Posting sales tax amounts for intercompany transactions

Transcription

1 Microsoft Dynamics AX 2012 CU5 Posting sales tax amounts for intercompany transactions White Paper When you post an intercompany transaction, you can select to post sales tax amounts to the destination legal entity or the source legal entity. Author: Leslie Wagner April

2 Table of Contents Overview and definitions... 3 Select which legal entity to post sales tax amounts to for intercompany transactions... 3 Modify or view the legal entity for intercompany tax posting on journals... 4 Reports that can be printed across legal entities... 4 Example: Posting sales tax to the destination legal entity... 4 Example: Posting sales tax to the source legal entity... 5 Example: Posting sales tax when a sales tax code contains a nonrecoverable VAT amount... 6 Example: Posting sales tax when a settlement contains a cash discount and a nonrecoverable VAT amount... 7 Example: Posting sales tax amounts when underpayments or overpayments

3 Overview and definitions In Microsoft Dynamics AX, you can create intercompany transactions, which are transactions between legal entities of the same organization. Those transactions are posted to general ledger accounts that are consolidated, or combined, into accounts for a single, consolidated legal entity. For specific journals, when you post an intercompany transaction that includes sales tax amounts, you can select to post the sales tax amount to either the source legal entity or the destination legal entity. Those journals include the General journal, the Accounts payable Invoice journal, and the Accounts payable Invoice approval journal. Sales tax amounts for intercompany transactions on all other journals will be posted to the destination legal entity. To select the legal entity to post sales tax amounts to, use the Legal entity for intercompany tax posting field in the General ledger parameters form. You also can change the option in the Legal entity for intercompany tax posting field in the General journal form, the Accounts payable Invoice journal form, and the Accounts payable Invoice approval journal form. Before you select to post sales taxes to the source or destination legal entity, you should become familiar with the following terms. Term Intercompany transaction Destination legal entity Source legal entity Definition A transaction between legal entities that are part of the same organization that consolidates the accounts of the legal entities. The legal entity that the expense or revenue is being distributed to, or a bank account. The legal entity where the payable to the vendor or the receivable to the customer is recorded. Select which legal entity to post sales tax amounts to for intercompany transactions You can select which legal entity sales tax amounts should be posted to when the taxes are part of an intercompany transaction. Use the General ledger parameters form to select the option. 1. Click General ledger > Setup > General ledger parameters. 2. Click the Sales tax link. 3. In the Legal entity for intercompany tax posting field, select one of the following options: Destination Post the sales tax amounts for intercompany transactions to the legal entity that the expense or revenue is being distributed to. Source Post the sales tax amounts for intercompany transactions to the legal entity where the payable to the vendor, the receivable to the customer, or a bank account is recorded. Note: If the Apply US Sales and Use tax option is selected in the General ledger parameters form, you cannot select this option. Note: The Legal entity for intercompany tax posting field is available only when the Intercompany configuration key is selected. 3

4 Modify or view the legal entity for intercompany tax posting on journals The option that you selected in the Legal entity for intercompany tax posting field in the General ledger parameters form will be displayed in the journal form when you create an intercompany transaction. You can change the option in the Legal entity for intercompany tax posting field in the General journal form, the Accounts payable Invoice journal form, and the Accounts payable Invoice approval journal form. All other journal forms will work as if the tax obligation is set to Destination. 1. Open one of the journal forms. 4 General journal form Click General ledger > Journals > General journal. Invoice journal form Click Accounts payable > Journals > Invoices > Invoice journal. Invoice approval journal form Click Accounts payable > Journals > Invoices > Invoice approval journal. 2. On the Setup tab, you can view and change the selection in the Legal entity for intercompany tax posting field. Reports that can be printed across legal entities If Source is selected in the Legal entity for intercompany tax posting field in a journal, the following reports can be printed across legal entities: Ledger statement by Ledger Account (LedgerTransStatement) Ledger transaction list (LedgerTransListAccount) Sales tax specification (TaxTransCode) Sales tax specification by ledger transaction (TaxSpecPerLedgerTrans) Sales tax transactions Detail (TaxTransDetail) Transaction list by date (LedgerTransListDate) If you print the reports from the source legal entity, the expense or revenue account from the destination legal entity will be printed on the reports. If you print the reports from the destination legal entity, the transaction will not be printed on the reports. Example: Posting sales tax to the destination legal entity When you select Destination in the Legal entity for intercompany tax posting field in the General ledger parameters form, the sales tax amount will be posted to the destination legal entity. This example assumes that the Amounts include sales tax check box is cleared in the journal form. Therefore, the amount that is entered in the journal line excludes sales tax. Assumptions invoice 5 percent tax Source legal entity = A Account type = Vendor

