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Transferring the Liability
During a tax period, the VAT amounts due by each entity are accrued separately, and on period end you can generate the VAT Liability Calculation documents to learn the entity's total tax due.
It is important to note that the Representative Member must submit a single consolidated VAT Return and VAT payment (return request) on behalf of the VAT tax group.
To consolidate these VAT amounts on the representative member's account you need to create the following tax transactions:
- VAT Calculation Liability: To determine the VAT liability for each ordinary member. If the entity had quit the group or joined the group during the tax period, then the VAT liability is calculated only for the days of membership.
- Tax Transaction: To move the VAT liability from an ordinary entity to the Representative Member.
- Tax Transaction: To accept the VAT liability of an ordinary member by the Representative Member.
- VAT Calculation Liability: To determine the consolidated VAT liability for the Representative Member once all the VAT amounts are transferred to proper GL Accounts of the Representative Member. This document is generated last.
FirstBIT ERP automates calculation of VAT Liability for each entity and consolidation of these liabilities for the Representative Member, that is, generation of all the above-listed documents.
To automatically generate all the required documents for each tax group, you can use the Taxes > Service Tools > VAT Liability Transfer form.
Note. Review the generated documents, correct them if needed, post each of them.
For the VAT amount (Due_Amount) owed to the FTA by an ordinary group member, the application generates the following journal entries:
GL Account | Debit | Credit |
|---|---|---|
Current VAT Payable | -(Due_Amount) | |
Other Operating Expenses | -(Due_Amount) |
For the VAT refund amount (Refund_Amount) to be received from the FTA by an ordinary group member, the application generates the following journal entries:
GL Account | Debit | Credit |
|---|---|---|
Current VAT Receivable | -(Refund_Amount) | |
Other Operating Income | -(Refund_Amount) |
For the VAT amount that was due to FTA by an ordinary member and must be accepted by the representative member, the application generates the following journal entries:
GL Account | Debit | Credit |
|---|---|---|
Current VAT Payables | (Due_Amount) | |
Other Operating Expenses | (Due_Amount) |
For the VAT refund amount to be accepted by the representative member from an ordinary group member, the application generates the following journal entries:
GL Account | Debit | Credit |
|---|---|---|
Current VAT Receivables | (Refund_Amount) | |
Other Operating Income | (Refund_Amount) |
Then, on behalf of the entity that acts as Representative Member can create , you can generate a VAT Return for the current tax period by using the Taxes > Tax Documents > VAT Returns form and send it to the FTA. Also the Representative Member creates a payment to the FTA or request requests a return depending on the sign of the total tax amount.
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