Reading the post relating to Import of goods into Australia, it looks like i will have to make a tax code of 100% for the import duty and log this in separate as the actual Import Duty cost into the Purchase Invoice section.
This should then put the import tax into the liabilities section of the account summary and appear on the balance sheet.
OK, so when you receive an invoice from supplier, they are not charging you VAT so you enter purchase invoice or simple spend money transaction but don’t use VAT code because supplier is not charging you VAT.
So far so good right?
Then you will receive separate bill charging you VAT and import duty tax. So on £7,500.00, 20% VAT is £1,500 and 5% import duty tax is on £375.00. Therefore you will receive a bill of £1,875.00 right?
Now here is an example of how to record this bill correctly:
Notice how first line is -7,500 and no tax code is used. This is to reverse purchase created by original transaction. Then next line is 9,000, this is new purchase price which includes VAT 20% and finally the last line accounts for import duty tax 375.00 coming to total of 1,875.00
sorry to reopen this subject, but have question here, will explain by Example.
am importing Goods,( which will be stored in Inventory for resale).
as mentioned above, goods value will have two Tax, Customs duty and Import VAT.
Customs duty is paid at clearance time, and will be paid against clearance agent or directly to customs authority,
Import VAT will be paid via reconciliation with TAX authority,
Customs Paid shouldn’t be reflected in Inventory items, not as just expenses, since customs duty is adding cost to the items, which shall be counted based on sold quantity not just one time payment amount ?
Unsure what your question is but perhaps the above statement can be re-written as:
Customs Paid should be reflected in Inventory items, not as expenses, since customs duty is adding cost to the Inventory items, which shall be counted based on purchase quantity and not as a one time payment.
It doesn’t have to be same currency, you can add taxes in currency 1 to suppliers purchase invoice in currency 2 by converting the taxes using an exchange rate and adding as Freight-in to the purchase invoice.
But this wont add / spread those costs over the actual inventory items involved as requested:
“Customs paid should be reflected in Inventory items since customs duty is adding cost to the Inventory items”
Besides, as you will never sell “tax” or “clearance”, those inventory items will never decrease in value unless you journalise them to P&L expenses.
I just read all responses concerning import duty. I do understand that I have to add to the cost of buying my goods to have my final sales value. My question is say I paid for import duty straight to the authories through my bank how do I count for that payment on my statement? Do I create a customs duty expense?
Hi @lubos I am new here, and I am a little bit confused. I am importing goods from Asia and when those goods arrive at my country, I have to pay 15% over the CIF amount as a customs tax, which goes to the cost of the goods, then custom authorities charge me another 15% as a sales tax paid in advance, I am supposed to charge that last 15% to my customer when I sell to them and decrease it from the amount already paid. Both taxes come in the same bill from the customs authorities. The thing is, I don’t know how to allocate in the system, the customs tax to the cost of the goods, and the sales tax paid in advance to the proper tax account. Here is an example: Amount invoiced by the supplier $7,000.00, freight plus insurance $3,000.00 so CIF= $10,000.00; Customs tax= $1,500.00, Sales tax paid in advance ($11,500.00 x 15%) = $1,725.00; tax bill sent by customs authorities $3,225.00. I’ve read so many threads and tried some of the things there, but I’m still confused. I hope I’ve made myself clear, can you please guide me?
In essence, from the customs authorities invoice the 15% customs tax goes to a clearing account and gets back added to the suppliers invoice as freight-in whereas the Sales Tax gets posted to the Tax Payable account…