Excelent analysis Jacopo, I'd like to add further add to your comments,
that in Mexico's case all the previous steps you mentioned are performed
by the accountant to file in the monthly VAT report for the tax
authority, furthermore it is required to discount the actual VAT paid
and/or charged by each Company against its own bank records.
I'll give you a little example how it works:
1) VAT from purchase orders:
$100 -> goes to credit VAT account i.e. 15100 (asset) from purchases to
suppliers
Less, VAT actually paid to suppliers during closing period (after bank
account reconciliation)
$40 -> goes to VAT actually credited account i.e. 15200 (asset)
After deducting the VAT actually credited against the credit VAT account
$100 - $40, company ends up with:
$60 -> Net remaining in credited VAT account i.e. 15100 (asset)
2) NOW, lets look at how VAT works in sales:
$80 -> goes to payable VAT account i.e. 21100 (liability) from invoices
issued to customers from sales
VAT actually enterd from invoices collected (after bank account
reconciliation)
$40 -> goes to VAT actually collected account i.e. 21200 (liability)
Remaining payable VAT $80 - $40:
$40
3) In order for the accountant to fill out the VAT monthly report,
he/she need to declare the NET VAT amount i.e.:
Net amount credit VAT: $60
less net amount payable VAT $40
Then the accountant declares a net credit VAT of $20, otherwise he/she
would have to issue a check to the tax authority in case the VAT payabla
net amount is greater than the Net credit amount.
So, to sum up it will great for ofbiz to provide furhter VAT management
functionallity as you propose and also it woul be great to include such
a report like the one I described, however it needs a good bank account
reconciliation procedures.
I have worked with these functionalities in other ERP systems before,
I'd be happy to contribute with documentation adn testing and some
development shall you decide to pursue these efforts and integrate the
into Ofbiz.
Regards,
Enrique
Jacopo Cappellato wrote:
Hi,
we have already discussed many times about the best way to implement
VAT taxes in OFBiz.
I did some research recently and I've found this page very interesting:
http://en.wikipedia.org/wiki/Value_added_tax
The most interesting aspect, in my opinion, is that, apart from the
differences in the way taxes in general are shown to the customers
(e.g. price with/without tax, as total or per item etc...), that, by
the way are very industry/country specific (and not really related to
VAT), the fundamental difference appears to be the following one:
"Sales taxes are normally only charged on final sales to consumers.
VAT differs from a conventional sales tax in that VAT is levied on
every business as a fraction of the price of each taxable sale they
make, but they are in turn reimbursed VAT on their purchases, so the
VAT is applied to the value added to the goods at each stage of
production."
The "Example" paragraph illustrates very well the difference.
Moving these concepts to OFBiz:
Sales Tax:
* tax is computed and collected only for sales orders
* a (monthly) report summarizes the tax collected from customers (i.e
due to the Governemnt)
VAT:
* tax is computed and collected only for sales orders (OK)
* tax should be computed and paid also for purchase orders
* a (monthly) report summarizes the tax collected from customers and
the tax paid to suppliers: the difference is the amount due to the
Governemnt
That said, in order to implement VAT tax in OFBiz we could:
1) add a flag to mark the tax as "VAT Tax" (and distinguish it from
sales tax)
2) implement automatic tax calculation for purchase orders
3) implement the monthly report that filters taxes by the flag in
point 1 and shows the difference as described above
This doesn't seem very complex; what do you think?
Jacopo
