[Web-erp-developers] Re: vat high low zero

[Daintree <p.d...@pa...>]

Dick,

I only know about the UK, Australia and New Zealand - all 3 use two rates of
tax - of which one is 0%. In all three it depends on where the customer is
where the goods are delivered ie supplies outside the tax authority are in
every case 0%. So if the products are invoiced out of a warehouse in
Birmingham destined for Iceland then the supply is exempt from tax.
Some products like childrens clothing was zero rated, food and insurance(?)
ie 0% even when the delivery is round the corner.

So... I think that storing the tax authority against the customer branch is
the right place (as it is) - but what we need is a way to make up a matrix
of applicable rates for the tax authority depending on the product. We need
a new table which has:

TaxAuthLevelID  - Some Unique code for the table index - to be stored
against invoice line items
Tax Authority -   eg UK VAT
Level_Description  eg zero rated/taxable supplies
CategoryID   - reference to the stock category
TaxRate  - the applicable tax rate

Sherif has added some interesting extras in Open Accounting where there are
potentially two tax authorities for the same supply ... ouch! He has tax
authority groups - ie multiple taxing authorities each with different rates
applicable, that apply to different products and selling destinations. I
think this is possibly overkill for most countries - except the middle
east..

Since different Levels could apply to each line of the invoice as you say we
need to store the TaxAuthLevelID against the stock movements created. This
would be a useful key for a seperate tax report if required.

I have a requirement to get EDI up and running at least with invoices so
I'll do this first - not sure if Jeff is going to help with this or not.

I will send you the updated scripts later.

Phil
----- Original Message -----
From: "Stins, Dick" <DR...@Zi...>
To: "Daintree" <p.d...@pa...>
Sent: Monday, February 02, 2004 9:24 AM
Subject: Re: vat high low zero


> Phil,
>
> You are right. Also the location is related. It is even more complicated.
> International companies have several warehouses in several locations. Or
> sometimes one warehouse but made a deal with the tax department that some
> products are virtually located abroad, so they are allowed to reduce
import
> and export rules.
>
> In other products, I have seen very complicated solutions.
>
> I think we should start with a simplified solution.
> Just a proposal:
> - only hold the current tax rate with a start date (ofcourse I recommend
> logging historical data)
> - when the transaction has taken place before the start date, the end user
> should enter it manually (when the company is not behind with their
> accounting, there is no need to do this). Consequence: we should store the
> vat rate with the processed data (invoice line like you proposed),
otherwise
> we loose information.
> - we relate the current vat types to inventory categories
> - a tax change can have the consequence that some products move from a
high
> rate to a low rate, so we need a system to split or join (sub) categories
> for splitting the tax rate.
> - For suppliers, we should keep it like it now is: automatically or
override
> manually
>   * for the vat report I need to recognise which tax is vat or no vat.
> - since vat is related to the (virtual) location where the stock is and
the
> location where the customer is, it will be very complicated. So I have the
> next proposal for a start:
>     * location stock + product category + local vat % + abroad vat %
>     * when the customer is abroad, the end user should be able to overrule
> the automatic vat (=abroad vat  or if abroad vat is empty then local vat).
>
> We need to think very good about the categories.
> It might be wise to create special tax categories, or create subcategories
> in the functional categories so we are able to keep the functional
> categories and are also able to vary the the vat rates within the
functional
> categories through creating subcategories.
> There is also an option to add products to more than one category. One for
> functional reasons. One for tax reasons. One for local reasons. One for
> local and tax reasons.
>
> Since this all sounds very complicated, it might be for quick
implementation
> reasons not to relate categories to vat types but directly to vat types,
> with the minor consequence that tax type changes are probably harder to
> maintain.
> But I think that this disadvantage has to be proofed in practise before we
> develop very complicated software to solve this issue. Or make it an
> enhancement request to develop later.
> So when we leave the category stuff like it is, we need this:
>     * location stock + product + local vat % + abroad vat %
>     * when the customer is abroad, the end user should be able to overrule
> the automatic vat (=abroad vat  or if abroad vat is empty then local vat).
>
> Do you have any other suggestions?
> Is the abroad vat% column a good idea or is it of no use in practise?
>
> With best regards,
>
> Dick Stins
>
> ----- Original Message -----
> From: "Daintree" <p.d...@pa...>
> To: "Web-ERP Developers" <Web...@li...>;
"Stins,
> Dick" <DR...@Zi...>
> Sent: Sunday, February 01, 2004 8:11 PM
> Subject: Re: vat high low zero
>
>
> > BlankYes we need to do something here. As well as depending on the
product
> > the tax often depends on where the customer is - both factors need to be
> > taken into account and tax needs to be held at the line level ... I
think.
> > This is a more serious change and needs a little thought. Maybe the tax
> rate
> > needs to be held at the stock item level, but it would also depend on
> where
> > the customer is. There needs to be some kind of tax matrix.
> >
> > Phil
> >   ----- Original Message -----
> >   From: Stins, Dick
> >   To: Phil Daintree
> >   Sent: Monday, February 02, 2004 3:11 AM
> >   Subject: vat high low zero
> >
> >
> >   Phil,
> >
> >   I can't find how to setup VAT as needed in The Netherlands. (I guess
we
> > have to implement this)
> >
> >   In The Netherlands, we have 2 kinds of tax:
> >   insurance tax=6% for insurance companies.
> >
> >   or VAT:
> >   - high: 19% for standard
> >   - Low: 6% for food and some other basic life needs
> >   - Zero: 0% for some export services and ....
> >
> >   I guess this should be a property of a stock category.
> >
> >   The invoice should have a column with a indication of which vat type
is
> > has.
> >   It should have a total for each vat type (only when >0 ).
> >
> >   When this functionality is available, please tell me how to configure
> > web-erp, because I have not found it. (or help me to create an example
in
> my
> > demo system at: http://195.240.119.84/web-erp)
> >
> >   When this functionality is not available in web-erp:
> >   - let's brainstorm how we can implement this:
> >   * option to turn it off or on for user who do not need this?
> >   *  stock category?
> >   * the goverment forces for vat changes from time to time, so we need
to
> > know which percentage was used in the past and/or now?
> >
> >   with best regards,
> >
> >   Dick Stins
> >
> >
>
>
>