GST/VAT on purchases
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Has anyone worked out a method for tracking GST/VAT on purchases (not
sales)? The code makes a pretty big assumption that SALES_TAX is not applicable to purchases, so I can't use that plumbing to implement GST on purchases, as you can with sales. Specifically, if I purchase GST-ratable products worth $110 from a supplier, then $10 of that (assuming a GST rate of 10%) is a claimable business expense. I need this fact recorded somewhere. I've tried to mess about with Promos and Agreements to "fake" it, but no luck. Has anyone else solved this problem? Cheers, Iain -- No virus found in this outgoing message. Checked by AVG Free Edition. Version: 7.1.394 / Virus Database: 268.10.7/410 - Release Date: 5/08/2006 |
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Hi Iain
I had quick look at this as I'm a kiwi and I'll need the same thing at point in the future for our GST here, so far all I've found is calcAndAddTax in CheckOutHelper.java which does nothing if the order type is not a sales order. I guess that would need to modified to handle purchase orders and somewhere further down the line would need to be logged against a different account rather than the 'sales tax collected' account. You would need to make it fairly flexible as you probably don't want GST showing up on overseas purchase orders which would be paid to customs rather than the supplier. Good luck Scott Iain Fogg wrote: > Has anyone worked out a method for tracking GST/VAT on purchases (not > sales)? > > The code makes a pretty big assumption that SALES_TAX is not > applicable to purchases, so I can't use that plumbing to implement GST > on purchases, as you can with sales. Specifically, if I purchase > GST-ratable products worth $110 from a supplier, then $10 of that > (assuming a GST rate of 10%) is a claimable business expense. I need > this fact recorded somewhere. > > I've tried to mess about with Promos and Agreements to "fake" it, but > no luck. Has anyone else solved this problem? > > Cheers, Iain > > |
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Scott,
I decided on pragmatism and resisted the urge to start trying to make wholesale changes to something that is already working pretty damn well without my help :-) My solution to GST on purchases? Create the PO and don't give a toss about GST; when the shipment arrives, you've got to reconcile the invoice anyway, so just make a GST tax adjustment on the invoice then. Simple, and since the GST is provided for you on the Tax Invoice from the supplier (at that is the law in Australia), then shoving that in as an invoice adjustment just works. Importantly, the Chart Of Accounts get updated correctly too. I have to admit that as I was studying the code, I was struck by how much shipping and tax treatment is hardcoded. I started down the path of trying to see how hard it would be to define a tax and treatment policies, and drive the execution off those policies. Then my brain started to hurt and I realised with very small compromises I could use the system as is, which is I think a testament to its generality. Cheers, Iain Scott Gray wrote: > Hi Iain > > I had quick look at this as I'm a kiwi and I'll need the same thing at > point in the future for our GST here, so far all I've found is > calcAndAddTax in CheckOutHelper.java which does nothing if the order > type is not a sales order. I guess that would need to modified to > handle purchase orders and somewhere further down the line would need > to be logged against a different account rather than the 'sales tax > collected' account. You would need to make it fairly flexible as you > probably don't want GST showing up on overseas purchase orders which > would be paid to customs rather than the supplier. > > Good luck > Scott > > Iain Fogg wrote: > >> Has anyone worked out a method for tracking GST/VAT on purchases (not >> sales)? >> >> The code makes a pretty big assumption that SALES_TAX is not >> applicable to purchases, so I can't use that plumbing to implement >> GST on purchases, as you can with sales. Specifically, if I purchase >> GST-ratable products worth $110 from a supplier, then $10 of that >> (assuming a GST rate of 10%) is a claimable business expense. I need >> this fact recorded somewhere. >> >> I've tried to mess about with Promos and Agreements to "fake" it, but >> no luck. Has anyone else solved this problem? >> >> Cheers, Iain >> >> > > > -- No virus found in this outgoing message. Checked by AVG Free Edition. Version: 7.1.405 / Virus Database: 268.10.7/411 - Release Date: 7/08/2006 |
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In reply to this post by Scott Gray
