Foreign currency tax accounts

Hi All,

I run a business that issues invoices in either ZWL or USD, depending on the currency a customer can pay. I have therefore created both ZWL and USD denominated accounts for some of our customers and created a separate tax code for each currency. For VAT purposes, our tax authorities require that we submit tax returns in both currencies whenever we issue invoices in both ZWL and USD. When extracting the Tax Summary Report, I find that all amounts under the ZWL and USD tax codes are converted to ZWL. How do I get the report to report in both currencies, without converting to ZWL?

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You cannot. This is because you are reporting the results of postings to and from your tax liability account, which is denominated only in your base currency. So you will need to make conversions outside Manager.

I have exactly the same problem as you do, and it is frustrating. I use the Tax Transactions report. My USD customers all have “ (USD)” at the end of their names, so it’s easy to identify those transactions in the report. Your use of separate tax codes for each currency will make it even easier, but when I installed my fiscal device I had to revert to using a single tax code for all 14.5% VAT transactions. I copy the report into a spreadsheet application, split the ZWL and USD customers into separate columns, and add another column for the exchange rate which I use to convert the USD transactions back to USD amounts. I’m sure someone more skilled with spreadsheets could automate this to a degree. For the number of transactions I’m dealing with this is workable, but your situation may be different.

You may find this topic relevant: VAT report by currency I gave up on the report transformation, as it was taking a lot of time for me to figure out, and I didn’t have full confidence that I was extracting the correct data. Hopefully I can revisit it at some point, as it would be great to have a one-click report available for VAT returns.

How does this work? If you have single customer who you invoiced 1000 USD. Do you have to report the same amount twice? Once in ZWL and once in USD? Seems kind of redundant since tax authority can work it out themselves.

No, we report the amount only once, in the currency of the transaction. The two currencies are treated separately for tax reporting. Inputs in once currency can’t be claimed against outputs in the other. It causes all sorts of headaches.

OK, basically this is unsupported scenario but it is something I’ve been thinking about before.

This is not as simple as presenting a report. This requires tax accounts to be in foreign currency for this to actually work properly.

Currently all tax accounts are in base currency. It’s not possible to have foreign currency tax account and I’ll move this into ideas because it would useful to anyone who is collecting or tracking tax amounts for tax authority which is dealing with you in other than your base currency.

Can any accounting system do this actually?

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Thanks @lubos. I’m really pleased this is getting your attention and consideration. It would help with several other scenarios too, for example when there are foreign currency gains or losses on tax liabilities between the time the liabilities are incurred and they are paid. Currently I have to just live with persistent balances in those accounts, or create expense accounts to clear them.

I have no idea. Manager is the only accounting package I’ve used. I get the feeling that there are all sorts of crazy workarounds being employed by other Zimbabwean businesses to handle the unusual requirements of our tax authority and financial system. I think even my accountant uses a combination of an accounting package with custom expense accounts and regular journal entries combined with Excel-based procedures.

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This whole thing is a real pain. Official exchange rates change weekly and are quoted to up to 6 decimal places. Couple this with the fact that USD1 notes are very hard to come by, never mind coins and you have rounding issues of great complexity. All tax heads have this separation of currencies. That is: Income tax, personal or corporate, VAT and withholding taxes, of which there are several. Yet the company accounts must be kept in ZWL.

I now have 2 different VAT accounts in manager.io. One for usd and one for ZWL

With all the recent development around localizations I think it’s worth giving this topic a bump, as I don’t believe it is possible for us to have full reporting for Zimbabwe without having foreign currency tax accounts. Until we get that I don’t see much point in working on a localization for us.

Still battling with this issue. I have tried for several hours to use the new options in the custom reports with no success.

I am trying to create a report with invoice totals for the month ex vat and with the vat showing separately all in the currency of the invoice and with only 1 row per invoice and ordered by invoice number. I can get some of this, but not all.

If anybody has got past the copy it all to excel stage I would be interested to know