Tax on Tax

Am quite new to Navision. We have just purchased this and about to implement it. Kindly assist in implementing the following Sales Invoice scenario

Product quantity unit cost Product value

Text Books 10 10 100.0

Excise Duty (30%) 30.0

handling Tax (10%) 10.0

Sub Total 140.0

VAT (16% of Sub total i.e. 140) 22.4

The product value, Excise Duty, Handling Tax and VAT are supposed to go to various G/Lr accounts. Someone suggested posting groups but I don’t know how to implement this since am new.

Hi Musenga, welcome to this forum.

There is no direct way to calculate taxes the way you described, in the standard version. There might be localized versions or add ons where this is supported.

Do you need the handling taxes and excise duties being calculated automatically ? In this case it would be a programming issue and not a setup issue.

Otherwise you could use the item charges to make sure that the individual “taxes” are being posted to the right account.

You can assign a seperate “Product Posting Group” to every individual “Item Charge”. But make sure that the item and the item charges are being set to the same “VAT Prod. Posting Group” (16%).

When creating your sales Order, you would add the item and after that add the item charges for excise duty and handling taxes with their corresponding values.
The problem you have with this is that you would need to calculate the amounts for the charges (and recalculate if necessary) based on the item values. On top of that you would need to assign the charges to the item lines.

Thank you Thomas,

I will try the programming way. You ideas have been quite helpful.

Musenga

If you are considering using Item Charges, then I suggest first checking if it is acceptable business / accounting practice in your country to include the excise tax and handling tax as inventory costs (assigning them as item charges will increase the book value of your inventory and and we have run into issues in some countries as it is not allowed for taxes to be included in the inventory asset value).

You need to use structure. Define a structure as follow:

Type Group Calculation formula

Excise

Charges Handling

Sales Tax +1+2

When using item charges on the SALES SIDE - as we are discussing here - the book value of the inventory will not change!
What will happen is that the profit will increase - which is in fact incorrect.

Hi all,

Thank you for your help. I managed to implement this except I did it programmically. Introduced the rates in the item table as well as the values in the sales line table. Simply got the initial value and the taxes based on this then added these values to give subtotal on which I applied VAT charge. Asante sana wazee (swahili - thank you so much).

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