Setting Up Reverse Charges

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Reverse Charges Screen

About Reverse Charges

Adding Tax Authorities

Adding Tax Classes

Entering Tax Rates

Adding Tax Groups

You can specify whether to use reverse charges for each set of purchases tax classes.

Note: When you change which tax classes use reverse charges, the changes will apply only to invoices entered after you save your changes.

  • Add tax authorities and tax classes.

    To use reverse charges, a tax authority must have the following settings on the Tax Authorities screen:

    • On the Profile tab:
      • The Report Tax on Retainage Document field must be set to At Time of Original Document.
    • On the Accounts tab:
      • The Tax Recoverable option must be selected.
      • A Recoverable Tax Account must be specified, and the Recoverable Rate must be set to 100.
  • In General Ledger, set up input and output tax accounts. For more information, see About Reverse Charges.

To set up reverse charges:

  1. Open Tax Services > Tax Setup > Reverse Charges.
  2. Select a Tax Authority code, and then specify an Input Tax Account, an Output Tax Account, and optionally a Threshold Amount.
  3. In the table, enter Yes for each combination of item tax class and vendor tax class that will use reverse charges.

    Tip: You can use the Set All To Yes and Set All To No buttons above the table to enter Yes or No for all combinations of item tax class and vendor tax class.

  4. When you are finished, click Add or Save.