VAT PayableSetup

PROCESSING VALUE ADDED TAX (VAT)
PEOPLESOFT PAYABLES
IN
PeopleSoft Payables enables you to record and report VAT information associated with
vouchers. Before you can do this, you must set up your VAT environment and enable your
business units for VAT.
The system calculates VAT based on the information you enter during setup (for example,
VAT codes which determine the VAT rates that the system uses).
Understanding Accounts Payable VAT Calculations and

Accounting Entries
Exclusive VAT Calculation for Vouchers
In the case of exclusive VAT vouchers, when you save the voucher, a VAT confirmation
process takes place. The system calculates the VAT amount for each line based on entered
VAT values and stores that amount on the distribution line.
Inclusive VAT Calculation for Vouchers (Occurs with low monetary value invoices)
In this case, the amount of VAT is not explicitly detailed on the voucher, but is included in
the merchandise amount for each voucher line. The system calculates the amount of VAT for
the voucher and stores the amount for reporting purposes. The system calculates the VAT at
the line level and stores the sum of all VAT amounts, on all lines, on the voucher header.
Vouchers with a VAT Exemption
When your organization is VAT exempt, the VAT Exception Type is Exoneration. In this case,
the transactions are treated as taxable at a zero-rate. This means that the transaction line
would have a taxable type VAT Applicability (X) and a VAT code with a zero rate should be
specified on the line.
When the good or service is VAT exempt, the voucher line is flagged with a VAT Applicability
of Exempt, and there is no VAT code on the line. In this case, you are not allowed to enter a
VAT amount on the header if all lines are flagged as exempt. However, it is possible for a
voucher to contain a mixture of taxable and exempt lines, in which case you can enter a VAT
amount on the header.
Another type of VAT exemption occurs when you have been granted a temporary suspension
from paying VAT. In this case the transaction line has a taxable-type VAT
Applicability (S), and a VAT code with a zero-rate should be specified on the line.
Finally, when a transaction line is outside the scope of VAT, VAT calculation simply ignores
the transaction.
VAT Accounting Entries in PeopleSoft Payables

VAT accounting entries are created by voucher posting and payment posting, when
applicable, for each combination of general ledger business unit, VAT code, and VAT
transaction type that exists in the voucher distribution. Several factors affect how VAT can
be accounted for, as follows:
If you are recording input VAT only, where VAT is included on the invoice and the VAT
amount is payable to the vendor, the VAT amount is included in the accounts payable
entry during voucher posting.
If you are recording both input and output VAT, where VAT is not included on the
invoice and you may be liable for VAT, but it is not payable to the vendor, the system
creates a separate VAT liability entry during voucher posting.
VAT can be recorded in the general ledger using the general ledger business unit
associated with the accounts payable business unit on the voucher header or the
general ledger business unit on the voucher distribution line, depending on the VAT
interunit settings.
If VAT is declared at time of payment, intermediate VAT accounting entries are

created by voucher posting. Payment posting reverses the intermediate entries and
creates the VAT accounting entries against the final VAT accounts. If VAT is declarable
at invoice, delivery, or accounting date, the VAT accounting entries for the final VAT
accounts are created by voucher posting; no intermediate accounts are used.
If VAT is initially calculated at gross and then recalculated at the time of payment,
and a cash discount is being taken, adjusting VAT accounting entries are created by
payment posting to reduce the amount of VAT that is recorded, based on the amount
of the discount.
Setting Up the VAT Environment

To set up a VAT environment for PeopleSoft Payables, you need to access pages in the Set Up
Financials/Supply Chain, Common Definitions, VAT and Intrastat menu. These pages, the VAT
components, and VAT setup are described in detail in the VAT Global Setup manual.
As part of your setup you:
1. Define VAT transaction types.
2. Set up VAT authorities, tax codes, and accounting information.
3. Define VAT countries.
4. Set up VAT entities.

5. Establish VAT defaults.
Each piece of the setup builds on the next, so it is important to complete the setup in the
recommended order.
Please refer to the VAT Global Setup manual.
Setting Up the Payables VAT Default Hierarchy

After you set up your VAT environment, you set up VAT defaults and options throughout the
PeopleSoft Payables control hierarchy to determine how to process Payables VAT
transactions. At the top of the control hierarchy are the VAT entity and VAT country. From
here you default the processing options according to the following hierarchy.
General Ledger business unit.
Payables business unit.
Voucher origin.
Control group.
Vendor.
Vendor location.
Inventory item ID.
Voucher.
Voucher line.
The following table lists the pages on which you establish VAT options (with respect to
Payables):
Payable
s
Hierarc
hy
General
Ledger
VAT Options Pages or Defaults Links
Set Up Financials/Supply Chain, Business Unit Related, Procurement,
Payable
s
Hierarc
hy
Procurement Control - Non-Merch Charges
business
unit
Payables
business
unit
Set Up Financials/Supply Chain, Business Unit Related, Payables, Payables

