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Pricing Procedure- Handling of VAT

Former Member
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Hello All

Need help for designing IMPORT pricing procedure for a specific case (Thailand).

Our client applies VAT - 7% on total value of the Import PO i.e. at the end.

Their Pricing Structure is like:

1 Basic Price

2 Freight

3 Insurance

4 Custom Duty

5 Surcharge

6 Excise

7 Internal Duty

Net value = (1234567)

and then

8 VAT on this Net Value.i.e 7% of (1234567).

They are paying this 7% directly to government and not to the Foregin Supplier.

Now this VAT amount is deductable as they are having a VAT return report submitted to the government each month.

i don't know how to handle this case..so request you all if anybody have idea please help me.

It is vey urgent...

Regards

Yogesh

Accepted Solutions (0)

Answers (3)

Answers (3)

Former Member
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Hi

This is a common scenario.

There are 2 things involved in this (in general)

a - Posting of VAT amount to a separate GL & not loading it on to the material/service cost

b - Not paying this amount to the Foreign Vendor but to the govt agency.

Create a new tax code (TCode FTXP) for the amount of VAT. Depending upon the tax procedure you are using here. Assign tax %age to this Tax Code.

If the cost has to be loaded to material than make the Tax Code as Non -Deductible & if not to be loaded then make it Deductible.

(TAX CODES ARE ONLY 2 DIGIT CODES)

Now the Calculation Schema shall be such that, the VAT should come on the total of all 1 to 7 - means before the condition type "NAVS" - (if the condition type has not been changed in the standard shcema).

In MIRO (assuming the amount of PO is 100 & VAT is 😎 put 100.00 as amount on the Top & let the tax amount of 8.00 come as Tax amount below that. Now put in the item details screen in the tab G/L account put these 8.00 into the GL account for VAT clearing or VAT payable (as given by client finance) & use the indicator as Credit here.

Things will fall in place with this.

Regards

--Vikas

Reward points if you find the answer useful.

Former Member
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Hi

I'm sharing one of the way i used to solve this.

Maintain a new tax code ZWST & account key & accrual key keep as VST & need to maintain G/L account in OBYC for this.

This will post to VAT account where they will take credit.

Kindly note this you can't route via TAX CODE, this has to be dealt with pricing procedure, maintain a dummy tax code with zero value for this, since it is mandatory field.

Regards

Rang

Message was edited by:

Ranganath Mysore

Former Member
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Hi Ranganath

If I handle this throught pricing as per your suggestion,

in my scenario there are different rates of VAT for different items in single PO. I am calculating VAT on gross + freight.There are 100 items in PO and I am not using inforecords as they default condition price every time in PO and we dont want that.Do I need to enter the VAT for each item manually in this case? Is there any other solution for this?

Former Member
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Hello Ranga and Vikas

Have few queries against your solutions:

1) Create new condition type ZWST--- So which condition type i should copy to create this one.

2) At which position in Cal Schema should i put this ZWST.

3) Should i keep it as Manual condition?

4) Should i keep it as Statistical?

5) Is there any need of maintaining conditon record for this ZWST cond type.(because i am not sure from where VAT 7% will come).

regards

Yogesh

Former Member
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Hi Yogesh

The Questions asked by you are not pertaining to the solution I suggested.

I am suggesting to make Tax Codes for VAT & use corresponding* Condition Type given in the Tax Procedure.

Which Tax procedure you are doing ? TAXINN or TAXINJ.

Reg.

--Vikas

Former Member
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Hi Vikas

U r correct the solution suggested by you is not the desirable in my case.

please advise if u have some other solution.

Ranga: I am waiting for ur answers to my queries.

Guys this is very urgent so request you to please help urgently in this regards.

Regards

Yogesh

Former Member
0 Kudos

Hi yogesh

i tried the solution given by vikas and ranga..

but it does not solve my problem

still i can answer your questions as follows

Create new condition type ZWST--- So which condition type i should copy to create this one : You just create the new fresh condition

2) At which position in Cal Schema should i put this ZWST : Put it after freights.

3) Should i keep it as Manual condition : yes if u dont want to make condition records otherwise u can make it automatic as %

4) Should i keep it as Statistical: No

5) Is there any need of maintaining conditon record for this ZWST cond type.(because i am not sure from where VAT 7% will come).: if you want it automatic

Former Member
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Hi Buddy

I have tried this but not getting the result as dont understand how to pay 7% to the government.

regards

Yogesh

Former Member
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Hello All

Help !!!

Regards

Yogesh

Former Member
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Hi

I tried it with pricing only and not through tax code and it worked.

In this case you have to manually put tax rate in the PO. If you are maintaining inforecord, then it can be defaulted from there. By the time I got one solution to handle it through the tax code also. To make a stastical condition in PO which will subtotal all these conditions in pricing and write a subroutine for base condition in tax procedure to change its base from netprice to this condition value. it needs ABAP development.

Former Member
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Hi Praful

I would like to know your scenario...

Like my case is :

1) Company A procures goods from Vendor V( Foreign Supplier).

2) When Goods received at the Port Copmany payes custome duty and VAT to the authority- Important Point hare is VAT is not paid to the supplier.

3) Now company has a VAT report run at the end of each month which will show total input VAT and Output VAT and accordingly they pay or get money from government (Set off process).

4) Now i have created a new Condition type (Manual tick and not statistical) for Input Tax. conditon type control data maitained is : cond class: A (Discount or Surcharge) Cal type : A (%) Cond Category: B (Delivery cost).in calculation scehma acct key and accrl key for this cond type is VST and in OBYC VAT account number is maintained against VST.

