Use the VAT Rate Change Tool

Understanding the VAT Rate Conversion Process

The VAT rate change tool performs VAT rate conversions for master data, journals, and orders in different ways. The selected master data and journals will be updated by the new general product posting group or VAT product post group. If an order has been fully or partially shipped, the shipped items will keep the current general product posting group or VAT product posting group. A new order line will be created for the unshipped items and updated to align current and new VAT or general product posting groups. In addition, item charge assignments, reservations, and item tracking information will be updated accordingly.

There are a few things that the tool does not convert:

  • Sales or purchase orders and invoices where shipments have been posted. These documents are posted using the current VAT rate.
  • Documents that have posted prepayment invoices. For example, you have made or received prepayments on invoices that have not been completed before you use the VAT rate change tool. In this case, there will be a difference between the VAT that is due and the VAT that has been paid in the prepayments when the invoice is completed. The VAT rate change tool will skip these documents and you will have to manually update them.
  • Drop shipments or special orders.
  • Sales or purchase orders with warehouse integration if they are partially shipped or received.
  • Service contracts.

To prepare VAT rate change conversions

Before you set up the VAT rate change tool, you must make the following preparations.

  • If you have transactions that use different rates, then they must be separated into different groups either by creating new general ledger accounts for each rate or by using data filters to group transactions according to rate.
  • If you create new general ledger accounts, then you must create new general posting groups.
  • To reduce the number of documents that get converted, post as many documents as possible and reduce unposted documents to a minimum.
  • Back up data.

To set up the VAT rate change tool

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter VAT Rate Change Setup, and then choose the related link.
  2. On the Master Data, Journals, and Documents FastTabs, choose a posting group value from the option list for needed fields. For each group you can choose whether to convert VAT product posting groups or general product posting groups, or convert both values if they are available in the master data item. For some areas you can also set a filter to convert only a subset of values, for example, G/L accounts.

To set up product posting group conversion

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter VAT Rate Change Setup, and then choose the related link.
  2. On the VAT Rate Change Setup page, choose either the VAT Prod. Posting Group Conv. or Gen Prod. Posting Group Conv. action.
  3. In the From Code field, enter the current posting group.
  4. In the To Code field, enter the new posting group.

To perform VAT rate change conversion

You use the VAT rate change tool to manage changes in the standard rate of VAT. You perform VAT and general posting group conversions to change VAT rates and maintain accurate VAT reporting. Depending on your setup, the following changes are made:

  • VAT and general posting groups are converted.
  • Changes are implemented in general ledger accounts, customers, vendors, open documents, journal lines, and so on.
Important

Before you perform VAT rate change conversion, you can test the conversion. To do so, follow the steps below, but make sure to clear the Perform Conversion and VAT Rate Change Tool Completed check boxes. During test conversion, the Converted field in the VAT Rate Change Log Entry table is cleared and the Converted Date field in the VAT Rate Change Log Entry table is blank. After the conversion is complete, choose VAT Rate Change Log Entries to view the results of the test conversion. Verify each entry before you perform the conversion. In particular, verify transactions that use an old VAT rate.

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter VAT Rate Change, and then choose the VAT Rate Change Setup link.
  2. Verify that you have already set up the VAT product posting group conversion or general product posting group conversion.

  3. Choose the Perform Conversion check box.

    Important

    Clear the VAT Rate Change Tool Completed check box. The check box is automatically selected when the VAT rate change conversion is completed.

  4. Choose the Convert action.

  5. After the conversion is complete, choose the VAT Rate Change Log Entries action to view the results of the conversion.
Important

After the conversion, the Converted field in the VAT Rate Change Log Entry table is chosen and the Converted Date field in the VAT Rate Change Log Entry table displays the conversion date.

See Also

Set Up Value-Added Tax
Setting Up Unrealized Value Added Tax
Report VAT to a Tax Authority
Work with VAT on Sales and Purchases
Local functionality in Business Central