Importing of goods

I will do it today, post them both to that account

I have done this so both of the transport invoices are sitting now in Transport Clearing account
What I have spotted that on the Clearing agents Invoice Import VAT can not be selected to 100% Import VAT, if I do that then the Transport clearing account will not contain that portion

OK, so on that invoice you need to do a couple of extra entries - read below

OK, so on that invoice you need to do a couple of extra entries - read below

Hi Brucanna
what extra entries you talking about because I think I’ve lost you
Like I’ve stated before if I select the portion of VAT for 100% VAT than this part does not appear on BS if I don’t assign it to the 100% vat than the thing is correct on BS

This is without VAT being asign
if I do it with full VAT

OK, lets just clear up this VAT situation first so that we have the same understanding.

When you say VAT 100%, is this the same as when you say VAT on Import ?
The BS account - VAT on Import, did you create this account in the Chart of Accounts ?
When you run a VAT report, does it pick up your VAT on Import values ?

Once this is cleared up we can move on to re-allocating the Transport Clearing
PS: Do you don’t to add “account” after Transport Clearing.

Yes this is the same VAT and it should be calculated as a VAT

[quote=“Brucanna, post:19, topic:6903”]
The BS account - VAT on Import, did you create this account in the Chart of Accounts ?
[/quote]That’s correct I have created it in the Chart of Accounts

here is the screenshot

I hope this helps

Thanks for that, your Tax Summary highlights a slight problem with the method currently being used for the Import Tax, there is no value under Net Purchases on that line, therefore it appears that you are paying VAT without making any purchases, that is why the extra entries mentioned above are required.

If you read the following edited extract from the “GST on importation” link you will get an explanation. But first I am going to suggest that Transport Clearing be re-named to Importation Clearing so that all clearing entries relating to importation are located in the one account

Start edited extract
This is how it works when you end up paying VAT to Customs separate from purchase invoice:

When you record the purchase invoice from the overseas supplier, record it as you would record any other expense. Use tax code (VAT TAX FREE) because supplier is not charging you VAT.

Then the VAT invoice comes from customs. Let’s say the original purchase was 10,000 (already recorded) and the VAT invoice comes for $1,400 (14%)

You need to split this $1,400 in following way on the invoice with the Customs VAT included by replacing the existing VAT Account line with:
Account = Import Clearing -10,000 with tax code: VAT TAX FREE
Account = Import Clearing 11,400 with tax code: VAT 14% (being inclusive)

This split reverses the original VAT-free purchase (-10,000) and records a new purchase with VAT 14% code ($11,400). Now the Tax Summary will show correct purchases

Lastly, delete tax code - VAT 100% and delete COA - VAT on import which you created.
End Edited Extract

Please tell me if I have a proper understanding of the action
on the purchase invoice from Courier; the part for VAT bill of entry I should create it twice correct? one with the negative value from the first TAX FREE INVOICE and replace it with the new value which would contain money spent on Supplier Invoice and the VAT Paid correct? than I have to mark it as a VAT Included in that portion? correct?
Than I definitely don’t understand, because it works perfect with single currency but not with the exchange included with it
If I do that what I have said before than the VAT claimable would be either less or more than 14%
What Customs does, it takes the value of the shipment say $ 10,000 and adds to it duty say 2%
and than the VAT is added to the whole equation. so to say they will take the Invoice Value $ 10,000 multiply by the exchange rate on that day +5% handling fee say R 15.00 than from R 150,000 they calculate Duty R 3,000 and then from R 153,000 calculate VAT R 21,420.
So even on that day with the same exchange rate the VAT is not 14% anymore, now add the exchange fluctuations that on the day I have paid my supplier the $ costed R 16.00 so I will really pay to the supplier for the same $ 10,000.00 R 160,000.00 adding VAT now = R 181,420.00 now divide to get VAT R 22279.65 which is not the same any more

Yes, but not by using the first tax free invoice as exchange rates don’t come into it.
If Customs has used 153,000 to calculate the VAT, then you use 153,000 as the + and - values

I finally understand why there is a difference between SA calculations and Australian calculations
simply because Lubos created that extra codes for Australian taxes but there is no possibility to add and extra code to the tax code which would do the same?

Sorry Brucanna
seams I’m dumber than it can be
in one way I do understand what is written but when I’m trying to do what is there I can not do it
let me explain why
I have two invoices

  1. is the original purchase order created to my supplier (it is in EURO but this is besides the point) and is for products in my stock list so I can not assign them to Import Clearing Account, they stay as Inventory On Hand.
  2. the second invoice (which contains VAT on import) is from my courier if I do what is written and put adjustments than it works but I have to negate the value of the total first invoice (the one from my supplier) or let me say differently I have to calculate what the value of that invoice would be inclusive of VAT and negate that number (taken from the VAT paid) and add the value (positive) to the invoice and select to add VAT
    in that way the VAT is correct and the Import clearing account becomes the left over of the total amount less VAT the account payable stays correct
    Now if I add to the first invoice the value of the second invoice to get the stock vale right then my invoice becomes larger and partially paid
    Please help me to understand this since whatever I do does not work as it suppose to.

I don’t mean to step into an ongoing discussion. But, @jacekm, do you mean purchase order or purchase invoice? Those are very different things. Purchase orders have no impact on financials or inventory. Purchase invoices do.

Hi Tut
I rather should say Purchase Invoice
to me this is converted from Purchase Order to purchase Invoice

OK. I was just confirming. I will bow out now.

@jacekm - I think you need to paste screenshots of the courier purchase invoice, the freight-in section of the suppliers invoice and the transaction within Importation Clearing. Meanwhile lets see if we work through what you are trying to say.

Perfect, so now lets forget about this invoice as it not needed for the VAT entries or Courier Invoice

Why, if the adjustments worked then the Courier invoice should balance and the VAT will be correct. The value of the first invoice has nothing to do with processing the courier invoice.

Why do you need to calculate that, you shouldn’t need to do any calculating. The VAT is taken care of within the courier invoice - as for the rest I’m not grasping what you are trying to say.

The balance on the Importation Clearing account should now represent the total of the Transport and Courier Invoices. Now convert that balance to EURO using the same exchange rate as used for the Suppliers Invoice. Now using the screenshot in my first post above add two lines to the Suppliers Invoice - on the first line select Freight-In under item and put the euro value under unit price (qty should be blank) - on the second line select Importation Clearing and enter the same value but as a negative - the total value of the Suppliers invoice remains unchanged.

Hi Brucanna
I finally got the whole calculations
here is the screenshot of my courier Purchase Invoice

and now all the VAT and everything works out
below is the screenshot of my supplier’s invoice

the banking costs which you se there are specifically applicable to the specific transfer that’s why I usually put them there
below is the screenshot of the accountsso at present everything works out as it suppose to
Thanks for your help I really appreciate it
I think that will be useful (at least for South African users) to add code to the TAX codes the same way @lubos has done for Australia that would make thinks much easier, but so far I will use the existing method thanks again

For the Banking Costs, why don’t you post the initial expense to the Importation Clearing account, then it can be amalgamated into the one Freight-In entry.

On a separate matter, the Equity section is showing accounts for Starting Balance Equity and Suspense - neither of those should be there - so there are problems with the transactions that make up those balances.

Hi Brucanna

The reason for it is because this is an old business and I’,m basically reconciling everything together from old system to new and have already imported bank as well and I have not finished yet