5) while creating the PO manually putting this cond type JWST and value as 7 %. also entring dummy tax code N0 (0%). and against this JWST i am entering some other vendor (which is government in this case) as delivery cost charges.

6) Now at the time of GR postings are happening properly as this 7% is not reflected in inventory account.

7) I post two MIRO against this PO one for goods and one for Delivery cost.

But while posting MIRO for delivery cost (as planned) it is not posting the 7% amount to VAT account maintained in OBYC against VST.second thing message i am getting while doing MIRO for delivery cost is "Qty delivered is Zero" Qty check" i dont know why this message is coming.

I hiope now i have explained the scenario properly..can anybody provide some pointers now.

Regards

Yogesh

5)

Former Member
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Hi Praful

If you are able to solve this problem could you please provide me your contact number. its very urgent.

regards

Yogesh

Former Member
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Hi Yogesh

The solution i sugested is something I am working on.

1- Make a Tax Code for VAT Calcultation

2- Make a new Tax Code for each of different %age.

3- Create condition record for each of these Tax Codes. Use the appropriate condition type (depending upon whether to make it deductible or non deductible) from you Tax Procedure. If its a new implementation then it must be TAXINN.

4- While doing MIRO if the Tax amt. is to be paid to Government agency & not to Vendor, post the amt. of Tax (as Credit amt.) to a separate G/L account manually.

In case you still have doubts, pls write again. This is a tested solution & I am myself using on the present site.

Regards

--Vikas

Former Member
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Hello Vikas

Thanks for Providing ur solution.

Buddy this problem is for country THAILAND and tax procedure used is TAXTH.

i thnk i should have one tax code only (dummy code) with 0%.

i request you to please read my problem above once again and provide me some suitable answer.

Thanks for your support.

Regards

Yogesh

Former Member
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Hi yogesh,

check whether you have flagged the Gr based IR in PO. Since it is imports and you are paying this before the GR .

If your problem is only with the message, then revert back after checking this.

Thanks,

Krishna Reddy

Former Member
0 Kudos

Hi Yogesh

I am sorry I didnt realise its for Thailand. Anyways the solution remains the same. Check the Tax procedure. There must be a condition type for VAT. (If not then make one with a copy from any existing Tax Condition & assign this to your Tax procedure).

In case theres one existing, check what AccKey is given against that. Check that AccKey in OBCN. If the posting Indicator in this is 2 then it is Deductible type of condition type. If its 3 then its non-deductible.

Deductible means it goes to a separate GL account (scenario where I take a set-off) of VAT paid & non deductible loading on to material where I do not take setoff.

Solution for posting it to separate G/L for paying to govt. agency & not to foreign vendor remains same as earlier.

Regards

--Vikas

Former Member
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Hi Yogesh

VAT is a Tax & shall be handled thru Tax procedure & not pricing procedure. If you do it thru Tax procedure by making Deductible Tax Code, you assign the GL you want to post against it in MIRO in TCode OB40 & not in OBYC.

Regards

--Vikas

Pls reward points in case answer is useful

Former Member
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hi yogesh

still i am not succesful in handling it through tax procedure which is required and trying to find out the solution.

my mail id is ipraful1@rediffmail.com

i will let you know progress.

Former Member
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use 'to' and 'from' in the pricing to get the subtotal for this tax condition including gross price and all your charges. at the time of invoive check tax code at item level in invoive.

Former Member
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Hi Praful

Tell me what you are trying to do & where are you getting struck in Tax procedure.

Regards

--Vikas

Former Member
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Hi Yogesh,

In our case the requirement is simple.We have defined a tax procedure for african country which only has input and out put conditions on the base amount.

In PO, we have several conditions (header) for additional costs like freight,demurage,port charges etc and which we have defined as fright conditions.

The accrual indicator has been ticked and so is the Vendor GR checkbox.

The reason is that while GR, ALL THESE CONDITIONS WILL BE LOADED ON MATERIAL SO TO HAVE a LANDED COST.

Now,the requirement in this country is that whatever they receive vide PO incurrs certain % of VAT on basic price of an item + all the additional costs(freight,demurage,port charges).

As per the tax procedure, it calculates VAT on the BASE amount which does not consider the net price in PO.It considers gross price entered against the material.

This is the problem.

If I remove the accrual tick in PO pricing procedure for all the conditions for freight,port charges etc, then those conditions will get added on the basic cost of the material and thus the net price will change accordingly.VAT can then be calculated on this.

But the problem in this is that the FREIGHT tab at the time of GR does not appear which does not allow me to consider all these costs at the time of GR.

I hope you understand our requirement clearly now.

There is some additional requirement but that can be thought of later.The requirement is that the VAT will differ in % depending on the material in a PO.It means a PO can have items with different VAT %

Thanks in advance.I hope someone must have tried out this earlier.

Thanks in advance.

Regards,

manOO

Former Member
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Hi,

Just a correction in my earlier post where I have mentioned:

As per the tax procedure, it calculates VAT on the BASE amount which does not consider the net price in PO.It considers gross price entered against the material.

I mean system considers the net price only which is not a combination of basic cost + additional costs as mentioned.

Regards,

manOO

Former Member
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Hello Freinds

Any Pointers....it is urgent!!!

Regards

Yogesh

Former Member
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Freinds Any Updates

Former Member
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Hi yogesh

I am also facing the same problem for africa..

But here they are adding freight to basic price..and then calculating VAT on sum.

i am trying to get solution and let u know once i get it

i think in this case we need to change the base for the tax calculation in the taxation procedure and i am looking for this, Do u have any idea how to do this..

Former Member
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Hi Praful

Is your scenario is also of Import.

Regards

Yogesh

Former Member
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yes my scenario is also for import.

We are just adding freight to gross price and calculating VAT on this total.