SUPPLEMENTARY TAX CALCULATION BUNDLE

The Supplementary Tax Calculation enables accounting and finance users to easily manage purchases where the input tax is partially reclaimable.  It is mainly used in Vendor bills, Expense Reports, Checks, and Vendor Bill credits. There is a work flow for Supplementary Tax calculation.

Setting up Tax control Account and tax codes for Non deductible Tax

Set up a tax control account where the non-deductible tax will initially post. After posting to the tax control account, the system will automatically reclassify this tax amount to appropriate expense account. And also need to set up tax codes to be used for purchases and expenses that have non-deductible tax.

1. Creating a Tax control Account
   1. Set up > Accounting > Taxes > Tax control Account > New
   2. select the nexus, that you are creating a tax control account.
   3. Enter name
   4. Enter description
   5. In the Tax account type field, select Purchase
   6. Assign subsidiaries- Parent subsidiary and check include children
   7. click save
2. Creating a tax type for non-deductible tax  
   1. Set up > Accounting > taxes > tax types > new
   2. Select the nexus
   3. Enter name
   4. Enter description
   5. In the Asset/Purchase Tax account column select the tax control account that you created.
   6. click save
3. Creating a Tax code for the non-deductible portion of VAT
   1. Set up > Accounting > Taxes > Tax code > New
   2. Enter name
   3. Enter description
   4. Enter a rate that represents the non-deductible portion.
   5. Select the subsidiary
   6. Select the tax agency field
   7. In the tax type field, select Non-Deductible VAT
   8. In the purchase Tax account field, select non deductible VAT on purchase.
   9. In the Available on field, Select purchase transaction.
   10. Check Non-deductible tax box.
   11. Click save
4. Creating a tax code for Reclaimable Portion of the VAT
   1. Enter Name
   2. Enter description
   3. Enter VAT rate that should be applied to purchase.
   4. Select the Tax agency
   5. Select Tax type
   6. In the purchase tax account field, select VAT on purchase.
   7. In the Available on field, select purchase transaction.
   8. In the Non-deductible Rate derived from field, select the tax code for non-deductible portion.
   9. In the Non-deductible expense field, select the expense account that the non-deductible tax should be posted to.
   10. Click save.

Applying in Transactions
create a new transaction (eg : PO)
Apply Tax code -reclaimable portion of the VAT- in the PO item line.
Receive item (item receipt)
Bill and we can see the supplementary tax calculation in G/L impact- Actions > GL Impact.

Tax Report (international)

we can see the reclaimable tax calculation in the tax report ( international)