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Based on the entity's sales data, at the end of the current tax period, you need to calculate the percent of the input VAT that cannot be recovered.
Depending Depending on the company policies, you can apply this adjustment percent to each related document or you can create two adjustments: one applicable to the inventory and another applicable to the services imported during the tax period and used for mixed purposes. The procedure below describes a case of single adjustment applicable to services.
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- Click Create to create a new Input VAT Transaction.
- In the Company field, select or create a virtual company for recording tax adjustments (for instance, Apportionment Adjustments).
- Select Reverse Charge (Inventory) as transaction type to adjust the VAT for imported goods or Reverse Charge (Services) to adjust the VAT for services.
- Select Decrease as adjustment type.
- Select the Generate GL Transactions check box.
- Make sure the correct entity is selected in the Entity field.
- Select the department associated with the transaction.Below the Basis field, notice the link in blue font that presents information about the currency, its exchange rate, price type, and taxation option. Make sure Prices Include VAT is selected as the taxation option. Otherwise, click the link to open the Prices and Currency dialog box and select the option.
- Click Save to record the document.
- On the Inventory and Services tab, click Add to add a new line.
- In the Contents column, type a brief description of the transaction, for instance, "Period-end adjustment apportionment (services)".
- In the VAT Amount column, enter the VAT adjustment amount which will decrease the reversed VAT, notice that you you don't have to enter any figure in the Amount column and Total columns.
- Save and post the document.
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