Ceravolo Consulting

Doral, FL

Difficulty Level: Beginner Level AccountMate User

Version(s) Affected: AccountMate 7 for SQL and Express

Module(s) Affected: SO, AR, PO, AP, RA

DESCRIPTION

Sales tax systems between countries can either be similar to or very different from each other. The similarities and differences can include such things as the tax rates imposed on goods and services, or the tax filing procedures, among others. Another major similarity or difference can be the number of tax governing entities in each country that collects taxes from the sale of goods and services. For example, the United States imposes federal, state and local government sales taxes on the sale of certain goods and services. Canada has government/federal (GST) and provincial (PST) sales taxes; while South Africa and Australia have only the government/federal (VAT) tax. AccountMate 7 includes a feature that handles the different tax systems implemented in the US, Canada, South Africa, Australia and any other countries with tax systems and reporting requirements the same as any of the four (4) countries mentioned. It also allows you now to create and maintain tax entity records that you can select and add to each tax code.

This technical note provides a comprehensive discussion on how to select and set up the country tax appropriate for your installation. This document also discusses the procedures to set up the tax entities and tax codes.

SOLUTION

You can set up only one country tax for each company; and this must be done at the time that you create a new company. You must also select the correct country tax because once the company is created you cannot change the country tax without deleting the company and recreating it.

A. Steps to set up country tax
(1) Access the Company Setup function through the Administrator program.
(2) Click the Add button to create a new company.
(3) Follow the procedures for creating a company. In the second window, select in the Country Tax field the value that appropriately applies to your company’s tax system.
(4) Follow the procedures to set up each of your modules.

 

B. Steps to set up tax entity
(1) Access the Tax Entity Maintenance function.
a. In the Tax Entity field, enter the tax entity code and click the Add button.
b. In the Description field, enter the tax entity description.
c. Accept or amend the GL account in the Sales Tax Payable field.
d. Accept or amend the GL account in the Sales Tax Costs or Purchase Tax Deductible field.
e. In the Tax Rate field, enter the tax rate value.
f. If you are creating a tax entity with United States country tax, enter or select the appropriate values in the following fields:
1. In the Min Taxable Amt and Max Taxable Amt fields, enter the appropriate amounts.
2. In the Minimum and Maximum fields in the Tax Amount area, enter the appropriate amounts.
3. In the Rounding Method area, select either Higher, Nearest, or Lower method.
(2) Click the Update button.

 

C. Steps to set up tax codes
(1) Access the Sales Tax Code Maintenance function.
(2) In the Tax Code field, enter the tax code number.
(3) In the Description field, enter the tax code description which is reflective of the type or nature of your tax code.
(4) In the Tax Entity Code field, enter the tax entity code number and the rest of the fields will display the tax entity information defined in the tax entity record. You can only enter a tax entity code with active status.

The number of tax entity code fields may vary depending on the country tax you designated when you created the company. It can range from one to three tax entity code fields. The table below shows the list of country tax supported in AccountMate and the maximum number of tax entity codes (based on tax entities for each country) that you can set up for a sales tax code.

Country Tax Maximum # of Tax Entities Tax Entities
United States 3 Federal, State, Local
Canada 2 Government (GST), Province (PST)
South Africa 1 Government (VAT)
Australia 1 Government (VAT)
Botswana 1 Government (VAT)
Mozambique 1 Government (VAT)
Namibia 1 Government (VAT)
Puerto Rico 3 Federal, State, Local
Zambia 1 Government (VAT)
Zimbabwe 1 Government (VAT)

Review the tax rates for each tax entity. To change the tax rate, you must amend the tax rate on the tax entity record in the Tax Entity Maintenance function.

(5) Review the values or mark the checkboxes in the following fields that are unique based on your country tax.
a. United States
Review the values of Min Taxable Amt, Max Taxable Amt, Minimum Tax Amount, Maximum Tax Amount and Rounding Method fields. These fields are read-only and you can change the values only through the Tax Entity Maintenance function.
b. Canada
1. PST Tax on Tax – mark this checkbox if you want to apply PST tax on GST tax amount.
2. Claim GST – mark this checkbox if you want to claim a refund or rebate from the government the GST tax that you pay on your purchases.
3. Claim PST – mark this checkbox if you want to claim a refund or rebate from the government the PST tax that you pay on your purchases.
(6) Click the Update button.


AccountMate 7 now supports more countries with various tax systems and allows you to create and maintain tax entity code records that you can easily select or add to each of your tax code records. This discussion in this Technical Note is provided to help you to understand the procedures required to properly set up the country tax applicable to your company.

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