During the current tax period, the company imported some goods and services that were used for making mixed supplies, that is, taxable supplies as well as non-taxable supplies, proportion of which is not defined.
At the end of the tax period, the entity determines the proportion of the input VAT that cannot be recovered and makes corresponding adjustment or adjustments.

How to process

To register the imported supplies, you create the following documents:

• Invoice Received with the amount of supplies, VAT amount, and all the supplier's details.
• Tax Invoice Received for the full input VAT amount that could be recovered.

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 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.

Where: Taxes > Tax Documents > Input VAT Transactions

1. Click Create to create a new Input VAT Transaction.
2. In the Company field, select or create a virtual company for recording tax adjustments (for instance, Apportionment Adjustments).
3. Select Reverse Charge (Inventory) as transaction type to adjust the VAT for imported goods or Reverse Charge (Services) to adjust the VAT for services.
4. Select Decrease as adjustment type.
5. Select the Generate GL Transactions check box.
6. Make sure the correct entity is selected in the Entity field.
7. Select the department associated with the transaction.
8. 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.
   
   
   
9. Click Save to record the document.
10. On the Inventory and Services tab, click Add to add a new line.
11. In the Contents column, type a brief description of the transaction, for instance, "Period-end adjustment (services)".
12. 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.
    
    
    
    
13. Save and post the document.
    
    

Click the  button to review the GL transactions generated for the document. As the result, the reversed VAT will be decreased by the adjustment amount and expenses increased by the same amount.
In the VAT Return, the VAT adjustment amount will change a value in the VAT Amount column of the Supplies Subject to the Reverse Charge Provisions row.