Are purchase orders supposed to calculate taxes?

[Christian Carlow-OFBizzer]

If Accounting->Tax Authorities->Product Rates exists for a category of a
purchase order product, taxes are applied to the purchase order.  Is
this correct or should taxes only apply to sales order?  Isn't purchase
order sales tax supposed to be manually added as adjustment?

[Scott Gray-2]

http://markmail.org/message/mzbu3i336uu6csps

As always, there's plenty of previous discussion if you search for purchase
order tax on ofbiz.markmail.org

Regards
Scott

On Tue, Dec 30, 2014 at 3:41 PM, Christian Carlow <
[hidden email]> wrote:

> If Accounting->Tax Authorities->Product Rates exists for a category of a
> purchase order product, taxes are applied to the purchase order.  Is this
> correct or should taxes only apply to sales order?  Isn't purchase order
> sales tax supposed to be manually added as adjustment?
>

[Christian Carlow-OFBizzer]

Thanks Scott,

I read that post too but wanted to make sure it was still valid since it
was so old.  I'll create a JIRA to remove tax calculations from purchase
orders.

On 12/29/2014 10:13 PM, Scott Gray wrote:

> http://markmail.org/message/mzbu3i336uu6csps
>
> As always, there's plenty of previous discussion if you search for purchase
> order tax on ofbiz.markmail.org
>
> Regards
> Scott
>
> On Tue, Dec 30, 2014 at 3:41 PM, Christian Carlow <
> [hidden email]> wrote:
>
>> If Accounting->Tax Authorities->Product Rates exists for a category of a
>> purchase order product, taxes are applied to the purchase order.  Is this
>> correct or should taxes only apply to sales order?  Isn't purchase order
>> sales tax supposed to be manually added as adjustment?
>>

[Gavin Mabie-2]

Hi Christian

Tax, specifically VAT must be reflected on Purchases Invoices as a legal
requirement in most countries that use VAT.  On the accounting side of
things, VAT paid on Purchases represents a credit whilst VAT charged on
Sales represent a debit on the same account. The company can then claim the
difference from the Tax Authority.Orders do not form part of the accounting
system in the narrow sense of the word, but invoices do and the tax
obligation only arises once an invoice is raised.  That said, and whilst
it's not a legal requirement to disclose tax on a purchase order, it is
widely regarded as a best practice. Not least because you will need to
reconcile your orders with your invoices, buy also because accepted
purchase order create contingent liabilities.

Regards

Gavin

On Tue, Dec 30, 2014 at 3:26 PM, Christian Carlow <
[hidden email]> wrote:

> Thanks Scott,
>
> I read that post too but wanted to make sure it was still valid since it
> was so old.  I'll create a JIRA to remove tax calculations from purchase
> orders.
>
>
> On 12/29/2014 10:13 PM, Scott Gray wrote:
>
>> http://markmail.org/message/mzbu3i336uu6csps
>>
>> As always, there's plenty of previous discussion if you search for
>> purchase
>> order tax on ofbiz.markmail.org
>>
>> Regards
>> Scott
>>
>> On Tue, Dec 30, 2014 at 3:41 PM, Christian Carlow <
>> [hidden email]> wrote:
>>
>>  If Accounting->Tax Authorities->Product Rates exists for a category of a
>>> purchase order product, taxes are applied to the purchase order.  Is this
>>> correct or should taxes only apply to sales order?  Isn't purchase order
>>> sales tax supposed to be manually added as adjustment?
>>>
>>>
>

[Pierre Smits]

Christian,

Gavin has good points. Apart from the fiscal requirements in specific
countries (and OFBiz should be applicable in those countries too), there is
another good reason to have calculation of VAT and other taxes on orders.
That is that the information gathered/registered when having it is that it
will enable the internal organisation (most specifically the accounting
department) to a more accurate projection of future cash flows and credit
requirements.

Registering an order not only indicates future deliveries (meaning
inventory changes or effort executions), but also future debt (to or from
the internal company). Leaving the tax out of the equation can lead to
incomplete and wrong projects.

Regards,

Pierre Smits

*ORRTIZ.COM <http://www.orrtiz.com>*
Services & Solutions for Cloud-
Based Manufacturing, Professional
Services and Retail & Trade
http://www.orrtiz.com

On Tue, Dec 30, 2014 at 3:47 PM, Gavin Mabie <[hidden email]> wrote:

> Hi Christian
>
> Tax, specifically VAT must be reflected on Purchases Invoices as a legal
> requirement in most countries that use VAT.  On the accounting side of
> things, VAT paid on Purchases represents a credit whilst VAT charged on
> Sales represent a debit on the same account. The company can then claim the
> difference from the Tax Authority.Orders do not form part of the accounting
> system in the narrow sense of the word, but invoices do and the tax
> obligation only arises once an invoice is raised.  That said, and whilst
> it's not a legal requirement to disclose tax on a purchase order, it is
> widely regarded as a best practice. Not least because you will need to
> reconcile your orders with your invoices, buy also because accepted
> purchase order create contingent liabilities.
>
> Regards
>
> Gavin
>
> On Tue, Dec 30, 2014 at 3:26 PM, Christian Carlow <
> [hidden email]> wrote:
>
> > Thanks Scott,
> >
> > I read that post too but wanted to make sure it was still valid since it
> > was so old.  I'll create a JIRA to remove tax calculations from purchase
> > orders.
> >
> >
> > On 12/29/2014 10:13 PM, Scott Gray wrote:
> >
> >> http://markmail.org/message/mzbu3i336uu6csps
> >>
> >> As always, there's plenty of previous discussion if you search for
> >> purchase
> >> order tax on ofbiz.markmail.org
> >>
> >> Regards
> >> Scott
> >>
> >> On Tue, Dec 30, 2014 at 3:41 PM, Christian Carlow <
> >> [hidden email]> wrote:
> >>
> >>  If Accounting->Tax Authorities->Product Rates exists for a category of
> a
> >>> purchase order product, taxes are applied to the purchase order.  Is
> this
> >>> correct or should taxes only apply to sales order?  Isn't purchase
> order
> >>> sales tax supposed to be manually added as adjustment?
> >>>
> >>>
> >
>