VAT/Sales Tax

There are specific legislations that use the payment of VAT/Sales tax at a fixed rate percentage. Usually, the percentage with which to calculate the VAT has been authorized by the tax authorities. The VAT/Sales tax is calculated on the gross amount of the sales, while the VAT/Sales tax on the purchases cannot be deducted.

When calculating the periodical VAT (Sales tax) report, it can happen that the recoverable VAT exceeds the VAT which is due. As a result the VAT Revenue Authority account closes with a difference to the advantage of the taxpayer.

In the following window the account card for the Automatic VAT is shown. The balance of 667.45 is a VAT credit.

The balance of the Automatic VAT account has to be transferred to the VAT Revenue Authority account, like it has to be done at every end of period.

There are special cases, prescribed by law, in which the VAT (Sales tax) cannot be completely deducted. 

Example:
Dinner with clients for the amount of (VAT included). A deductibility of 50% is allowed.

The transaction is entered by inserting the VAT code as usual, but in the "%Exempt" column, the percentage that cannot be deducted should be entered. In the "VAT Acc" column, the actually deductible VAT is shown.

The printout of the VAT registers reports all transactions subject to VAT, related to purchases and sales.  

To be able to print the registers of purchases and sales, Group 1 (Total VAT due) and Group 2 (Total Recoverable VAT) have to be defined in the VAT codes table, in addition to the VAT codes. 

In the Account1 menu, click on "VAT/ Sales tax report":