SD (Sales and Distribution), FIN (Finance), SAP ERP

UAE VAT-Customer Advance Process and Subsequent Sales Adjustment

As per the new VAT law in UAE any advance received from customer is subject to VAT, if Sales Order is not processed within 14 days of advance receipt.

Scenario:

We are supposed to receive an Advance Payment of AED 1050.00 (including VAT) from a customer against a total value of supply of goods of AED 3000.00

Accounting entry for the entire cycle:

Description Debit Credit
Bank Account 1,050.00
Customer Account 2,100.00
VAT Output 150.00
Sales 3,000.00

Customer balance in FBL5N should be 2,100.00

Tax report should be base amount 3,000.00 and Tax amount 150.00.

Configuration Steps:

  • Configuration in Pricing Procedure
  • Sales Invoice Output Changes
  • New Advance Tax Invoice Form
  • Field Status for GL account group
  • Special GL account configuration

Configuration in Pricing Procedure

For capturing advance amount in Sales Invoice output and deducting the same from total sales value in Invoice output New statistical condition type to be created.

SD (Sales and Distribution), FIN (Finance), SAP ERP

Update Pricing Procedure.

SD (Sales and Distribution), FIN (Finance), SAP ERP

Sales Invoice Output Changes

Change the sales invoice output form to capture ZADV condition type and recalculate Total and Tax amount.

SD (Sales and Distribution), FIN (Finance), SAP ERP

New Advance Tax Invoice Form

Tax invoice form to be created for document posted via F-29

SD (Sales and Distribution), FIN (Finance), SAP ERP

Field Status for GL account group

OBC4 for activating sales order field in F-37 / F-29

SD (Sales and Distribution), FIN (Finance), SAP ERP

Special GL account configuration

OBXR

SD (Sales and Distribution), FIN (Finance), SAP ERP

Business Process Steps

Step1: Create the sales Order (VA01)

SD (Sales and Distribution), FIN (Finance), SAP ERP

Step 2: Create Customer down payment request via F-37

SD (Sales and Distribution), FIN (Finance), SAP ERP

In the Next screen you need to input the advance amount and provide the tax code which should be same as SO and it can be referred over there. In the Sales document field input the sales order #. Give other parameters as required.

SD (Sales and Distribution), FIN (Finance), SAP ERP

Then Simulate and Save. It will post one noted item for the customer and will hit to one Alternate reconciliation account which is in this case 110050. This is nothing but your Sales Advance account for this customer.

SD (Sales and Distribution), FIN (Finance), SAP ERP

Step 3: Post Customer Advance payment in F-29

SD (Sales and Distribution), FIN (Finance), SAP ERP

In the Next screen you need to input the advance amount and provide the tax code which should be same as SO and it can be referred over there. In the Sales document field input the sales order #. Give other parameters as required.

SD (Sales and Distribution), FIN (Finance), SAP ERP

Custom output form to be created for generating Tax invoice from F-29

SD (Sales and Distribution), FIN (Finance), SAP ERP

Step 4: Complete customer billing against Sales Order. (VF01)

SD (Sales and Distribution), FIN (Finance), SAP ERP

Custom output form to be created for generating Tax invoice

SD (Sales and Distribution), FIN (Finance), SAP ERP

Step 5: Now we need to execute T/code F-39 and clear customer down payment.

SD (Sales and Distribution), FIN (Finance), SAP ERP

In the next screen you need to choose for which down payment/advance you want to make the transfer

SD (Sales and Distribution), FIN (Finance), SAP ERP

So in this way we are moving sales advance amount to customer account.

FBL5N Report

SD (Sales and Distribution), FIN (Finance), SAP ERP

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