In general we don't plan on doing sales tax calculation for purchase orders because it is EXTREMELY complicated. In order to do it properly, you have to know more about your supplier than a customer usually does. In some places the taxes are fairly flat and simple, but even then do you really want the liability of having come up with a number for the taxes? Either way, the vendor is responsible for tax collection and the associated liability in most places, so chances are they won't want your number anyway... So, yeah, you could make changes to OFBiz to use the sales tax calc stuff for purchases, but doing so really isn't a best practice from a business perspective so I don't think such a thing should ever go into the project. Of course, I'm not really an expert in this field and if discussion went in this direction it could/would certainly happen. -David On Aug 8, 2006, at 3:21 AM, Scott Gray wrote: > Hi Iain > > I had quick look at this as I'm a kiwi and I'll need the same thing > at point in the future for our GST here, so far all I've found is > calcAndAddTax in CheckOutHelper.java which does nothing if the > order type is not a sales order. I guess that would need to > modified to handle purchase orders and somewhere further down the > line would need to be logged against a different account rather > than the 'sales tax collected' account. You would need to make it > fairly flexible as you probably don't want GST showing up on > overseas purchase orders which would be paid to customs rather than > the supplier. > > Good luck > Scott > > Iain Fogg wrote: >> Has anyone worked out a method for tracking GST/VAT on purchases >> (not sales)? >> >> The code makes a pretty big assumption that SALES_TAX is not >> applicable to purchases, so I can't use that plumbing to implement >> GST on purchases, as you can with sales. Specifically, if I >> purchase GST-ratable products worth $110 from a supplier, then $10 >> of that (assuming a GST rate of 10%) is a claimable business >> expense. I need this fact recorded somewhere. >> >> I've tried to mess about with Promos and Agreements to "fake" it, >> but no luck. Has anyone else solved this problem? >> >> Cheers, Iain >> >> > |
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Fair call, I can't argue with any of that logic. My only thought had
been that if the taxes are simple and easily calculated then there's no extra work to do when the invoice is generated. That advantage probably wouldn't outweigh some of the points below though. Regards Scott David E. Jones wrote: > > In general we don't plan on doing sales tax calculation for purchase > orders because it is EXTREMELY complicated. In order to do it > properly, you have to know more about your supplier than a customer > usually does. In some places the taxes are fairly flat and simple, but > even then do you really want the liability of having come up with a > number for the taxes? Either way, the vendor is responsible for tax > collection and the associated liability in most places, so chances are > they won't want your number anyway... > > So, yeah, you could make changes to OFBiz to use the sales tax calc > stuff for purchases, but doing so really isn't a best practice from a > business perspective so I don't think such a thing should ever go into > the project. Of course, I'm not really an expert in this field and if > discussion went in this direction it could/would certainly happen. > > -David > > > On Aug 8, 2006, at 3:21 AM, Scott Gray wrote: > >> Hi Iain >> >> I had quick look at this as I'm a kiwi and I'll need the same thing >> at point in the future for our GST here, so far all I've found is >> calcAndAddTax in CheckOutHelper.java which does nothing if the order >> type is not a sales order. I guess that would need to modified to >> handle purchase orders and somewhere further down the line would need >> to be logged against a different account rather than the 'sales tax >> collected' account. You would need to make it fairly flexible as you >> probably don't want GST showing up on overseas purchase orders which >> would be paid to customs rather than the supplier. >> >> Good luck >> Scott >> >> Iain Fogg wrote: >>> Has anyone worked out a method for tracking GST/VAT on purchases >>> (not sales)? >>> >>> The code makes a pretty big assumption that SALES_TAX is not >>> applicable to purchases, so I can't use that plumbing to implement >>> GST on purchases, as you can with sales. Specifically, if I purchase >>> GST-ratable products worth $110 from a supplier, then $10 of that >>> (assuming a GST rate of 10%) is a claimable business expense. I need >>> this fact recorded somewhere. >>> >>> I've tried to mess about with Promos and Agreements to "fake" it, >>> but no luck. Has anyone else solved this problem? >>> >>> Cheers, Iain >>> >>> >> > > |
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In reply to this post by David E Jones-2
David,
I don't think tax calculation in purchases should be ignored because in countries like Mexico it is a truly important matter. Here, every company should make a ballance of the taxes you have to pay against the taxes you collect from sales. And the amount of taxes the company have to actuallly pay depends on this diffence. Therefore, sometimes the company can pay less taxes than others, or even don't pay taxes at all. That's why it is so important this capability. Perhaps, there should be a way to configure the behavior of taxes in the tax authorities section. I think if the including of taxes calculation is very complex, then it would be probably easier to just make the funcionality to let the user configure it. Besides, there are plenty of software in the market with this capability, and we should include this capability in Ofbiz if we don't want it to be a incomplete ERP. Roger.
