System Data - Tax Codes

Pgm: ARTAXFM – Tax Table Maintenance; standard Treeview path: System > Global Tables > Tax Code

The Tax Table Maintenance screen is used to define all taxes that are applicable to each company in the system.  These defined taxes will then be available in the system’s modules that use taxes.

Via this screen, various tax types can be defined:

• Standard Single Rate Taxes

• Compound Jurisdictional Taxes (State, County, City, & School District Levels)

• Direct Pay Taxes

• Value Added (Credit) Taxes

This screen is loaded in Form Mode, to insert new entries.  To view existing tax codes, select the relevant company via the Company field, and click on [Table Mode].

Tax Setup

This tab displays tax codes for the company selected via the Company field.

Tax Code

Enter a 2-character code that will identify the tax you are defining.  If a compound tax is being defined, then 10 characters may be used.

Non Taxable Code

For every tax code entered, a non-taxable version is automatically created, and its code is displayed via this field.  The code for the non-taxable version is comprised of the tax code’s code with an asterisk (*) appended at the end.  Non-taxable versions of tax codes are used to show that a tax was considered for a payment, but not applicable to it (zero amount).

In screens in which taxes are selected, if a particular tax is not taxable for a payment, but you want the tax and its zero amount to show on reports and receipts to show that it was considered and not applicable: select the tax code and unclick its corresponding ‘Taxable’ checkbox.

Name

Enter the name for the tax being defined.  This name will appear to the right of the tax code on most screens that require the entry of the tax code.

Short Name

Enter a short name for this tax.  The short name will appear on certain screens and reports where the longer name cannot fit.

Tax Description, Tax English Translation, Tax Authorities, Tax Reverse Charges - Checkbox

These fields are used for VAT payment calculation for international clients.

Refer to Accounts Payable - Calculating VAT Payments for more information on how this functionality is used.

Tax Registration

Enter the tax registration description to show on the tax line, if the Job Billing invoice used supports it.

Percent

This is the tax’s percentage.

If the ‘Compound Tax’ checkbox is checked, this is a display-only field that displays the sum of the jurisdictional taxes entered in the Compound Tax Setup section.

Payment %

This field is used to enter the tax rate for a tax code of the Standard Single Rate Tax type.  If a tax code is of the Compound Tax variety, its component rates are specified via the Compound Tax Setup section, and the total rate is displayed via the Percent display-only field.

Active – Checkbox

If active, the tax code will be available in LOVs, otherwise it will not be.

Compound Tax – Checkbox

If checked, this tax is a Compound Tax, and its component tax rates are specified in the Compound Tax Setup section, with the total rate displayed via the Percent display-only field.

TDS Tax – Checkbox

If checked, the Percent field’s tax rate can be negative. For the Tax Deduction at Source (TDS) legal requirement in Mauritius, this option provides the ability to apply negative tax rates on billing invoices.

Tax Credit – Checkbox

Check this box if you will receive a tax credit for any taxes your company has paid on the purchase of goods and services.  VAT type taxes and GST are examples of taxes that require this field to be checked.

Receivable Invoices

Journal Used for Payment Debit

Enter/select the default journal to be used for payment processing.

Tax Liability Department, Account

Enter the department and account number to be credited for this tax when it is charged on receivable invoices.  The account number must have been previously set up on the GL Chart of Accounts Setup screen.

Tax Liability on Retainage Department, Account

Enter the department and account number to be credited for the tax calculated on the retainage portion of a receivable invoice.  If separate accounts are not used for retainage tax and standard tax, the same account can be entered in both fields.

The account entered must be already set up on the GL Chart of Accounts Setup screen.  The account name will be displayed to the right if found.

JB Tax Costing Cost Code, JB Tax Costing Category

These fields are used to associate a tax code to a cost code and category combination, so that tax amounts incurred against items of that cost code and category are recorded for the job.  See the previous subsection, Recording AR Taxes in Job Cost, for additional information.  

Payable Invoices

Tax Credit Department, Account

Enter the department and account number to debit for a tax credit when it is charged on a payable invoice. These fields are only required if a “Y” was entered into the previous Tax Credit field.

If the tax code being entered is for the Goods and Services Tax (GST), then enter the General Ledger account being used for the GST Input Tax Credit.  Normally, this account will be a different one than that specified for regular GST Payable.  The account entered must be already set up on the GL Chart of Accounts Setup screen.

Tax Credit on Retainage Department, Account

Enter the department and account number to be debited for the tax calculated on the retainage portion of a payable invoice.  If separate accounts are not used for retainage tax and standard tax, the same account can be entered in both fields.

These fields are only required if a “Y” was entered into the previous Tax Credit field.

Direct Pay – Checkbox

Check this field if you are responsible for submitting this tax to the government.  This is applicable to AP taxes only.  If left unchecked, the tax amount will be included in your payment to the vendor.