5 Account = Contoso, Ltd. Destination (offset) legal entity = B Offset account type = Ledger Offset account = Electricity expenses Accounting entry in Legal entity A Due from Legal entity B Accounts payable Accounting entry in Legal entity B Main account Electricity expenses DR Tax receivable* 5.00 Due to Legal entity A *If the Apply U.S. taxation rules check box in the General ledger parameters form is selected, this amount is included in the expense account. Example: Posting sales tax to the source legal entity When you select Source in the Legal entity for intercompany tax posting field in the General ledger parameters form, the sales tax amount will be posted to the source legal entity, which is the legal entity that records the invoice. This example assumes that the Amounts include sales tax check box is cleared in the journal form. Therefore, the amount that is entered in the journal line excludes sales tax. Assumptions invoice 5 percent tax Source legal entity = A Account type = Vendor Account = Contoso, Ltd. Destination (offset) legal entity = B Offset account type = Ledger Offset account = Electricity expenses Accounting entry in Legal entity A Due from Legal entity B Tax receivable 5.00 Accounts payable

6 Accounting entry in Legal entity B Main account Electricity expenses DR Due to Legal entity A Example: Posting sales tax when a sales tax code contains a nonrecoverable VAT amount When the sales tax code that is used in an intercompany transaction contains a sales tax amount that is non-recoverable, the amount that is not recoverable will be posted with the revenue account or expense account, or to the source or destination legal entity s expense account. Nonrecoverable VAT (Value-added tax) is percentage of the tax that a legal entity cannot recover from the government. In Microsoft Dynamics AX, this amount can be entered in the Pct. exempt from sales tax field in the in the Values of sales tax codes form. (Click General ledger > Setup > Sales tax > Sales tax codes. Click Values) Assumptions invoice 20 percent tax 5 percent non-recoverable VAT Source legal entity = A Account type = Vendor Account = Contoso, Ltd. Destination (offset) legal entity = B Offset account type = Ledger Offset account = Electricity expenses Accounting entry in Legal entity A Due from Legal entity B Tax receivable Accounts payable Accounting entry in Legal entity B Electricity expenses Electricity expenses 1.00 Due to Legal entity A

7 Example: Posting sales tax when a settlement contains a cash discount and a nonrecoverable VAT amount When an invoice includes a cash discount, and the following conditions are met, the sales tax and expense amounts will be reduced to reflect the reduced invoice amount: The Reverse sales tax on cash discount check box is selected in the Sales tax group form. Both of the Cash discount is calculated on amount including sales tax check boxes are selected in the General ledger parameters form. The customer or vendor invoice contains a cash discount. The cash discount is granted upon settling a payment to the invoice. Non-recoverable VAT (Value-added tax) is percentage of the tax that a legal entity cannot recover from the government. In Microsoft Dynamics AX, this amount can be entered in the Pct. exempt from sales tax field in the in the Values of sales tax codes form. (Click General ledger > Setup > Sales tax > Sales tax codes. Click Values) Assumptions Invoice Payment 20 percent sales tax 5 percent non-recoverable VAT 2 percent cash discount Source legal entity = A Account type = Vendor Account = Contoso, Ltd. Destination (offset) legal entity = B Offset account type = Ledger Offset account = Electricity expenses Accounting entry in Legal entity A for the invoice Due from Legal entity B Tax receivable Accounts payable Accounting entry in Legal entity A for the payment Accounts payable Cash

8 Accounting entry in Legal entity A for the settlement Accounts payable 2.40 Cash discount 2.00 Tax receivable.38 Due to Legal entity B.02 Accounting entry in Legal entity B Electricity expenses Electricity expenses 1.00 Due to Legal entity A Due from Legal entity A Electricity expenses.02 Example: Posting sales tax amounts when underpayments or overpayments When an overpayment or underpayment is made, the expense account on the invoice will be adjusted upon settlement of the payment. In the case of an overpayment, the expense account will be adjusted to reflect the additional sales tax charge amount. In the case of an underpayment, the expense account will be adjusted to reflect the reduction in the sales tax charge. Nonrecoverable VAT (Value-added tax) is percentage of the tax that a legal entity cannot recover from the government. In Microsoft Dynamics AX, this amount can be entered in the Pct. exempt from sales tax field in the in the Values of sales tax codes form. (Click General ledger > Setup > Sales tax > Sales tax codes. Click Values) Assumptions Invoice Payment 20 percent sales tax 5 percent non-recoverable VAT Source legal entity = A Account type = Vendor Account = Contoso, Ltd. Destination (offset) legal entity = B Offset account type = Ledger Offset account = Electricity expenses 8

9 Accounting entry in Legal entity A for invoice Due from Legal entity B Tax receivable Accounts payable Accounting entry in Legal entity A for payment Accounts payable Cash Accounting entry in Legal entity A for settlement Due from Legal entity B.03 Tax receivable.64 Overpayment account 3.33 Accounts payable 3.33 Accounts payable.67 Accounting entry in Legal entity B Electricity expenses Electricity expenses 1.00 Due to Legal entity A Electricity expenses.03 Due to Legal entity A.03 9

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