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Ummm... yeah... lots of discussion and work has happened since this pretty old discussion. This functionality is even somewhat in place now (Hans Bakker and others have been working on it). While things vary around the world (doing this actually isn't possible in the USA because of complicated sales tax codes and numerous tax jurisdictions) wherever you are there is a risk that the vendor will calculate tax differently than your estimated sales tax when doing a purchase. Usually you'll find out the actual tax amount (unless you want to dispute it with the vendor) when the order with them is finalized, but sometimes it is as late as when the invoice is received. Both of those are typically after a purchase order is created so if you want OFBiz to calculate sales taxes for purchase orders (as opposed to sales taxes for sales orders, which makes good sense) then you'll have to live with limitations and a need to reconcile after you get the actual amount from the vendor. Either way, why are you addressing this to me? Other than for things I am working on I don't decide what goes into OFBiz and what doesn't... -David On Aug 11, 2008, at 9:59 AM, rogernb wrote: > > David, > > I don't think tax calculation in purchases should be ignored because > in > countries like Mexico it is a truly important matter. Here, every > company > should make a ballance of the taxes you have to pay against the > taxes you > collect from sales. And the amount of taxes the company have to > actuallly > pay depends on this diffence. Therefore, sometimes the company can > pay less > taxes than others, or even don't pay taxes at all. That's why it is so > important this capability. > > Perhaps, there should be a way to configure the behavior of taxes in > the tax > authorities section. I think if the including of taxes calculation > is very > complex, then it would be probably easier to just make the > funcionality to > let the user configure it. Besides, there are plenty of software in > the > market with this capability, and we should include this capability > in Ofbiz > if we don't want it to be a incomplete ERP. > > Roger. > > > David E Jones-2 wrote: >> >> >> In general we don't plan on doing sales tax calculation for purchase >> orders because it is EXTREMELY complicated. In order to do it >> properly, you have to know more about your supplier than a customer >> usually does. In some places the taxes are fairly flat and simple, >> but even then do you really want the liability of having come up with >> a number for the taxes? Either way, the vendor is responsible for tax >> collection and the associated liability in most places, so chances >> are they won't want your number anyway... >> >> So, yeah, you could make changes to OFBiz to use the sales tax calc >> stuff for purchases, but doing so really isn't a best practice from a >> business perspective so I don't think such a thing should ever go >> into the project. Of course, I'm not really an expert in this field >> and if discussion went in this direction it could/would certainly >> happen. >> >> -David >> >> >> On Aug 8, 2006, at 3:21 AM, Scott Gray wrote: >> >>> Hi Iain >>> >>> I had quick look at this as I'm a kiwi and I'll need the same thing >>> at point in the future for our GST here, so far all I've found is >>> calcAndAddTax in CheckOutHelper.java which does nothing if the >>> order type is not a sales order. I guess that would need to >>> modified to handle purchase orders and somewhere further down the >>> line would need to be logged against a different account rather >>> than the 'sales tax collected' account. You would need to make it >>> fairly flexible as you probably don't want GST showing up on >>> overseas purchase orders which would be paid to customs rather than >>> the supplier. >>> >>> Good luck >>> Scott >>> >>> Iain Fogg wrote: >>>> Has anyone worked out a method for tracking GST/VAT on purchases >>>> (not sales)? >>>> >>>> The code makes a pretty big assumption that SALES_TAX is not >>>> applicable to purchases, so I can't use that plumbing to implement >>>> GST on purchases, as you can with sales. Specifically, if I >>>> purchase GST-ratable products worth $110 from a supplier, then $10 >>>> of that (assuming a GST rate of 10%) is a claimable business >>>> expense. I need this fact recorded somewhere. >>>> >>>> I've tried to mess about with Promos and Agreements to "fake" it, >>>> but no luck. Has anyone else solved this problem? >>>> >>>> Cheers, Iain >>>> >>>> >>> >> >> >> > > -- > View this message in context: http://www.nabble.com/GST-VAT-on-purchases-tp5679595p18928651.html > Sent from the OFBiz - User mailing list archive at Nabble.com. > |