Included in Voucher Amount – Checkbox

This checkbox will indicate that the tax is not calculated separately, but rather is already included in the voucher amount being entered.

Liability Department, Account (Direct Pay)

Enter the department and account number to be credited for this tax when it is a Direct Pay Tax charged on a payable invoice.  The account number must have been previously set up on the GL Chart of Accounts Setup screen.

Vendor (Direct Pay)

If the tax being entered is a Direct Pay Tax, and you want the system to automatically create a payable for the direct tax amount whenever an AP Voucher is entered, then enter the vendor code here.  Also, the AP Control File must have the ‘Generate Direct Tax Voucher’ checkbox checked (standard Treeview path: Accounts Payable > Setup > Local Tables > Control File Options – System Defaults tab).  See the Direct Pay Tax subsection under the Tax Types & Samples section for details. 

Freight – Checkbox (Tax on Freight)

Check this box if this tax is applicable on freight charges; otherwise, leave this box unchecked.

Insurance – Checkbox (Tax on Insurance)

Check this box if this tax is applicable to insurance charges; otherwise, leave this box unchecked.

Misc – Checkbox (Tax on Miscellaneous Charges)

Check this box if this tax is applicable to miscellaneous charges; otherwise, leave this box unchecked.

Tax on Tax – Checkbox

Check this box if this tax is applicable on taxes already applied to the invoice; otherwise, leave this box unchecked.

Example 1: Tax on Tax Unchecked for Second Tax

 

Example 2: Tax on Tax Checked for Second Tax

 

Tax Calculation Formulas

Let A = Voucher Amount, let T1 = Tax 1, and let T2 = Tax 2

Total - Tax on Tax Unchecked	Total - Tax on Tax Checked
A•T1       +    A•T2          +         A Tax 1 Amount      Tax 2 Amount    Voucher Amount	A•T1       +  (A•T1 + A)T2  +       A Tax 1 Amount    Tax 2 Amount        Voucher Amount = A•T1 + A•T2 + A•T1•T2 + A

Compound Tax Setup

Pgm: ARTAXFM – Tax Table Maintenance; standard Treeview path: System > Global Tables > Tax Code – Compound Tax Setup section

This section of the screen is used to enter the component Jurisdictional Taxes for a Compound Tax.  The states/provinces available via the State field’s LOV, and the Jurisdiction Taxes available via the Jurisdiction Code field’s LOV are set up via the Region Code Maintenance screen.  For details, see System Data - Region Codes.

For details about setting up Compound Taxes, refer to the Compound Tax subsection under Tax Types & Samples.

State

Select the state under which the Jurisdictional Taxes are defined.

Jurisdiction Code

Select the individual Jurisdictional Taxes that make up the Compound Tax.

Tax Percent

This field is automatically populated with the rate defined for the Jurisdictional Tax, however, this rate may be modified if required.  If the rate is modified, the rate set for the Jurisdictional Tax in the Region Code screen will not be altered.

Delete Compound Tax

To delete a Compound Tax, first delete the Compound Taxes under the Compound Tax Setup section using the [Delete] button of that section’s Block Toolbar.   Then, delete the Compound Tax using the [Delete] button of the Tax Setup section.

Tax Types & Samples

Standard Single Rate Tax

Example of a Standard Single Rate Tax setup; sample shown is of a state tax (standard Treeview path: System > Global Tables > Tax Code)

For a Standard Single Rate Tax setup (sample shown above), the ‘Compound Tax’ box is unchecked, and the tax rate is specified via the Payment % field.  The Compound Tax Setup section is not used, as it is only applicable to Compound Tax setups.

The ‘Tax Credit’ box is also unchecked, and its corresponding Tax Credit Account and Tax Credit on Ret. Account fields are left blank, as these fields only apply to Value Added Tax setups.

Also, the ‘Direct Pay’ box is unchecked, and it is corresponding Liability Account and Vendor fields are left blank, as these fields only apply to Direct Pay Tax setups.

Compound Tax (Multiple Jurisdictional Taxes)

Example of Compound Tax setup (standard Treeview path: System > Global Tables > Tax Code)

Compound Taxes in CMiC Enterprise consists of multiple jurisdictional type taxes, and they are used to consolidate taxes for a region.

A Compound Tax’s code can be up to 10 characters in length, and Compound Taxes can be of the Direct Pay Tax and Value Added Tax sub-types.

For a Compound Tax, the component Jurisdictional Taxes are entered in the Compound Tax Setup section, as shown above, and the total rate is displayed via the Percent display-only field.

The states/provinces available via the State field’s LOV, and the Jurisdiction Taxes available via the Jurisdiction Code field’s LOV are set up via the Region Code Maintenance screen.  For details, see System Data - Region Codes.

