee did not issue the official receipt – the restaurant did – when the company submits its VAT report to the tax authority, it should list the restaurant as the vendor, not the employee. In this case, the restaurant is considered the third-party vendor.

Activities

There are two methods for posting a vendor invoice involving a third-party vendor, depending on whether the third-party vendor already exists in your vendor master record. When you enter the invoice, you enter the third-party vendor information on the Notes tab (which later appears as the long text to the Text field of the line item) as follows:

·        For third-party vendors with master records

Enter the vendor number with a colon as a prefix, for example, :v-001.

The system then automatically retrieves the vendor information from the vendor master record and places it into the following user fields:

1. Vendor name into User field 1

2. Taxpayer identification number (TIN) of vendor into User field 2

3. Vendor address line 1 into User field 3

4. Postal code and city into User field 4

·        For third-party vendors without master records

If the third-party vendor does not exist in your vendor master, then you must manually enter the required vendor information. Enter the following data in the order specified below, with a semicolon at the end of each line. Each line is limited to 50 characters.

1. Vendor name

2. TIN of vendor

3. Vendor address line 1

4. Postal code and city (separate postal code and city with one space – no comma)

Antonio's Bistro;
123-456-123-456V;
1000 Main Street;
2211 Manila;

You must enter the vendor data in the above order only – so that it is stored and transferred to the VAT report in the same format as the data for third-party vendors with master records.

When you generate a VAT report that contains third-party vendors, note that you must modify your display variant to include user fields. For more information, see VAT Reporting.