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In reply to this post by rogernb
From: "rogernb" <[hidden email]>
> > David, > > I don't think tax calculation in purchases should be ignored because in > countries like Mexico it is a truly important matter. Here, every company > should make a ballance of the taxes you have to pay against the taxes you > collect from sales. And the amount of taxes the company have to actuallly > pay depends on this diffence. Therefore, sometimes the company can pay less > taxes than others, or even don't pay taxes at all. That's why it is so > important this capability. This works like VAT, you may be interested by http://docs.ofbiz.org/display/OFBIZ/VAT. Note that in case of purchase tax calculation is the responsability of the sender. From this POV OFBiz is ready... Jacques > Perhaps, there should be a way to configure the behavior of taxes in the tax > authorities section. I think if the including of taxes calculation is very > complex, then it would be probably easier to just make the funcionality to > let the user configure it. Besides, there are plenty of software in the > market with this capability, and we should include this capability in Ofbiz > if we don't want it to be a incomplete ERP. > > Roger. > > > David E Jones-2 wrote: >> >> >> In general we don't plan on doing sales tax calculation for purchase >> orders because it is EXTREMELY complicated. In order to do it >> properly, you have to know more about your supplier than a customer >> usually does. In some places the taxes are fairly flat and simple, >> but even then do you really want the liability of having come up with >> a number for the taxes? Either way, the vendor is responsible for tax >> collection and the associated liability in most places, so chances >> are they won't want your number anyway... >> >> So, yeah, you could make changes to OFBiz to use the sales tax calc >> stuff for purchases, but doing so really isn't a best practice from a >> business perspective so I don't think such a thing should ever go >> into the project. Of course, I'm not really an expert in this field >> and if discussion went in this direction it could/would certainly >> happen. >> >> -David >> >> >> On Aug 8, 2006, at 3:21 AM, Scott Gray wrote: >> >>> Hi Iain >>> >>> I had quick look at this as I'm a kiwi and I'll need the same thing >>> at point in the future for our GST here, so far all I've found is >>> calcAndAddTax in CheckOutHelper.java which does nothing if the >>> order type is not a sales order. I guess that would need to >>> modified to handle purchase orders and somewhere further down the >>> line would need to be logged against a different account rather >>> than the 'sales tax collected' account. You would need to make it >>> fairly flexible as you probably don't want GST showing up on >>> overseas purchase orders which would be paid to customs rather than >>> the supplier. >>> >>> Good luck >>> Scott >>> >>> Iain Fogg wrote: >>>> Has anyone worked out a method for tracking GST/VAT on purchases >>>> (not sales)? >>>> >>>> The code makes a pretty big assumption that SALES_TAX is not >>>> applicable to purchases, so I can't use that plumbing to implement >>>> GST on purchases, as you can with sales. Specifically, if I >>>> purchase GST-ratable products worth $110 from a supplier, then $10 >>>> of that (assuming a GST rate of 10%) is a claimable business >>>> expense. I need this fact recorded somewhere. >>>> >>>> I've tried to mess about with Promos and Agreements to "fake" it, >>>> but no luck. Has anyone else solved this problem? >>>> >>>> Cheers, Iain >>>> >>>> >>> >> >> >> > > -- > View this message in context: http://www.nabble.com/GST-VAT-on-purchases-tp5679595p18928651.html > Sent from the OFBiz - User mailing list archive at Nabble.com. > |
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