The Secret Map of  D365 Tax Module , especially for Egypt

Introduction

The tax module in D365 is a comprehensive one because of the differences between tax legislation around the world.

The system includes the components that help you configure process and even report many kinds of indirect taxes like (Value added taxes VAT ,Sales Taxes ST and  Goods and Services Taxes GST) and also can maintain some components of direct taxes like Withholding taxes , unit based fees and other tax rates.

There are many reports layouts added in the system that matched with some countries Tax Authorities,  and can be linked with a report code that refer to a field number on the Authority tax report , so that you can send tax reports like sales tax or VAT from D365 directly to the related tax authority.

And also, the code can be used for the sales tax payment.

To our followers in countries that apply this valuable feature , please describe to us more about it in the comments or you can participate by a blog illustrating that process from a functional preview.

Preparation and Configuration.

In our topic we are going to talk about using the Tax module in Egypt,
Egyptian companies can utilise this module In creating and monitoring value added tax and withholding tax and stamp taxes

Let’s start with the Value added tax VAT,
Firstly you as a consultant should expect all the requirements to configure a VAT that meet the business requirements, and this will be done by analysing and discussing every step in the below picture.

This picture summarizes and can be used as a guide for the Configuration process.

Step 1 (Ledger Posting Group)

The Ledger posting group controls the automatic posting of sales taxes ,so you have to consider the accounts related to the tax configuration in the step of preparing  chart of account (don’t forget to assign a sales tax posting type for main accounts that will be used in ledger posting group.

What if, I changed the accounts in the ledger posting group after posting some data on them ?
The effect of the new ledger posting group will be only on transactions that have not yet posted

According to the Egyptian VAT law , there is a VAT on your purchases and on your sales ,
We will consider
Sales Tax payable             “   the account in the general ledger that will collect all the VAT considered in your sales transactions  to be payable to the Tax authority”

Sales Tax Receivables     “  the account in the general ledger that will collect all the VAT amount burden in your purchase transactions to be receivable “due” from the tax authority.

There is not Use tax law in Egypt so, it will be no use of use tax expense or payable.

Vendor Cash Discount    “ If there a cash discount earned from a vendor, and that has an effect your VAT report to the tax authority “

Customer Cash Discount  “ If there a cash discount given to a customer, and that has an effect your VAT report to the tax authority “

Settlement account “ settlement account is the pool the all the above accounts will be offset to it ,so I can have at the end of the tax period on balance of my due amount to the tax authority.

Quick Notes on step 1 (ledger posting group)

First , You might not find sales tax receivable box while configuring ,
In that case you have to go to general ledger parameters > Sales tax , and check the box of Apply sales taxation rules  is set to “No” as shown below.

What if I set it to “Yes”
All the invoice will be expensed and no VAT can be deducted from the vendor , and this is not applicable in Egypt VAT Law.

Second If the company has a cash discount transaction that includes VAT, make sure to the below parameters are set.