Self-Invoice for Foreign Vendor

To set up customer for overseas self-invoice:

1. Go to Setup > Company > Subsidiaries and click View next to the applicable subsidiary.

2. Ensure that the VAT Registration Number and Taxpayer ID fields have been populated.

3. On the Financial subtab, from the Terms list, select Immediate.

4. Note the Tax ID.

5. Click Save.

To set up the VAT code for overseas self-invoice:

1. Go to List > Relationships > Vendors.

2. Click the Edit link on the applicable vendor.

3. On the Subsidiaries subtab, from the Tax Code list, select the correct tax code to define the default VAT on purchase self-invoice.

4. Click Save.

To set up vendor for overseas self-invoice:

1. Go to List > Relationships > Vendors.

2. Click New Vendor.

3. Name the vendor. The name of the vendor should be the same as the Company name on the customer subsidiary record set up in 'Setting up the Customer'.

4. Fill in the required fields. Ensure the tax registration number should match the details populated on the subsidiary record.

5. Leave the Taxpayer ID empty.

To set up withholding tax definitions:

1. Go to Lists > Relationships > Vendors.

2. Click the Edit link on the applicable vendor record.

3. On the Israeli Tax Certificates subtab, clear the כלול בדיווח מס במקור box.

4. Click Save.

To create an offset account:

1. Go to Setup > Accounting > Manage G/L > New.

2. In the Name field, enter Self Invoice.

3. From the Type list, select Other Current Liability.

4. Fill in the relevant fields.

5. Click Save.

To define item for self-invoice:

1. Go to Lists > Accounting > Items > New

2. Select Non-inventory Item for Sale from the Item Type list.

3. From the Account & Income Account list, select the Self Invoice account.

To set up the VAT code:

1. Set up the following VAT codes:

   • VAT on purchase self-invoice

   • VAT on sales self-invoice

   • VAT not to report

2. Go to Setup > Accounting > Tax Codes > New.

3. Click Israel.

4. Inn the Tax Code field, enter: VAT not to be reported which is available for both transactions and inputs. This guide refers to the use of the above VAT code. Fill out the fields as follows:

   ערך	שם שדה
   IL- מע"מ לא לדיווח	Tax Code
   IL- מע"מ לא לדיווח	Description
   0%	Rate
   IL Subsidiary	Subsidiary
   Default Tax Agency IL	Tax Agency
   IL_VAT	Tax Type
   Both	Available on

To create a customer overseas self-invoice:

1. Go to Transaction > Sales > Create Invoices > List.

2. Select the customer set up in the Setup for Overseas Self-invoice guidelines.

3. Ensure that the customer invoice and vendor bill date, currency, VAT periods, amounts and invoice number are the same.

4. Enter lines with each of the Vendor numbers of the overseas vendors paid during the month.

5. Select the item created in To define item for self-invoice: ensure the correct tax code is populated.

6. Re-add the same item, and select Self-Invoice Sales Tax. Set the amount as a minus amount.

7. The last line which offset the invoice balance should use Zero Percentage Sales VAT. At the end of the process the total invoice is zero and fully paid.

To create a vendor bill for overseas self-invoice:

Example of the second option to close customer invoice through payment:

1. Go to Transaction > Payables > Enter Bills.

2. Select the vendor created in Setup for Overseas Self-invoice.

3. Add the Vendor Bill number to match the Invoice number created in the previous procedure To create a customer overseas self-invoice.

4. Click the Expense subtab, and on the first line do the following:

   1. From the Account list, select the offset account.

   2. In the Amount field, enter the sum of all payments or payments per line.

   3. From the Tax Code list, select VAT on purchase self-invoice.

   4. Click Add.

5. On the second line, do the following:

   1. From the Account list, select the offset account.

   2. In the Amount field, enter the gross amount, including VAT, which should be a negative value (-).

   3. From the Tax Code list, select VAT not to report. At the end of the process, the vendor bill total is zero (0) and fully paid.

   4. Click Add.

6. Click Save.

To enter import declarations as vendor bills

1. Go to Transaction > Payables > Enter Bills.

2. In the Vendor Name field, enter the freight forwarder or custom broker.

3. In the Bill Number field, enter the declaration number (for VAT reporting purposes).

4. In the Bill Date field, enter the import declaration date.

5. In cases where fees or service charges are included in addition to customs duty, fill in the following fields:

   • Account: select the corresponding expense account

   • Amount: enter the fee or service charge amount

   • Tax Code: ILAP:ILR (Import Purchase VAT)

   • Tax Amount: VAT amount paid to customs

6. In cases where there are no fees and the charge is only for customs duty, fill in the following fields:

   • Line 1:

     • Account: select the corresponding expense account

     • Amount: 1

     • Tax Code: ILAP:ILR (Import Purchase VAT)

     • Tax Amount: 0

   • Line 2:

     • Account: select the same expense account as in Line 1

     • Amount: -1

     • Tax Code: ILAP:IL (Non-Reportable Purchase VAT)

     • Tax Amount: 0

7. Click Save.

To record bank-deducted withholding tax on a foreign vendor payment:

1. Go to Lists > Relationships > Vendors and edit the foreign vendor.

2. On the Israeli Tax Certificates subtab, set WHT Payment Group to WHT0.

3. Set WHT Deduction Type to 08.

4. Check the Include in WHT Report box.

5. Click Save.

6. Go to Transactions > Payables > Enter Bills.

7. In the Vendor field, select the foreign vendor.

8. On the Expenses subtab, add the expense line for the vendor invoice. Select the applicable account and enter the gross invoice amount.

9. In the Tax Code field, select LAP:IL.

10. Click Save.

11. Go to Transactions > Payables > Pay Single Vendor.

12. Select the foreign vendor and check the Apply box next to the bill you created.

13. In the Amount field, enter the full invoice amount. Do not deduct withholding tax from the payment amount. The bank deducts the withholding tax directly from the bank account.

14. On the Israeli Bank Details subtab, enter the payment-currency equivalent of the withholding tax deducted by the bank in the WHT Deducted by the Bank field.

    To calculate the payment currency amount, divide the exact ILS deduction on the bank document by the transaction exchange rate.

15. Click Save.

To record VAT charged by the bank:

1. Create a vendor record for the bank if one does not already exist. For more information, see Creating a Vendor Record.

2. Go to Transactions > Payables > Enter Bills.

3. In the Vendor field, select the bank vendor.

4. On the Expenses subtab, add a line with the applicable general ledger account, the transaction base amount, and the Tax Code set to ILH.

5. Add a second line with the same general ledger account and the same amount as a negative value. Set the Tax Code to LAP:IL.

6. Verify that the net expense is zero and that the bill total equals the VAT charged by the bank.

7. Click Save.

8. Go to Transactions > Payables > Pay Single Vendor, apply the VAT bill, and save the payment.