Exact Globe

Release 390: Extension of Cash-based VAT System in Bill of Exchange and Payment in Transit

Introduction

Menu path

• System/General/Settings/General ledger settings
• System/General/Countries/Tax codes
• Finance/VAT/Statistics/Invoice list
• Finance/VAT/Statistics/VAT Overview
• Finance/VAT/Statistics/Value added tax
• Cash flow/Miscellaneous/Instrument status
• Cash flow/Payments/Process
• Finance/Accounts receivable/Cards
• Finance/Accounts payable/Cards

What has been changed

The following changes are implemented:

1. Settings
   
   A new section for VAT is designed under the System/General/Settings/General ledger settings. All related settings for VAT will be shown under this section. The way the fields are displayed have been rearranged but the functionality and validation remain unchanged. For more details of the settings in Russia and Thailand legislations, see Flexible VAT System settings in Russia and Thailand legislations.
   
   
    
2. VAT code maintenance
    
   • Once the Flexible VAT system check box is selected, users will see an additional VAT cash system check box in the VAT code maintenance via System/General/Countries/Tax codes.
   • Users can only define one system per VAT code, either by VAT Cash system or Invoice system.
     
     

   Note: When VAT charged is selected, the system will hide the VAT cash system, VAT to be paid account, and VAT to be claimed account. 

3. VAT Invoice List
   
   In the VAT Invoice List under Finance/VAT/Statistics/Invoice list, the Assign button is enabled again.
   
   
   
   Note:

   • Return period can only be assigned for matched cash-based VAT invoices.
   • When the system detected there are cash-based VAT invoices, a message "Only matched cash based invoices will be assigned with the return period" is displayed. 
      
4. VAT Overview
   
   The Method field (Flexible VAT system, Invoice system or Cash system) in the Finance/VAT/Statistics/VAT Overview will now follow the type as selected in the G/L settings.
   
   
    
5. VAT return

   The Type field (Flexible VAT system, Invoice system or Cash system) in the Finance/VAT/Statistics/Value added tax will now follow the type as selected in the G/L settings.
   
    

6. Bill of exchange (BOE)

   Upon the settlement of the letter of credit (LOC), the system shall automatically generate the VAT reversal entry according to the matched paid amount of the invoice.

   When the user found that the deposit of the letter of credit is incorrect (for example, enter the wrong amount) or the customer does not have enough funds to clear the LOC, the user will bounce the invoice, and the system will reset to the original invoice stage. Upon Bounce status, the system will revert the VAT reversal entry that was generated earlier.

   For more details of the BOE, see Extension of Cash-Based VAT System in BOE. 

7. Payment in transit (PIT)

   When the Journalize payments and PIT are selected in the System/General/Settings/Bank settings, upon the term processing in Cash Flow/Payments/Process, the VAT reversal entry (full VAT amount) will be generated.

   For more details of the PIT, see Extension of Cash-Based VAT System in PIT. 

8. Matching prepayment with invoices in multiple currencies
   
   When matching prepayment (prepayment which is excess payment/receipts resulted from the matching of the receipt/payment) with invoices in multiple currencies, the following scenarios applies:

   • When only two currencies involved, the balance is booked on the currency code which has greater amount in default currency.
   • When more than two currencies involved, the balance is booked on the top currency code (as per existing functionality) in the matching application.
     
     
     
     Note: Amount in default currency for GBP has a greater value. Therefore the balance is booked on GBP.
     
     
9. Compress of prepayment term and credit note
   
   Compressing prepayment (prepayment which is excess payment/receipts resulted from the matching of the receipt/payment) and invoice/credit note is blocked from proceeding. The following warning message is displayed when user attempt to do so:
   
   
   
   Note: Close the screen will return to the Matching screen. The blocking is executed when Flexible VAT system is turned on, regardless of Invoice-based or Cash-based VAT.

Related documents

• Release 381: VAT Cash System Supported on VAT Return
• Release 390: VAT to Report General Ledger Account