This article will guide you through the correct procedure to record Value Added Tax (VAT) payments associated with importing goods from third countries. These VAT payments apply when goods are subjected to a customs clearance procedure and VAT is required upon the release of these goods into free circulation.

 

1. Activating the "Import" Tax Key

The software provides a distinct tax key labeled "Import", which is designed to register VAT payments related to imports.  Initially, you need to ensure that this tax key is active (by default, this tax key is inactive due to its application specifics). To do this, navigate through My PayTraq -> Settings -> Accounting -> Tax keys 

 

Then go to the settings of this key (notepad icon) and turn off the "Inactive" switch button.

 
There's no need to alter the percentage rate for this tax key.
Save your changes by clicking the "Change" button.

 

2. Application of the "Import" Tax Key

The "Import" tax key has a specific role – it is used solely to record into the program the amount of VAT paid, unlike other tax keys that apply to the value of goods or services.

This key is used when entering a tax payment or an invoice from a customs broker into the program.

 

3. Recording an Invoice from the Supplier of Goods

It is important to note that when entering an invoice from the supplier of goods, during the import operation, the tax key "No VAT" should be used.

This is because VAT on imports is calculated based on the customs value of the imported goods, which may vary from the invoice's value of goods. The customs value generally includes additional expenses such as customs duty and possibly other related charges. Therefore, using the "Import" tax key for such an invoice would be inappropriate.

 

4. Recording the VAT Paid

There are several ways to record the VAT paid on import:

a) Recording a VAT Payment Made

When processing bank transactions, record the VAT payment as a manual journal entry using the "Create a New Manual Journal" button in the bank reconciliation interface.

Only one line should be filled in, specifying the money account from which the tax was paid, the amount of tax paid in the "Credit" field, and selecting the tax key "Import".  Once the tax key is selected, the second part of the journal is generated automatically, allowing you to post it promptly.

As noted above, the tax key, in this case, applies to the amount of VAT.

 

 

b) Recording an Import Customs Declaration

If you already have a completed import customs declaration at the time of VAT payment, record it as an invoice in the Purchases section of the software by selecting 'Other Expenses' as the type. Enter the VAT amount as calculated according to the customs declaration and select the "Import" tax key. Upon selecting this tax key, the GL account field will be deactivated, and the preset tax account will be used when generating the postings.

 

c) Recording an Invoice Received from a Customs Broker (or another intermediary).

If a customs broker has made the VAT payment on your behalf, enter the invoice received from the broker into the Purchases section of the software. Select the "Import" tax key for the line relating to the VAT amount paid (other services rendered by the broker should be specified in separate lines using the standard tax key). Upon selecting the "Import" tax key, the GL account field in the line will be deactivated, using the preset tax account when generating the posting.

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There is also an additional option to quickly set up a tax liability directly from the supplier invoice form. Once you have entered and confirmed the invoice for the goods to be customs cleared, the "Accrue Import VAT" button will appear in it.

After pressing this button the screen form will open where you can enter the necessary information (all fields are already filled with information from the invoice, but editable):

Date - the default date is the invoice date, you can change it to another date, for example, the date of the customs declaration or the date of the invoice from the customs broker;
Document No. - by default the field is filled with the invoice number, you can change it to the number of the customs declaration or the number of the invoice received from the customs broker;
Amount - the tax amount calculated from the total amount of the invoice, can be changed to the tax amount calculated on the customs declaration, if it differs;
Business partner - in this field you must select a counterparty (e.g. tax administration or customs broker) to which the tax payment will be made.

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The tax amount entered into the software using any of the methods above will be accurately reflected in the VAT return, calculating the taxable amount from the recorded VAT amount.