Here are the recommended changes you must make in your NetSuite account to ensure tax reporting compliance:
Important: The Valid Until field date for EC tax codes should reflect the correct and agreed Brexit date. This is a sample date and should be changed in case Brexit date is finalized to a later date.
You should inactivate EC tax codes since these are no longer required. However, you can inactivate them on a later date in case the EC tax codes are still required for the following certain use cases, such as:
If the Advanced Taxes feature is enabled in your account, ensure that EC tax codes are not used in your tax schedules.
If a default tax code is associated with the customer record, you must ensure that selected default tax code is not an EC tax code.
If a default tax code is associated with the vendor record, you must ensure that selected default tax code is not an EC tax code.
How to Record Postponed Import VAT transactions in NetSuite ?
To create Import VAT code for postponed accounting scheme:
1. Navigate to Setup> Accounting > Taxes > Tax Codes > New
o Go to Setup > Accounting > Taxes > Tax Codes > New
o Select United Kingdom in the country list on the New Tax Code page.
2. On the Tax Code page, enter values in the following fields and check the applicable tax code properties:
o Subsidiaries: Select the subsidiary that has United Kingdom as nexus
o Include Children: Check this box if you want to include child subsidiaries.
Important: The newly-created postponed import VAT code (IMPA-GB) has the same properties of the existing I-GB tax code which is currently reported in Box 7. You can use Saved Search to filter the purchase transactions with IMPA tax code. If you are using the Import CSV feature to create or update multiple purchase transactions where Postponed Accounting applies, ensure to use the postponed import VAT code (IMPA-GB).
Currently, the O-GB tax code is used for zero-rated international exports which is reported in Box 6 of the UK VAT100 return. After Brexit, the same tax code should be used for UK export transactions to EU countries. The net amount of sales to EU countries will need to be reported in Box 8.
The International Tax Reports SuiteApp is planned to be updated by mid-January 2021 to reflect the UK VAT100 form changes. A new tax property for the postponed import VAT code will be introduced to correctly report the values in the VAT100 return. Import transactions under the postponed accounting scheme will be reported in Boxes 2, 4 and 9. Zero-rated export transactions will be reported in Box 8.
The following table summarizes the form changes of UK VAT100 return :
|Box Number||Box Label (Before Brexit)||Box Label (After Brexit)||Reported Value|
|2||VAT due in this period on acquisitions from other EC Member States||VAT due in this period on imports accounted for through postponed accounting||Notional tax amount of imports (postponed accounting)|
|4||VAT reclaimed in this period on purchases and other inputs (including acquisitions from the EC)||VAT reclaimed in this period on purchases and other inputs including imports||Sales tax amount, notional tax amount of purchases, net or tax amount of 100% VAT bill|
|8||Total value of all suppliesof goods and related services, excluding any VAT, to other EC Member States||Total value of all exports of goods, excluding any VAT||Sales net amount for all exports|
|9||Total value of all acquisitions of goods and related services, excluding any VAT, from other EC Member States||Total value of all imports of goods, excluding any VAT||Purchase net amount for all imports|
Similarly, goods from and to the U.K. will no longer be treated as intra-community transactions for EU member subsidiaries/nexuses. These will be considered as either import or export transactions to the U.K. Users should not apply any EC tax code to their sales or purchase transactions to or from U.K.
A standard zero-rated export tax code should be applied to sales transactions to the U.K. An import tax code should be applied to purchases transactions from the U.K. We do, however, advise that you check each country’s tax determination and reporting rules as ultimately that responsibility lies with your business.
Important: You should check your VAT return and ensure that goods to and from U.K. are not reported as intra-community transactions but as import and export transactions.
The system marks the 28 countries that are members of the EU and/or follow the EU rules (Iceland, Liechtenstein, and Norway).
Based on this mark, the tax lookup determines the nature of the cross-border transaction and assigns the tax codes based on the setup. These marks are going to be removed from U.K. depending on the factual situation and exact date of termination of membership and/or following the EU tax rules. This will be pushed into production at the date of termination of membership of EU.
After the change, the tax lookup will consider the U.K. as a non-member of the EU and will not follow EU tax rules and determine the tax codes accordingly.
These changes will be automatically implemented and pushed to all accounts in EU member countries. The date for this is still to be determined.