Hi all,
My 2 cents on VAT/GST.
In Australia, most goods and services are subject to GST, but certainly
not all. The government determines which ones are taxed (don't ask -
it's a nightmare in some industries, though not mine thank goodness). If
they are subject to the tax, it is a flat 10%.
My experience with OFBiz and its ability to support GST has been pretty
good, although one or two things have had me scratching my head.
+ To ensure only taxable products are taxed create a GST category and
assign those taxable products to the category
+ Set up your tax authority Rate Product to only tax products in the GST
category
+ Make sure your store(s) have the VAT tax authority (and Geo) pointing
to your tax authority
+ The biggest hassle is the need to store prices exGST; at least I
haven't found a way to store the tax-inclusive price and still have the
GST reported properly (a requirement in Australia)
+ Customers (and sales staff) strongly prefer to see tax-inclusive
prices in all screens/invoices/receipts/etc. I found I needed to patch
the receipt generation code to allow me to do this. I still haven't
worked through all the screens/invoices/etc to make sure I've met this
requirement. Customers are the most important, so I'm focussing energy
there.
+ Order level discounting doesn't work properly for in the GST
environment. Eg, I have an item for $110, which includes $10 GST. If I
discount the order, the price drops to $88, but the GST still shows as
$10 - it should be $8.80. The correct behaviour depends on whether
individual line items are subject to GST or not. Technically, if I give
a 20% order level discount this discount should be distributed across
all line items in the order, and then the GST would be calculated
correctly. In practice, order level discounts are banned, and sales
staff need to apply any discounts at the item level (which works well
for GST calculations). It's not clear what a fixed-amount order-level
discount means in a GST environment, since individual products (not
whole orders) are subject to the tax - what if your order has a mixture
of GST and GST-free products???
+ The accounting app seems to work well in assigning GST amounts to the
appropriate GL account. However, make sure your Tax Authority Rate
Product has NULL values in min_purchase and min_item_price. Otherwise,
when you do a return, the GST calculation will be skipped (because the
return generates negative numbers), the customer will be annoyed because
he won't get his GST back, and you'll be annoyed because the GST account
wasn't credited with the refund (ie, the business owner is out of pocket).
Overall, I'm pretty happy with the way OFBiz supports GST, but it would
be nice if we could improve in a couple of areas...
#1 for me is being able to record my prices tax-inclusive, yet still
ensure that local reporting requirements are met (eg, displaying the
amount of GST in the sale), and that the GL tracks the GST component.
I think we already the flag to indicate whether prices include tax, but
it's not clear that this has relevance for GST?VAT (please correct me if
I'm wrong). We also need a flag(s) to indicate whether we need to report
the tax component, and whether the reporting needs to be on the item or
order level. As mentioned above, order adjustments need to be made
sensitive to the GST/VAT environment, but perhaps the simplest thing is
just to train users not to ever use order-level adjustments :-)
Of course, I rather flippantly suggested we need another flag or two to
improve support for the GST/VAT tax regimes, but obviously we also need
to work through the applications to ensure they appropriately support
the additional features.
Cheers, Iain
Andrew Sykes wrote:
Chris,
It's a government decision.
Some items are exempt, like children's clothes; books; food (I think)
most require VAT though.
- Andrew
On Thu, 2006-10-12 at 03:15 -0700, Chris Howe wrote:
Jacques,
Thanks for the info.
The wikipedia reference says that the price MAY be
inclusive of VAT. At who's discretion is it
inclusive? Does the seller choose whether the agreed
upon price is inclusive or does the government decide?
--- Jacques Le Roux <[EMAIL PROTECTED]>
wrote:
Hi Si,
Thanks for you interest in this
Can you post all of this on that JIRA issue you
created for VAT?
I'll try to help out when I have a chance.
OK, done :
http://issues.apache.org/jira/browse/OFBIZ-366
Also same regarding the invoice header thing--I'll
take a look at it
later. Can you confirm that Eriks is right--is a
tax authority Id in
the bill-to geo really required in EU? (Funny,
it's the exact
opposite of the US...)
Yes Eriks correctly explained the EU rules. The
Value Added Tax (VAT) ID number applies only if you
are placing a business order for
a business in the European Union that has a current
VAT ID. For all other orders, you should leave this
field blank. So this is a
B2B only rule. Eriks also added the VAT ID of the
seller. This is right too, both fields are mandatory
for B2B in EU. In this case
no VAT is charged (VAT Exemption).
Here is an interesting link explaining simply (good
examples) how that works :
http://www.apptranslator.com/blog/2006/03/should-you-charge-vat-to-whom.html
And last but not least a VAT : Definition, history,
and more (VAT was invented by a french, sorry for
that ;o) :
http://en.wikipedia.org/wiki/Value-added_tax
I put all this also in the Jira VAT issue (366)
Jacques
--
No virus found in this outgoing message.
Checked by AVG Free Edition.
Version: 7.1.408 / Virus Database: 268.13.2/472 - Release Date: 11/10/2006
