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After registration of a tax group with Tax Agency, changes to the tax group are allowed: members can be added or removed, Representative Member can be replaced by another member. Members of a tax group jointly have liability for any VAT debts incurred in the period during which they were this group's members.
Creating Tax Groups
Tax Groups can be created by using the Taxes > Master Data > Tax Groups form.
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History of changes is important because members of a tax group are responsible for any VAT debts incurred in the period during which they were this group's members. When tax documents are prepared for a specific tax period, the system will check the membership on the document date and use the data accordingly.
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Period-End Processing
During a tax period, the VAT amounts due by each entity are accrued separately, and on the tax 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 transactionsFirstBIT ERP automates calculation of VAT Liability for each entity and consolidation of these liabilities for the Representative Member, that is, generation of all the following documents:
- 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 during the current period. Created for each ordinary group member.
- Tax Transaction: To move the VAT liability from an ordinary entity to the Representative Member. Created for each ordinary group member.
- Tax Transaction: To accept the VAT liability of an ordinary member by the Representative Member. Created for each ordinary group 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 .
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- and only for the Representative
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- member.
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.
Consolidating the VAT Liability
Transferring VAT liability from a group member
For the VAT amount (Due_Amount) owed to the FTA by an ordinary group member, the application generates the following journal entries:
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GL Account | Debit | Credit |
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Current VAT Receivable | -(Refund_Amount) | |
Other Operating Income | -(Refund_Amount) |
Accepting VAT liability by the Representative member
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:
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