Options - Tax Options
Set Up Financials/Supply Chain, Business Unit Related, Payables, Payables

Definition - Tax Options
Payable
s
Hierarc
hy
Voucher
origin
Set Up Financials/Supply Chain, Product Related, Procurement Options,

Vouchers, Voucher Origin - Tax Options
Payable
s
Hierarc
hy
Vendors
and
Vendor
Location
s
Vendors, Vendor Information, Add/Update, Vendor, Vendor Information

Identifying Information
Payable
s
Hierarc
hy

Identifying Information, VAT Registration Details
Payable
s
Hierarc
hy

Location
Vouchers
and
Voucher
Lines
Accounts Payable, Vouchers, Add/Update, Voucher Invoice Information, VAT

Header
Payable
s
Hierarc
hy
Accounts Payable, Vouchers, Add/Update, Voucher Invoice Information, VAT

Summary
Accounts Payable, Vouchers, Add/Update, Voucher Invoice Information,

Voucher Line VAT Information
Entering Online Vouchers with VAT

Reviewing and Overriding Voucher Header VAT Defaults
VAT information for vouchers defaults through the PeopleSoft Payables control hierarchy.
When you enter VAT-applicable vouchers online, you can review and override VAT defaults at
the voucher header, voucher line, and voucher distribution line levels.
Page Name
Invoice Header
VAT Information
Navigation
Accounts Payable, Vouchers,
Add/Update, Regular Entry, Invoice
Information, VAT (link)
Usage
Set/Override
VAT Details
Reviewing and Overriding Voucher Line VAT Defaults

Page Name
Invoice Line
Navigation
Click the Invoice Line VAT link in the
Usage
Set/Override
Page Name
VAT Information
Navigation
Invoice Lines scroll area on the Invoice
Information page.
Usage
VAT Details
Reviewing and Overriding Voucher Distribution Line VAT Defaults

Page Name
Voucher
Distribution
Line VAT Info
Navigation
Usage
Click the VAT link on the VAT tab in the

Distribution Lines scroll area on the Invoice
Information page, then click the VAT link for
the distribution line row
Set/Override
VAT Details
Reviewing and Overriding Voucher Distribution Line VAT Defaults

Page Name
Navigation
Voucher Distribution
Line VAT Info
click the VAT Summary link on the

Invoice Information page
Usage
Set/Override
VAT Details
Entering Vouchers With VAT and Withholding

It is common to have a voucher with both VAT and a portion that is withheld. When you are
configuring withholding, you can specify whether VAT should be included or excluded from
the withholding calculation.
You set up the parameters for calculating withholding on the Withholding Options page.
Select the Apply VAT check box on this page if the VAT should form part of the basis for
calculation. For example, let's say that the merchandise amount is 1000.00 PKR and the VAT
is 70.00 PKR. If the withholding should be on 1070.00 PKR, you select this check box to
achieve the correct calculation.
Page Name
Navigation
Withholding
Options
Set Up Financials/Supply Chain, Product Related,

Procurement Options, Withholding, Withholding
Entities
Usage
Set VAT
Defaults

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PROCESSING VALUE ADDED TAX (VAT)

Understanding Accounts Payable VAT Calculations and

VAT Accounting Entries in PeopleSoft Payables

If VAT is declared at time of payment, intermediate VAT accounting entries are

Setting Up the VAT Environment

4. Set up VAT entities.

Setting Up the Payables VAT Default Hierarchy

General Ledger business unit.

Payables business unit.

Inventory item ID.

VAT Options Pages or Defaults Links

Set Up Financials/Supply Chain, Business Unit Related, Procurement,

VAT Options Pages or Defaults Links

Procurement Control - Non-Merch Charges

Set Up Financials/Supply Chain, Business Unit Related, Payables, Payables

Set Up Financials/Supply Chain, Business Unit Related, Payables, Payables

VAT Options Pages or Defaults Links

Set Up Financials/Supply Chain, Product Related, Procurement Options,

VAT Options Pages or Defaults Links

Vendors, Vendor Information, Add/Update, Vendor, Vendor Information

VAT Options Pages or Defaults Links

Vendors, Vendor Information, Add/Update, Vendor, Vendor Information

VAT Options Pages or Defaults Links

Vendors, Vendor Information, Add/Update, Vendor, Vendor Information

Accounts Payable, Vouchers, Add/Update, Voucher Invoice Information, VAT

VAT Options Pages or Defaults Links

Accounts Payable, Vouchers, Add/Update, Voucher Invoice Information, VAT

Accounts Payable, Vouchers, Add/Update, Voucher Invoice Information,

Entering Online Vouchers with VAT

Reviewing and Overriding Voucher Line VAT Defaults

Reviewing and Overriding Voucher Distribution Line VAT Defaults

Click the VAT link on the VAT tab in the

Reviewing and Overriding Voucher Distribution Line VAT Defaults

click the VAT Summary link on the

Entering Vouchers With VAT and Withholding

Set Up Financials/Supply Chain, Product Related,

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