Setting Up Tax Information for the VAT Report

Use these general steps to set up value-added (VAT) tax code information in the product so you can later run the VAT Report:

On the General Parameters form, select Activate EU Reporting. Also, specify the EU Weight Conv Factor, which is used to convert item weights to kilograms on the EU SSD Report.
If you plan to send EU SSD reports as ASCII or XML files, specify the SSD File Logical Folder and the dispatch and arrival interchange IDs in the Tax Parameters form. You can get the IDs from the appropriate federal statistical office in countries where this is required, for example, Germany. The user who runs the report must have authorization to create files in the logical folder.
If a state tax office value is required for use with intrastat SSD data files, specify the value in the Prov/States form. You can get the state tax office IDs from the appropriate federal statistical office in countries where this is required, for example, Germany.
Use the EU VAT Reporting Categories form to view and further define the available VAT tax categories, and to determine whether each category requires offsetting tax entries. The categories that are listed cannot be changed; however, you can specify a category description that is displayed in the VAT Report.
On the Tax Systems form, set up a Tax System 1 with Tax Mode set to Item. An item-based tax system allows sales taxes to be charged at the line item level and tax codes to be specified in the Items form. The system looks at the tax rate of the order line item and overrides the tax code on the order header.

On the General tab, select the Tax Discount/Allowance field for Tax System 1. This allows the system to calculate tax adjustments in payments due to discounts and allowances. It also disables the Next Level Tax Code field on the Tax Codes form.

Caution: The fields on the General tab should not be changed after there are valid transactions in the system. This can invalidate your data and compromise integrity. For example, if the Active For Purchasing field is set to Yes after purchase orders have already been entered into the system, the current purchase orders will not contain the proper tax codes, and the tax records on the PO side will be nonexistent.
On the Tax Codes form, set up codes:
- Allocate each tax code to a category.
- Select the Transfer VAT check box.
- Specify the A/R Account and A/P Account.
- Specify the VAT A/R Received Account field and VAT A/P Paid Account.
Return to the Tax Systems form. On the Tax Codes tab, define the default tax code information for Tax System 1. Specify the Transfer A/R VAT Tax Code and Transfer A/P VAT Tax Code.

Use the Labels tab to customize labels for tax codes, tax amounts, and tax IDs.
On the Account Tax Code Defaults form, set up tax codes to use as the default tax account when creating manual journal entry transactions that are not based on invoices or vouchers.
Use the Tax Parameters form to set your company's specific reporting and functionality requirements, including SSD information.
Set up the Tax Line Numbers form to allocate tax codes to the appropriate lines of the fiscal authority report. The line numbers in this form refer to the lines in the fiscal department tax formula. If line numbers are assigned, you can later sort the VAT Report by line number, which allows you to more easily fill in the required fiscal authority report.