FunctionTax Codes for Secondary Events

 

When you process exports and the construction of assets, you post VAT between three G/L accounts:

  • When you receive and post an invoice, the system posts the VAT to the deferred VAT account.

  • When you pay the invoice, the system transfers the VAT from the deferred VAT account to the provisional input VAT account.

  • When you verify the export or the capitalization of the asset, the system transfers the VAT to the input VAT account.

For these purposes, you use three different tax codes, which are linked to each other as target tax codes (for more information about target tax codes, see Customizing for Tax Codes).

Features

Sample Tax Codes

The system comes with sample tax codes that you can use. For purchases of materials for use in assets under construction, for example, the system comes with the following tax codes:

Tax Codes for Materials Used in the Construction of Assets

Tax Code

Name

Target Tax Code

G/L Account

V2

18% deferred input VAT on materials for assets

V9

19300000

V9

18% provisional input VAT on materials for assets

VC

19301000

VC

18% input VAT on materials for assets

—

68020320

These three tax codes are linked to each other by means of the Target Tax Code field. This field is in Customizing for Financial Accounting (FI), under Financial Accounting Global Settings · Tax on Sales/Purchases · Calculation · Define Tax Codes for Sales/Purchases.

In the settings for the code V2, for example, choose Properties, and in the Target Tax Code field is V9. Likewise, in the settings for the code V9, the target tax code is VC.

VAT Accounting Method

In Russia, tax payers were allowed to choose between the cash and accrual basis for VAT accounting. From January 2006, however, tax payers are obliged to apply the accrual basis. The system still allows to choose between the old and the new methods.

Depending on whether you apply the cash or the accrual basis for VAT purposes, you might need to use different tax codes. So that the system can check whether you use the correct tax code, you need to assign the tax codes to the VAT accounting methods. To do this, in Customizing for Financial Accounting (New), choose General Ledger Accounting · Periodic Processing · Report · Sales/Purchases Tax Returns · Group Tax Base Balances .

To assign tax codes to the accrual basis method, use the tax grouping version SHP.

To assign tax codes to the cash basis method, use the tax grouping version CSH.