If the amount of bonus/rebate earned by a customer is greater than the balance of the accounts receivable for this customer, then the difference might be considered an advance payment from the customer. Some of the auditors believe that the entity must generate a tax invoice to the customer in the amount of such advance payment.
How to process
Where: Sales > Sales Documents > Credit Notes
Create a credit note for the rebate earned by the customer. For details on filing out the document, refer to Creating a Credit Note. Make sure that Mutual Settlement Adjustment is selected as transaction type and Out of Scope is selected as the taxation option. On the Inventory tab, specify the documents or contracts to which rebate is applicable and may be considered advance payment – for this, select a check box for each line in the Advance column). Save and post the document.
Where:
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Taxes >
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Tax Documents >
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Output VAT Transactions
- Click Create to create a new Output VAT Transaction.
- In the Company box on the Main tab, select the customer.
- In the Transaction Type field, select Advance Payment.
- In the Adjustment Type field, select Increase.
- Make sure the correct entity is specified in the Entity field.
- In the Department field, select the department associated with the transaction.
- Select the Generate GL Transactions check box.
- Make sure the link below the fields contains Prices Include VAT. Otherwise, click the link to open the Prices and Currency dialog box, select the Prices Include VAT check box there, and close the dialog box.
- Optionally, in the Basis field, select the credit note with the rebate amount.
- Click Save to save the data and assign the number to this document.
- On the Inventory/Services tab, click Add to append a new line.
- In the Contents column, enter any comment to the transaction, for instance rebate as advance payment.
- In the Amount column, enter the rebate amount minus the amount that the customer owes to the entity.
- In the VAT,% column. select the rate applicable to the advance payment.
- Click Post to save and register the document in the system.
- On the Main tab at the bottom, click the Generate Tax Invoice button. A link to the generated Tax Invoice appears.
- Click the link to review the Tax Invoice.
- Save and post the Tax Invoice.