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FrontAccounting forum → Setup → South African VAT Increase
HI
RSA is increasing VAT from 01/04/2018 from 14% to 15% VAT.
I have seen only one suggestion to:
1. Complete all transactions by 31 March 2018
2. Change the Input and Output Vat % on the 01/04/2018 to 15%
This creates a problem when you have to do credit notes. If the invoice was issued at 14%, the credit note should also be done with 14% VAT.
I there any other workable solution or is this the only way to deal with the increase in VAT.
Regards
Wynand
Make a credit note in the new fiscal with the new 15%. Pass an adjustment Journal Entry for the difference.
@Joe: What is the best practice here - an editable Tax Rate?
Colombia had a VAT increase last year, in the end we created a new tax and applied from C/O date. The old VAT rate was renamed and in time was marked as inactive. There were no issues as each tax is distinct, so as far as credit notes; the tax rate that was applicable was applied.
I would definitly use the same method for any future tax changes
Edit - just to be clear on the names:-
The old VAT rate you have probally called just 'VAT' change this to 'VAT@ 14%' and create a new tax called 'VAT' with the new rate of 15%. Create any necessary Tax Groups and Item Tax Types so that the new VAT is applied in the same way as the old VAT changing names as necessary.
@poncho1234: Must we then create all new items for the new tax rate so as to preserve the old items with the old tax rate?
No, an item has a tax type assigned to it, this remains the same. The tax rate is changed with the customer (with the tax group); changed the rate on each customer; previous invoices created remained at old rate.
Same needs to be done with suppliers
@poncho1234: It is not everyday we have the tax rates being changed. Hence your experience is valuable. Thanks for the feedback.
No problem, hope it helps someone.
It was 2 years ago now, from memory I only did what needed to be done... 1st new tax, then how it is applied.
As always create a backup 1st.
So for Wynand's credit note case, revert tax for customer, create credit note, then change tax back to new tax will work.
Thanks everyone for your input. Much appreciated @poncho1234 and @apmuthu.
Maybe we should be able to create a VAT with dates attached to it.
Lets say that we have a start date and end date for 14% VAT and then create new VAT for 15% with new Start date and end date some date in future untill new VAT rate is created.
I think that people with line item vat per stock item would have a nightmare. Depending on the number of suppliers and clients could also be time consuming.
I will make a copy as a training database and then play around with it to find the best solution for each client.
@seahawk aka Wynand
1. For Items:- What happens if you have different rates of VAT eg 8% 10% & 19% then you would have a different item tax type for each rate, so on the day of the C/O create the new different taxes, 9%, 11% & 20% and assign the relevant item tax type to its new tax rate, not tried this, but no individual item setting would be touched.
To clarify:-
2. For Suppliers & Customers:- each customer is assigned with a tax group, lets say this is called VAT with a rate of 14%, then create a new tax for 15%, assign this to the tax group VAT, so now all customers and suppliers will be charged VAT @ 15%. Should you need to create a credit note, create a new tax group call 'VAT@14%' with an assigned tax of 14% change the relevant supplier/customer to this tax group, create the credit note, change supp./cust. tax group back.
I like your idea of taxes by date.
FrontAccounting forum → Setup → South African VAT Increase
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