Deferred Tax, Mexico 

Use

There are two different ways to report collected or paid tax. The first, is by the date the A/R or A/P invoice is created. The other way, which explained here, is reporting the tax by the time it was actually paid. This method called Deferred Tax. The documents covered by the deferred tax system are: A/R and A/P invoices, A/R and A/P credit memos, A/R and A/P down payment invoices. Incoming and Outgoing Payments documents created based on invoices subject to deferred tax are also affected by the deferred tax method as explained later.

Prerequisites

In order to use the deferred tax method in SAP Business One company the following preliminary definitions should be made:

• In Administration ® System Initialization ® Company Details ® Accounting Data Tab, the user determines whether to manage deferred tax system for customers, vendors or both.
• In Business Partners ® Business Partner Master Data ® Accounting Tab ® Tax Sub-Tab, define whether to include each business partner in the deferred tax system or not.
• Since the reporting according the deferred tax method is done by using special G/L accounts, go to Administration ® Setup ® Financials ® Tax ® Define Tax Codes, and relate to each tax code you wish to include in the deferred tax system, a deferred tax account.

 

Procedure

1.       Open the document you wish to create and choose the required business partner. The check box Deferred Tax in the Accounting Tab of the document will be automatically selected if the chosen business partner is subject to deferred tax.

2.       Process the document, and make sure that the tax codes used in the document (for items or service) contain a deferred tax account. Add the document.

Result

After the document is added the journal entry created by the document is recorded in the deferred tax account defined in the tax code. When Incoming or Outgoing Payment document is created for an invoice that subject to deferred tax, the tax amounts are posted to the deferred tax account as follows:

• Cash payment mean – the due date and the tax date are identical to the payment posting date.
• Check payment mean – each check creates a separate line in the journal entry, posted in the deferred tax account. The value date of each check row is identical to the due date of the check.
• Bank Transfer payment mean – the transfer date defined in the Payment Means window ® Bank Transfer tab is taken as the value date of the deferred tax line in the journal entry.
• Credit Card payment mean - each credit card payment creates a separate line in the journal entry, posted in the deferred tax account. The value date of each credit card payment row is identical to the due date of the credit card payment.

The tax included in the documents created under the deferred tax method is reported through the Deferred Sales and Purchase Ledger, found in Reports ® Financials ® Accounting ® Tax or through the path: Financials ® Financials Reports ® Accounting ® Tax.