Hi Guys,
When I receive an invoice from my vendor, when should I report my VAT(GST)?
If you ever had this question, then, probably in your country it is allowed to do in either way - based on invoice date or based on processing date.
Let me explain.
For example when we purchased some equipment from vendor A. We may receive invoice immediately on equipment delivery or much later, it depends on how we operate with vendor or how fast mail is delivered or how contract is drafted etc. etc.
The matter is - invoice can be received much later than it was issued. So how do we deal with revenue authority in this case?
Specifically say invoice was issued 15 MAR 2012, but receieved only on 15 APR 2012. A month later.
Well, technically, date of the invoice should be the date when we recognised our liability to our vendor. It is not a problem for us we can deal with it internally, it will only affect when we should pay for the bill. Right?
But for the Revenue Authority it is not that simple. We can report our tax either based on date of the bill, which is 15 March or date when we processed it - 15 April.
How it will affect us - if we decided to report based on date of the invoice, assuming (for simplicity) that our company fiscal periods are based on calendar months, we will post liability to Revenue Authority in 03-2012 period, but if we decided to account tax based on processing date - we should post it in 04-2012.
Seems logical. But not many ERP systems allow us to do it.
Issue becomes even more complicated when our Tax reporting periods are based on different intervals then our fiscal periods, let say we report Tax qurterly.
In my example then we should report Tax in Q1 if we process it based on Invoice Date, or in Q2 if we report based on processing date.
Well, here is the challenge.
In Singapore, IRAS (Inland Revenue Authority of Singapore) regulates it in the following way:
You should decide from the beginning how you process your tax either based on Bill date or Processing date. And company should use it forever.
Here is the link to that document: Claiming input tax in the right accounting period
And here is how this issue is addressed in Acumatica ERP:
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Cheers,
Sergey.
When I receive an invoice from my vendor, when should I report my VAT(GST)?
If you ever had this question, then, probably in your country it is allowed to do in either way - based on invoice date or based on processing date.
Let me explain.
For example when we purchased some equipment from vendor A. We may receive invoice immediately on equipment delivery or much later, it depends on how we operate with vendor or how fast mail is delivered or how contract is drafted etc. etc.
The matter is - invoice can be received much later than it was issued. So how do we deal with revenue authority in this case?
Specifically say invoice was issued 15 MAR 2012, but receieved only on 15 APR 2012. A month later.
Well, technically, date of the invoice should be the date when we recognised our liability to our vendor. It is not a problem for us we can deal with it internally, it will only affect when we should pay for the bill. Right?
But for the Revenue Authority it is not that simple. We can report our tax either based on date of the bill, which is 15 March or date when we processed it - 15 April.
How it will affect us - if we decided to report based on date of the invoice, assuming (for simplicity) that our company fiscal periods are based on calendar months, we will post liability to Revenue Authority in 03-2012 period, but if we decided to account tax based on processing date - we should post it in 04-2012.
Seems logical. But not many ERP systems allow us to do it.
Issue becomes even more complicated when our Tax reporting periods are based on different intervals then our fiscal periods, let say we report Tax qurterly.
In my example then we should report Tax in Q1 if we process it based on Invoice Date, or in Q2 if we report based on processing date.
Well, here is the challenge.
In Singapore, IRAS (Inland Revenue Authority of Singapore) regulates it in the following way:
You should decide from the beginning how you process your tax either based on Bill date or Processing date. And company should use it forever.
Here is the link to that document: Claiming input tax in the right accounting period
And here is how this issue is addressed in Acumatica ERP:
Sergey.