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Former Member

Pricing Procedure- Handling of VAT

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

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3 Answers

  • author's profile photo Former Member
    Former Member
    Posted on Sep 04, 2007 at 11:11 AM

    Hello Freinds

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

    Regards

    Yogesh

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  • author's profile photo Former Member
    Former Member
    Posted on Sep 05, 2007 at 07:22 AM

    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

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    • Former Member Former Member

      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

  • author's profile photo Former Member
    Former Member
    Posted on Sep 05, 2007 at 11:36 AM

    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 8) 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

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