GUIDELINES FOR HANDLING THE CHANGE IN VAT RATE IN FINCON ACCOUNTING
On 21 February 2018, the National Treasury has announced that the Value Added Tax (VAT) rate will increase from 14% to 15%, effective from 1 April 2018.
Fincon Accounting has the ability to manage this change already built-in. Please follow the following guidelines on how to handle the changing of the VAT rate:
What needs to happen is as follows:
- The current VAT rate has to be changed to 15%; and
- A new VAT code has to be created for VAT at 14%.
- All standard invoices and outstanding sales orders and purchase orders have to be refreshed for the change in VAT rate to pull through.
The standard invoices and outstanding sales orders and purchase orders have to be refreshed otherwise the VAT will stay at the old rate.
Why the need to create a new VAT code for the old VAT rate?
Even though the VAT rate is changing to 15% on 1 April 2018, chances are that you are going to run into a situation where you need to credit an invoice or debit a GRV that was made using VAT at 14%. Instead of writing the invoice or GRV back at 15% percent (and unjustly benefitting or penalising yourself), you will use the VAT code for VAT at 14%.
NOTE: This has to happen right after the month-end procedures of March 2018, before trading starts for April 2018.
Frequently asked questions
Where do you change the tax code when capturing a credit note?
Where do you change the tax code when capturing a debit note?
Why can't I change the tax code on a credit note or debit note?
Check that you have the appropriate user right to perform such a function.
Some additional points
Here are some additional points to bear in mind:
- Transactions should be processed from 1 April 2018 on Fincon as usual.
- Whenever a credit or debit note is made for a transaction that occurred at the previous VAT rate (i.e. 14%), change the VAT code on the document to the new "old" VAT code created (code 02 in our example).
- Please do not hesitate to contact our support line should anything remain unclear.
The Fincon Team
012 663 7567