3621839 - Processing VAT on Retention

Symptom

How to Processing VAT on Retention

"Image/data in this KBA is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental."

Environment

SAP S/4HANA Public Cloud

Resolution

This is a test example to show customizing and postings concerning VAT Retention. Note any customizing and postings should be in accordance with own Legal and Business requirements.

Configuration Activities:

ICV Retention (ID 104113)

Tax Treatment in Invoice Reduction (ID 103276)

Postings:

Purchase order must be subject to retention amount/percentage (that is 10% of invoice amount).
Create Purchase Order - App Manage Purchase Orders (F0842A).

Display Purchase Orders - App Manage Purchase Orders (F0842A)

2. Goods Receipt
Create a good receipt against Purchase Order without the Retention amount using app Post Goods Receipt for Purchasing Document (F0843)

Display FI journal entry generated from material document posted in app Manage Journal Entries (F0717A)

3. Supplier Invoice
App Create Supplier Invoice(F0859)/Create Supplier Invoice - Advanced (MIRO) .
- A supplier invoice is posted, and the retention amount is retained as deposit till all contractual obligations are met by the supplier.
- VAT base amount is updated on the net of supplier invoice amount (1000) – retention amount (10% = 100)].
  
  Display FI journal entries generated from invoice posted in app Manage Journal Entries (F0717A)
  
  5100000005 Accounting Document
  
  5100000006 Accounting Document
  
  4. Vendor Payment
  
  App Post Outgoing Payments (F1612)
  
  A vendor payment document is posted for the net 945 [Supplier invoice amount (1000) – Retention amount (100)].
  
  Bank line item 945
  Items to be cleared: Select
  
  5100000005
  5100000006
Display FI journal entry generated posted in app Manage Journal Entries (F0717A)

5.

Retention Clearing

When all contractual obligations are met by the supplier, you can create a manual clearing outgoing payment, where open item for the retention amount along with VAT is posted and subsequently the retention payment is made.

In App Edit User-Specific Options for Journal Entries (F2130), Enter Net Amount is selected

Use app Clear outgoing payments (F1367 ) , select transfer posting, Clear Open Items

Choose Document type KA

The following entries are made:

5.1. Post on Account:
Supplier Credit Amount
33300001 105

5.2. Post to G/L Account

Account Debit Amount Tax Code
21720200 100,00 V2

Account Credit Amount Tax Code
21720200 100,00 (empty - no tax code)

5.3. Open AP/AR Items
Select open item with Amount 100

Further Details:

5.1 Post on Account:
This item corresponds to the retention amount including VAT that must now be paid to the supplier.

5.2 Post to G/L Account

First item corresponds to an offsetting entry for the vendor posting created in the first line item with Tax code

The next item corresponds to an offsetting entry for the retention posting. Entry is without tax code

5.3 Open AP/AR Items
Process Open Items:
Account Type: K, Special G/L Ind.: H, Normal OI: <unselected>
Select Open Item Select the relevant open document to be cleared.

Post

Display FI journal entry generated from invoice posted in app Manage Journal Entries (F0717A)

6. Retention Payment

App Post Outgoing Payments (F1612)

The retention amount payment along with VAT is made.

Select 1700000000 and post

Display FI journal entry generated from invoice posted in app Manage Journal Entries (F0717A)