Processing Orders with VAT Tax

Beginning in version 16.07, DEACOM offers the option to calculate Value Added Tax (VAT) during sales and purchase order entry. The VAT tax rule is applied to all parts, or different categories or classes of parts and can be specified for purchases and sales at all Facilities, individual Facility Groups, or a specific Facility. In addition, a VAT Tax report has been added to Accounting Reporting.

Value Added Tax is a consumption tax levied on a product repeatedly at every point of sale at which value has been added, both on goods and services. The tax therefore applies at each stage in the production and distribution chain. For example, VAT would be added four separate times in the following cycle: the tax is added when a raw materials producer sells a product to a factory, when the factory sells the finished product to a wholesaler, when the wholesaler sells it on to a retailer, and, finally, when the retailer sells it to the consumer who will use it.

Additional information on VAT Tax characteristics is available via the VAT help page.

Configuration

The following items should be setup prior to using VAT Tax in DEACOM:

  • Customers, Item Masters, and Facilities will need to be created. Items will need to marked as sales or PO taxable via the fields on the Item Master properties tab.
  • VAT Tax Rules - VAT tax rules are applied to all parts, or different categories or classes of parts and can be specified for purchases and sales at all Facilities, individual Facility Groups, or a specific Facility.
  • Categories, Sub-Categories, Item Search 1-5 fields - These pieces of master data will usually be created during the creation of Item Masters, but companies may wish to create or modify additional Categories, Sub-Categories, and Item Search 1-5 fields since this are used to determine which items will be eligible for VAT Tax.
  • Tax Exemption Groups (optional) - Tax Exemption Groups may be used to exclude Ship-To Companies and Items from VAT Tax
  • The "Sales Tax Account" field on the Accounts Receivable tab in Accounting > Options must contain a valid account.
  • Tax Line Name - An entry signifying the name/description for the tax line added to the order needs to be specified in the "Tax Line Name" field in Sales > Options.

Process

VAT Tax may be added during sales or purchase order entry. The process is very similar for both options.

  1. Navigate to Sales > Order Entry or Purchasing > Order Entry.
  2. Select the appropriate Vendor or Bill-To/Ship-To customer.
  3. Verify all order defaults are correct and make any changes as necessary.
  4. Click the "New" button to add a line to the order. Repeat as necessary to enter additional items/lines.
  5. Once you have completed this step, the system will add a new VAT Tax id line for the appropriate tax amount using the rules defined via Accounting > Maintenance > VAT. The description for the line added to the order will be based on the value entered in the "Tax Line Name" field via Sales > Options.
  6. At this point users may make any additional modifications as required and save the order to complete the process.

Note: If there are multiple VAT Taxes on the same order, the report will display multiple lines, one for each VAT Tax ID (va_id)/order combination.