VAT Recalculation

When a customer makes payment in a foreign currency, VAT must be recalculated using the exchange rate at the time of the invoice payment.

A company creates an invoice in a foreign currency for the purchase of taxable goods and taxable services by a foreign customer. This invoice includes VAT. When the customer makes the payment at a later date, VAT is recalculated based on the original sales amount, and adjusted for the new currency rates.

The following steps show how to create a report for unrealized VAT amounts:

  • Set up an option to allow recalculation of VAT upon receipt of payment.
  • Recalculate VAT upon receipt of payment.
  • Adjust journal entries for realization of VAT taxes payable to recognize exchange differences.
  • Create a VAT statement that shows the unrealized VAT amounts.

See Also

Report VAT to Tax Authorities
Set Up Unrealized Sales Tax and Sales Payment Discounts
Mexico Local Functionality