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Processing a VAT Refund in NetSuite

Finance User Tip

Have you ever found yourself in the situation where you find yourself having to refund the VAT/Tax element of a Sales Transaction only?

As standard NetSuite is normally configured to automatically apply the appropriate VAT/Tax code to any international sales transactions. For example with European Union (EU) transactions the system normally applies VAT to Sales Transaction based on the ship to country and whether or not the Customer is VAT registered and has a Tax Registration ID or not. For example if a sale is to an EU country the system will automatically apply an EU VAT code. If the customer record has a Tax ID included then a 0% Exempt EU VAT code will be applied to the sales transaction. However, if the Tax ID is not present on the customer record then a Standard rate EU tax code would be applied and the customer would be charged VAT at the appropriate rate.

Problems can occur where VAT is applied to such a transaction and the customer subsequently advises you that they do in fact have an VAT registration number and request you to refund the VAT only portion of the sales transaction. In such an instance you will need to process the following:

1. Update the Tax ID on the customer record so that VAT is correctly accounted for on all future sales to the customer.

2. Setup an "Other Charge" item type with sale amount set to zero.

3. Create a standard Refund transaction against the original Sales transaction and save it as follows:

Item Rate Amount Tax Code Tax Rate Gross Amt Tax Amt
Other Charge
0.00
0.00
VAT:ES
0.00%
6.00
6.00

 

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