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Dear Members,

May i know is there any difference between in setups for Non Recoverable tax and Recoverable Tax.

Thanks in Advance

Hi,
If you r using tax manager in R12, You will need to setup a recovery rate with 0% and link it to the non-recoverable tax and another recovery rate with 100% and link it to the recoverable tax.

Regards,
Mohamed Badry

Hi Mohamed,

Thanks for reply

Can you Please elaborate.

hi mohamed i need more details

Hi,

<b>Non recoverable Tax</b> nothing but we don't recover anything from Paid Tax Amount, Ex: Sales Tax and VAT on Expense and Fixed Assets (In case of End Consumers)

<b>Recoverable Tax</b> nothing but we recover Some or Full of the Tax amount which we paid already. Ex: VAT on Inventory Items, Some Geography or Product Exemptions or Rebates

Most of the Cases the Company's have Sales tax and VAT,

For <b>Sales Tax</b>, The company doesn't recover any amount and Treats all amount as Expense...so for this <b>Tax Rates</b> define is enough and no need to setup <b>Recoverable Tax Rates</b>.

Ex: IF Sales Tax is 3%, we need to set up as follows.

Tax rate -> 3%....No need to define Recovery rates.

For <b>VAT</b>, The company Recovers Full (100%) amount for Inventory Items (Make the product and sell to Customers); and Don't Recover(0%) any amount for Expense items and Fixed Asset Purchases because the company is End Consumer for this,......so for this we need to Define <b>Tax Rate</b> and <b>Recoverable Rates</b> ( 0% and 100% separately).....we need to assign, for which Transactions or Accounts we are Recovering and not Recovering the amounts in Tax rules through Determining factors.

Ex: IF VAT IS 4%, we need to set up as follows.

Tax rate -> 4%
Recoverable Rate ->100%
Recoverable Rate ->0%

Based on our requirement we can define Various Tax Recovery rates Like 2%,5%,10%,.... (not only 0% and 100%).


Thank you,
Anjireddy