Posting Notional Tax Amounts
This feature automates the creation of accounting entries for notional tax amounts. Notional tax amounts are posted using custom GL lines, if the tax code charged on the transaction is configured to post notional tax amounts. The notional tax amounts will be debited and credited to the corresponding debit and credit accounts that are specified on the tax code record. On the GL Impact of a transaction, the Memo column will have the following information:
-
Reverse Charge Notional Tax Posting – if Reverse Charge or both Reverse Charge and EC Code are enabled for the tax code used on the transaction
-
Intracommunity Notional Tax Posting – if EC Code is enabled for the tax code used on the transaction
Sample GL Posting
Transaction Details:
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Item purchase price: 1,000.00
-
Notional tax rate: 20%
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Transaction subsidiary: Czechia subsidiary (Base currency: CZK)
Entity Details:
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Vendor A – assigned to the Czechia subsidiary, with CZK as the primary currency.
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Vendor B – assigned to the Czechia subsidiary, with EUR as the primary currency. CZK-EUR exchange rate is at .037.
GL Impact – Bill for Vendor A
|
Account |
Debit |
Credit |
Memo |
|---|---|---|---|
|
Expense |
1,000.00 |
|
|
|
Accounts Payable |
|
1,000.00 |
|
|
Notional VAT on Sale |
20.00 |
|
Reverse Charge Notional Tax Posting |
|
Notional VAT on Purchase |
|
20.00 |
Reverse Charge Notional Tax Posting |
GL Impact – Bill for Vendor B
|
Account |
Debit |
Credit |
Memo |
|---|---|---|---|
|
Expense |
37.00 |
|
|
|
Accounts Payable |
|
37.00 |
|
|
Notional VAT on Sale |
7.40 |
|
Reverse Charge Notional Tax Posting |
|
Notional VAT on Purchase |
|
7.40 |
Reverse Charge Notional Tax Posting |
GL Impact – Bill Credit
|
Account |
Debit |
Credit |
Memo |
|---|---|---|---|
|
Expense |
|
1,000.00 |
|
|
Accounts Payable |
1,000.00 |
|
|
|
Notional VAT on Sale |
|
20.00 |
Reverse Charge Notional Tax Posting |
|
Notional VAT on Purchase |
20.00 |
|
Reverse Charge Notional Tax Posting |
Roles and Permissions
You can use Tax Reporting roles from International Tax Reports with the Notional Tax Posting feature. If you want to customize standard accounting center roles to use this feature, makes sure to set the Tax Items permission to View. For more information, see International Tax Reports Permissions.