Thailand Localization in Dynamics 365 Finance Part – 2 (VAT & VAT Reports)

Hello Folks!

Thailand, one of the excited and famous place for tourist. We heard lot’s of thing about Thailand but here I’m planning to showcase something related to Localization of Thailand which is available as standard in Dynamics 365 Finance & Operation. I hope you have already seen & understand part -1 of this post. 

Let’s continue the journey.

Q 1. What is unrealized VAT?

In Thailand, there is law which define Unrealized VAT as “VAT Credit has been taken without TAX Invoice, but Based on Payment”.

Unrealized purchase value-added tax (VAT), or deferred input VAT, is the calculated VAT amount that isn’t due until the invoice is paid. This amount is posted to an unrealized purchase VAT account and can be claimed only after the tax invoice is received. Unrealized sales VAT, or deferred output VAT, is the calculated VAT amount that isn’t due until the invoice is paid. This amount is posted to an unrealized sales VAT account and can be claimed only after a tax invoice or receipt/tax invoice is printed.

Q.2. How to handle in D365FO?

Microsoft has provided localization in D365FO which can handle this tricky situation. let’s take example of Unrealized Purchase VAT with AP Invoice. 

Let’s Configure Unrealized VAT in system. (You can use THMF of Contoso Database for reference)

Before you create and post transactions that have unrealized VAT, complete the following setup:

1. Set up sales tax codes for unrealized VAT on the Sales tax codes and Values pages. (Check out in Part-1)
2. Set up sales tax groups, item sales tax groups, and ledger posting groups for unrealized VAT on the Sales tax groups, Item sales tax groups, and Ledger posting groups pages. (Check out in Part-1)
3. Set up the sales tax document set on the Sales tax document set page to specify the layout of documents that are generated, printed, and given to the customer as proof of the sales transaction.
4. Set up number sequences for unrealized sales VAT on the Accounts receivable parameters page, so that number sequences are assigned for Accounts receivable documents for unrealized VAT.
5. Set up number sequences for unrealized purchase VAT on the Accounts payable parameters page, so that number sequences are assigned for Accounts payable documents for unrealized VAT.

Let’s see system in action:

Unrealized Purchase VAT 

Follow these steps to calculate and post purchase orders that have unrealized purchase VAT, and to generate the Purchase Unrealized VAT Remaining and Input sales tax reports.

1. Reverse the unrealized purchase VAT that was posted. You can reverse the unrealized VAT when you receive the tax invoice from the vendor. Follow one of these steps, depending on when you receive the tax invoice from the vendor:
   • Reverse unrealized VAT directly when you post the payment journal. On the Journal voucher page, enter the tax invoice number, tax invoice date, and tax invoice receipt date that are applicable to the payment.
   • Reverse unrealized VAT only for the transactions only before you receive the tax invoice from the vendor. When you receive the tax invoice from the vendor for the settled transactions, you can reverse the unrealized purchase VAT for the transactions and post the input VAT by using the Reversal journal page. (Path->Accounts Payable -> Payments-> Reverse unrealized VAT) 
2. Generate the Purchase Unrealized VAT Remaining report. This report includes the transactions that the taxes haven’t been realized for. (Path->TAX-> Inquiries & Reports -> Sales Tax Reports -> Purchase Unrealized VAT Remaining)
3. Create and post a purchase order that has unrealized purchase VAT. On the Create purchase order, Purchase order, and Vendor invoice pages, create and post a purchase order that has unrealized purchase VAT. The purchase order can be for an item or a service. When you post the purchase order before you receive the tax invoice from the vendor, the unrealized purchase VAT is posted to the unrealized purchase VAT account.
4. Generate the Input sales tax report. This report includes transactions that the purchase VAT is realized for, and includes the details of the VAT that the legal entity pays for the purchase of goods and services. (Path->TAX-> Inquiries & Reports -> Sales Tax Reports -> Purchase VAT Report)

Value Added Tax Reports for Thailand 

Purchase VAT Report

Content of report:

This reports is as per requirement of local laws, Thailand VAT laws required declaration of VAT paid to registered Vendors and Procurement value of Goods and Services along with Tax Registration Number and Tax Invoice number. Normally Thailand government required this report branch wise. 

 (Path->TAX-> Inquiries & Reports -> Sales Tax Reports -> Purchase VAT Report)

Sales VAT Report

Content of report:

This reports is as per requirement of local laws, Thailand VAT laws required declaration of VAT collected from customers and value of Goods and Services along with Tax Registration Number and Tax Invoice number. Normally Thailand government required this report branch wise. 

 (Path->TAX-> Inquiries & Reports -> Sales Tax Reports -> Sales VAT Report)

Purchase Unrealized VAT Remaining

Content of report:

This reports contain details of purchase transaction with unrealized VAT code, which is yet not been converted as Realized VAT. 

 (Path->TAX-> Inquiries & Reports -> Sales Tax Reports -> Purchase Unrealized VAT)

Average VAT Rate

Content of report:

This reports contain details of purchase transaction where material or service was used for partially for business and partially for non business.  

 (Path->TAX-> Inquiries & Reports -> Sales Tax Reports -> Average VAT)

Let me know if this information can help you.

Please fill free to connect me if you have any question.

Thank you,

Gaurangkumar Jani

Microsoft Dynamics 365 Finance Consultant