Indirect Tax and ERP Notes SAP/Oracle Apps

  When TAX registration numbers mimic each other A company can charge tax for sales if it's VAT registered if it's in the same country. If the company is not registered for TAX it cannot charge the tax on the sales.  Registration numbers of different countries are to be distinct. but that's not the case all the time. Registration numbers can get tricky Let me explain this by an example  I was working on a particular case which was stuck in tax error. The reason being the transaction was taking place from Singapore to Thailand. Singapore vendor is VAT registered in Singapore. It can charge tax if it is selling to a Singapore customer.  But what if it is Thailand customer? Singapore vendor can charge tax if they are registered in Thailand as well. If not, the invoice will be with zero taxes from the vendor side.  In current scenario tax was getting calculated. Because the registration number of Singapore vendor was matching with the format of ...

Lets look at an example of Reverse Charge to understand it further The vendor is from France. The buyer is from Germany. Let's assume both are VAT registe red. The french vendor would issue an invoice amount of say, EUR 1000. This is without any VAT amount because Reverse Charge applies here. As per the invoice, the German buyer will pay EUR 1000 to the french vendor. Along with that they will calculate and self assess the tax as per Germany, which is 19% on the EUR 1000. So the VAT amount will be EUR 190. During next VAT return period, the German buyer pays EUR 190 to German authorities

Following up on reverse charge from the last post (Read here : https://lnkd.in/gfJxjQX9 ) 𝑹𝒆𝒗𝒆𝒓𝒔𝒆 𝒄𝒉𝒂𝒓𝒈𝒆 𝒎𝒆𝒄𝒉𝒂𝒏𝒊𝒔𝒎 𝒔𝒉𝒊𝒇𝒕𝒔 𝒕𝒉𝒆 𝒕𝒂𝒙 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒚 𝒇𝒓𝒐𝒎 𝒕𝒉𝒆 𝒔𝒆𝒍𝒍𝒆𝒓 𝒕𝒐 𝒓𝒆𝒄𝒆𝒊𝒗𝒆𝒓. Seller would issue a zero tax invoice if the transaction falls under reverse charge. So the 𝐕𝐀𝐓 𝐫𝐞𝐠𝐢𝐬𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐫𝐞𝐜𝐞𝐢𝐯𝐞𝐫 𝐰𝐨𝐮𝐥𝐝 𝐦𝐚𝐭𝐭𝐞𝐫 𝐭𝐡𝐞 𝐦𝐨𝐬𝐭 in tax determination. If the buyer is not registered for VAT, Reverse charge won't be applicable. 𝑯𝒆𝒓𝒆 𝒂𝒓𝒆 𝒕𝒉𝒆 𝒔𝒄𝒆𝒏𝒂𝒓𝒊𝒐𝒔, Buyer and Seller VAT registered in their countries. - 𝙍𝙚𝙫𝙚𝙧𝙨𝙚 𝙘𝙝𝙖𝙧𝙜𝙚 𝙞𝙨 𝙖𝙥𝙥𝙡𝙞𝙘𝙖𝙗𝙡𝙚. Buyer is not registered and Seller is VAT registered - Reverse charge is not applicable. Buyer is VAT registered and Seller is not- 𝙍𝙚𝙫𝙚𝙧𝙨𝙚 𝙘𝙝𝙖𝙧𝙜𝙚 𝙞𝙨 𝙖𝙥𝙥𝙡𝙞𝙘𝙖𝙗𝙡𝙚. Buyer and Seller not VAT registered - Reverse charge is not applicable. Follow Lijo Jose for tax related posts #tax #Reversecharge...

𝐑𝐞𝐯𝐞𝐫𝐬𝐞 𝐂𝐡𝐚𝐫𝐠𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐄𝐔 EU countries introduced Reverse change to simplify taxation within EU. The idea is to tax products and services where its consumed. In a standard scenario, seller collects taxes like Sales Tax/VAT/GST. It's an indirect tax (Read more here: https://lnkd.in/gdJ-rPUU). But in case of reverse charge, the 𝐭𝐚𝐱 𝐛𝐮𝐫𝐝𝐞𝐧 𝐬𝐡𝐢𝐟𝐭𝐬 𝐟𝐫𝐨𝐦 𝐬𝐞𝐥𝐥𝐞𝐫 𝐭𝐨 𝐛𝐮𝐲𝐞𝐫 𝐨𝐟 𝐆𝐨𝐨𝐝𝐬 𝐨𝐫 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬. So that it can be taxed according to the tax rules of buyer country. How this works? 1, Seller must issue invoices without tax amount if its within EU. 2, Buyer will not pay tax amount to an EU seller. 3, Buyer will self assess tax and report it as due in VAT return. #tax #reversecharge #indirecttax #sabrix