To delete a Compound Tax, first delete the Compound Taxes under the Compound Tax Setup section using that section’s [Delete] button.   Then, delete the Compound Tax using the [Delete] button of the Tax Setup section.

Value Added Tax (Goods & Services Tax)

Example of a Value Added Tax setup; sample shown is of a GST tax (standard Treeview path: System > Global Tables > Tax Code)

Value added taxes (VAT), also known as goods and services taxes (GST), are applicable to our Canadian, UK, Ireland, and Singapore clients.

For a Value Added Tax setup (sample shown above), the ‘Tax Credit’ box is checked, and its corresponding Tax Credit Account and Tax Credit on Ret. Account fields are specified.

Also, a Value Added Tax setup can be defined with a single rate, specified via the Payment % field, or it can be defined as Compound Tax by checking the ‘Compound Tax’ box and entering the component tax rates in the Compound Tax Setup section.

Also, the ‘Direct Pay’ box is unchecked, and it is corresponding Liability Account and Vendor fields are left blank, as these fields only apply to Direct Pay Tax setups.

Value Added Taxes & Retainage/Holdback

Pgm: APCTRLFM – AP Control File; standard Treeview path: Accounts Payable > Setup > Local Tables > Control File Options – System Defaults tab

In some tax jurisdictions, the tax amount due on Retainage/Holdback is not considered a current payable until the Retainage/Holdback is released.  In this case, the tax credit tax in question must be entered as the first tax on any AP invoice, and the ‘Tax1 Is Credit Tax (GST in Canada)’ checkbox on the System Defaults tab of the AP Control File must be checked, as shown above.

If a tax is of the Tax Credit type, and the’ Tax1 Is Credit Tax (GST in Canada)’ box is not checked, the posting will be:

If a tax is of the Tax Credit type, and the ‘Tax1 Is Credit Tax (GST in Canada)’ box is checked, the posting will be:

Direct Pay Tax

Example of Direct Pay Tax setup (standard Treeview path: System > Global Tables > Tax Code)

Direct Pay Taxes are taxes applicable to Accounts Payable invoices that you have opted to pay directly to the tax authority, not to the vendor.  When a Direct Pay Tax is applied, the system automatically creates a payable invoice to the tax authority each time you post an AP invoice.  This system generated invoice can then be paid, as per any other invoice.

For a Direct Pay Tax setup (sample shown above), the ‘Direct Pay’ box is checked, and its corresponding Liability Account field is specified, which is a clearing account that should always have a balance of zero.  The vendor for who a Liability Voucher is to be automatically created whenever this Direct Pay Tax is used, is specified via the Vendor field.

Also, the ‘Tax Credit’ box is unchecked, and its corresponding Tax Credit Account and Tax Credit on Ret. Account fields are left blank, as these fields only apply to Value Added Tax setups.

Direct Pay Taxes can be defined with a single tax rate, or they can be Compound Taxes.  However, Direct Pay Taxes of the Compound Tax type cannot have a vendor assigned.

Invoice Series Codes for Direct Pay Taxes

1. Invoice Series Code Setup

Pgm: APINVSER - Invoice Series Code; standard Treeview path: Accounts Payable > Setup > Local Tables > Invoice Series Code (sample of an invoice series code set up for a Direct Pay Tax)

Create an invoice series code for the Direct Pay Tax via the Invoice Series screen, as shown in the screenshot above.  When defining the invoice series code, if tax invoices are to be considered part of your standard AP control account, enter the standard accounts here.  The accounts entered here will override the default accounts set up for the vendor.

2. AP Control File Setup

Pgm: APCTRLFM – AP Control File; standard Treeview path: Accounts Payable > Setup > Local Tables > Control File Options – System Defaults tab

The next step is to update the AP Control File.  Launch the AP Control File screen, and check the ‘Generate Direct Tax Voucher checkbox’ on the System Defaults tab.  Then select the invoice series code for the Direct Pay Tax via the Direct Tax Voucher Series Code field, and save the update.

3. Sample Posting Report with a Direct Pay Tax

Now, when vouchers in the AP or Subcontract modules are posted with a Direct Pay Tax, the system will post them and create secondary vouchers for the direct pay tax amounts.

Below is a simple sample of the posting report.  Notice that account 9901 is an in and out account, and therefore should always have a balance of zero.

Recording AR Taxes in Job Costing

Pgm: ARTAXFM – Tax Table Maintenance; standard Treeview path: System > Global Tables > Tax Code

Additionally, functionality is available to record taxes incurred by a cost code and category item against the job that incurred them.  All that is required for such a tax setup is the relevant cost code and category, as shown above.

If this option is used for a tax code, the system will create a new transaction batch during the Job Billing Invoice Posting process, which posts a “C” cost transaction for the Tax Amount and a “B” billing transaction for the tax amount using the cost code and category combination defined on the tax code.