Introduction to VAT/tax Dates in Business Central

Background

Starting with release wave 2 2022 release, Microsoft Dynamics 365 Business Central offers a VAT Date feature that enables more flexibility for dealing with tax-related scenarios. We developed the feature in response to a proposal submitted on the BcIdeas site. The proposal suggested we add more options for defining dates to use in tax reporting. VAT Date offers just that. Greater flexibility for specifying dates when you post documents, and better compliance control for VAT-related documents.

Availability and Localizations

VAT Date is available in most of the countries where Business Central is available, except Italy. In localizations without a value-added tax (VAT) system, the date is referred to as the "tax date." The tax date automatically uses the posting date on documents.

Pre-release activities

In preparation for 2022 release wave 2, Microsoft ran an upgrade code to populate existing entries with the posting date. We did that because the VAT date wasn’t previously used for VAT reporting. Data Transfer was used for the first time to populate data. Due to the large number of records we upgraded, the process took slightly longer than usual.

Understand VAT Date setup

To use the VAT Date feature, the first step is to choose Enabled in the VAT Date Usage field on the General Ledger Setup page. Enabling the VAT Date Usage field makes the VAT Date field available on relevant pages. It’s important to note that the other two options in the field won't block the use of VAT dates.

·??????Enabled (Prevent modification) option prevents users from modifying the VAT date after the document has been posted (it's enabled by default).

·??????Disabled hides all instances of the VAT Date across the application, but the VAT Date will still be used and automatically populated with the posting date.

Note that the options aren’t available in country versions where VAT isn’t used.

If the feature is enabled, you can enter the VAT date on the relevant pages. However, if left empty, it will be populated with the default value. The Default VAT Date field defines whether the Posting Date or the Document Date are used as the default value. If you use VAT periods, the Control VAT Period field controls whether to check, and potentially block, posting if the VAT Date is defined within closed periods. In both cases, the following happens:

·??????These settings ensure consistency in VAT reporting

·??????Prevent posted documents with an empty VAT Date

·??????Prevent having new posted entries within closed or released VAT periods.

VAT date validation in the posting routine

The VAT Date field is important in most VAT-related documents and reports. The field is included in the corresponding header tables, and its availability is controlled by the Application Area (VAT) and the VAT Data Usage field from the General Ledger Setup. The name of the field in tables is “VAT Reporting Date.”

When creating new documents, the VAT Date field automatically contains a value from either the Posting Date or Document Date fields. However, users are responsible for ensuring that the date is correct. You can’t post documents without specifying a VAT date.

If a document is posted automatically using APIs or other means without filling in the VAT Date, the date is verified during the posting procedure. If the VAT date is missing, it will be automatically populated by a default value defined in the General Ledger Setup. This is implemented in the following codeunits:

·??????For batch posting, in the "Gen.?Jnl.-Post?Batch" codeunit

·??????For all other posting, in the "Gen.?Jnl.-Post?Line" codeunit

·??????For item posting, in the "Item Jnl.-Post Line" codeunit

Depending on the setting on the General Ledger Setup page, the VAT Date field is checked against the VAT Periods and Allowed Posting Period fields. If the VAT date falls within a closed VAT period or is outside of the allowed posting period, the posting stops and a standard error message (or a warning if the Block posting within closed and warn for released period option is selected in the Control VAT Period setup) appears.

After the document is posted, the VAT date is saved in the GLEntry and VATEntry tables, and posted document's header tables.

To optimize performance, the table keys in the GLEntry and VATEntry tables have been modified to use the new VAT Reporting Date field.

Change the VAT date on posted documents

If the VAT date must be changed after the document is posted, you can modify the date from the VAT Entries page. To ensure consistency, changes to the VAT date of the VAT entry are automatically assigned to the corresponding G/L entry and posted documents tables. If there are multiple VAT entries with the same type and document number, only the VAT entries with the same transaction number are changed.

The helper functions of the VAT Date are stored in the "VAT?Reporting?Date?Mgt" codeunit.

VAT Reporting

VAT related reports now run using the VAT date to filter relevant records. In addition to country-specific reports, the following reports are changed:

-?????????VAT Statement

-?????????Calc and Post VAT Settlement

-?????????VAT Report Suggest Lines

-?????????VAT- VIES Declaration Disk

-?????????VAT- VIES Declaration Tax Auth

-?????????G/L - VAT Reconciliation

Conclusion

The tax capabilities of Business Central are integral to the product, and Microsoft is constantly seeking ways to enhance them. One such effort involves the introduction of two new features, VAT Date and non-deductible VAT, which will be included in Update 1 for 2023 release wave 1. These changes will impact several documents, the posting routine, and VAT-related reports.

With the implementation of VAT Date, users have greater control over tax dates, get help to avoid posting incorrect VAT periods, and get consistency in VAT reporting. This feature is especially useful for businesses that operate across multiple jurisdictions with varying VAT reporting requirements.

In addition, the non-deductible VAT feature will enable businesses to identify and account for VAT that isn’t recoverable, helping them calculate their tax liability more accurately. Together, these updates will improve the accuracy and efficiency of tax management in Business Central.