Output VAT on Imported services

CaptureIT · ‎May 16, 2024

Hi, I hope someone can assist.

My client used FIVERR (US based company) for remote administrative tasks.

The advice I received on how to process the VAT is as follows:

It is deemed to be an import so there's Output VAT, and how it is calculated is as follows:

Add 10% to the amount paid and then calculate VAT at 15%.

For example, if client paid $10, when translated to Rands, it's about R200, add 10% and that gives you R220. Multiply R220 by 15% which is R33 which will be Output VAT.

The problem comes in when capturing the above transaction in QuickBooks as an expense. If I select standard import in the VAT field, it processes it as Input VAT and not Output VAT.

Does anyone have any knowledge on VAT on imported services and how it should be processed in Quickbooks?

Thank you.

Archie_B · ‎May 16, 2024

I appreciate your effort in sharing those details, CaptureIT

Before we begin, are you trying to set a default tax rate for your line item to reflect as output VAT in an expense transaction?

If so, you just need to select the Default tax rate upon creating an Expense. See the second screenshot below for your visual reference:

You can also run the VAT Summary report to see the summary information for each box on your VAT return. This will help you as you complete and submit your return to your VAT agency.

To learn more about the filing and payment process, visit this article: File and Pay Tax/GST.

Let me know if you still need assistance or have other VAT-related concerns. I'll be here to help

CaptureIT · ‎May 16, 2024

Thank you so much for your feedback and assistance.

Can you make that screenshot zoomed in? As I am struggling to see it?

Thank you

LeizylM · ‎May 16, 2024

Let me quickly adjust the screenshot to make it more visible for you, CaptureIT.

As for zooming in on a screenshot, you can try using the zoom function on your device or software.

I'm also adding these links to guide you along:

I'm more than willing to help if you have any other concerns with your VAT in QuickBooks Online. I'll ensure your needs are taken care of. Take care.

CaptureIT · ‎May 16, 2024

Thank you for the feedback, I don't have a zoom function but I can see the last screenshot better.

I am selecting Standard Imports under the VAT option, but it's posting it as Input VAT in the ledger, and not Output VAT.

On normal expenses we claim VAT so that's Input VAT, however, for imported good or services we have to pay VAT, and I am struggling to process this transaction in QuickBooks. How do I process it as VAT that I have to pay on something that I purchased?

LeizylM · ‎May 16, 2024

I appreciate you getting back to us, CaptureIT. I'm here to ensure that the VAT on imported good an services is correctly recorded as an Output VAT on your QuickBooks Online (QBO).

After selecting the standard import option, it will appear as "Accounts Payable" in the General Ledger report. Can you confirm whether the transactions are categorized as both input VAT and output VAT in QuickBooks? Additionally, providing a screenshot of your report would be helpful for reference in understanding the issue.

If you want to post the imported goods and services to a sales tax liability account, we can manually create a separate VAT code specifically for Output VAT on imports.

Here's how:

Go to VAT from the left menu and click Add Tax.
Select Tax rate.
Enter the Tax name (Output VAT 15%).
Enter Description.
Click Purchases and enter the Purchase rate.
From the Account dropdown, select Liability.

You can check this article for more information about creating a new tax rate: Set up a new tax rate.

Please don't hesitate to reach out if you have VAT-related concerns. I'm always here to help. Take care!

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Output VAT on Imported services