I would appreciate if someone can describe for me how the tax calculations are supposed to work in Baan 5.0c. I'm the IT Director of our company and I'm currently in a disagreement with a consultant on the nature of tax processing. I have gone to Baan Support but I can't get an explanation I can understand.

We are implementing a VAT tax system for one of our companies. There are three tax settings that can be entered in tcmcs0136s000: Net, Gross, and Gross over Hundred.

I'll use a manually entered purchase invoice as an example. My understanding is that when I use tfacp1110s000 to enter an invoice for processing I should get results like these based on the tax type in use on the tax code I'm using for the invoice.

Net
Invoice amount = 100, tax rate = 17.5, tax calculated = 17.50

Gross
Invoice amount = 100, tax rate = 17.5, tax calculated = 14.89

Gross over Hundred
Invoice amount = 100, tax rate = 17.5, tax calculated = 17.50

Further, if after entering the invoice amounts I then go to enter detail lines using session tfacp1112s000, using the Gross over Hundred method the system reduces the invoice amount to 82.50 and leaves the tax calculated amount at 17.50.

In our system, using the Net method the system I enter an amount of 100 and the system treats it like a Gross calculation, calculates a tax of 14.90 and reduces the invoice amount to 85.10.

This Net calculation doesn't seem right but Baan Support says that this is the way it is designed to work.

This seems like a simple topic but I'm having trouble getting a simple answer. Can anyone help explain it to me?

Hi Mick,
although this seems a little confusing the calculation is correct.
Depending on the Tax Setting you have to enter the net or the gross amount.
Let's take your example.

Tax Setting:
Gross:
Enter in tfacp1120s000 the Gross-Invoice-Amount (The Label says Grossamount)
Tax Value = 100 *17.5/117.5 = 14.89

Net:
Enter in tfacp1120s000 the Net-Invoice-Amount (The Label says Netamount)
Tax Value = 100 *17.5/100 = 17.5
Nevertheless you have to insert The Gross-Amount in tfacp1110s000, in this case 117.5. On the third Form of the session you can see the Netamount.

Gross over Hundred:
Tax Value = 100 *17.5/100 = 17.5
In this Case you have to enter the Gross-Amount in tfacp1120s000 if you define the Tax-setting at detail level.
If you define it on Invoice level then indeed the Amount is reduced to 82,50 , but also Label changes to Netamount.

The same with Net-Method defined on Invoice-Level. If you go to tfacp1120s000 and save the data the label changes to Netamount.

You can always confirm on the third form of tfacp1110s000.

Hope this helps,
Andreas

Thanks Andreas. This is a good explanation.

If in Baan a tax calculation should take place, then the system needs to know whether the base amount on which the tax calculation should take place, should be interpreted as gross, nett or gross over hunderd.
This information is stored on the tax code, which you already discovered.

Your example however with tfacp1110s000 is not a very good one, because there this is not applicable. I will explain why:
The total invoice amount which is at the bottom of each paper invoice consists of net amount, tax amount and late payment surcharge. This amount is the amount which should (per definition) be filled in on the first form of tfacp1110s000. This means that the invoice amount in tfacp1110s000 is per definition a GROSS amount. If you choose tax on header, then no matter what tax code you will be chosing, the tax calculation will always be done by interpreting the invoice amount as Gross. You might say that then also only tax codes of type GROSS should be allowed with tax on header in tfacp1110s000, but apparently the designers did not want to force users to create for each tax code a net and a gross variant.

The other reply about tfacp1120s000 is correct, because if you have tax on line with a cost invoice then the amount in that session is interpreted depending on the tax country/code.

Regards,
Michiel

This thread is so old and so true. We were struggling understanding the tax codes until I saw your explanations. Now it all makes sense!

This is still valid for LN 6.1 10.2.1