Deducted Purchase Tax Codes – Israel
If you are working with an Israeli database and your company is defined as a Tax Liable company, you may want to purchase items for which you are allowed to deduct lower tax rate – for example fuel, for which you can deduct 2/3 of the initial tax amount.
Currently, to reflect this scenario, you need to create a manual journal entry based on posting templates.
The good news is that after upgrading to SAP Business One 10.0 FP 2305, you can create A/P documents for these kinds of expenses and deduct different tax rate on your document at row level!
This new option is not activated by default; To enable the feature, please follow the steps below:
- Select the new checkbox Enable Applying Non-deductible Purchase Tax on Expense Account on the Accounting Data tab under Administration → System Initialization → Company Details.
- This checkbox is only available for tax liable companies.
- This setting is irreversible.
- A new form Deducted Purchase Tax Codes – Setup is available under Administration → Setup → Financials → Tax → Deducted Purchase Tax Codes.
In this form, four default deducted tax codes are predefined as below:
Code Name Deducted Purchase Tax % E0 מע”מ קניות פטורות 0 E1 מע”מ קניות 17% 100 E2 מע”מ קניות 2/3 66.67 E3 מע”מ קניות 1/4 25
If required, you can configure additional deducted purchase tax codes.
- You can define the default G/L accounts for Liable Deducted Purchase Tax and Exempt Deducted Purchase Tax for purchasing documents, in the G/L Account Determination window at Administration → Setup → Financials → G/L Account Determination → G/L Account Determination → Purchasing tab → Tax tab.
Now you are ready to work
- New columns are available by default for A/P documents’ rows:
- Deducted Tax Code
- Deducted Tax %
- Deducted Tax Amount (LC, FC, SC)
- Non-Deductible Tax Amount (LC, FC, SC)
- When you create an A/P document you can choose different tax code for each row, based on the purchase tax codes configured in the new Deducted Purchase Tax Codes – Setup window. Then the deducted tax amount is calculated automatically, and the non-deductible tax amount is charged on the expense.
- This new function is not available yet in the B1 web client.
- For creating a manual journal entry keep using the posting templates since the purchase tax codes are not available in the Journal Entry form.
- The process of creating the Tax Report and sending it to the authorities is not changed.
More information can be found in SAP Note: 3235805