I am a little confused with the reverse charge mechanism? What effect does it have ? I am trying to replicate this
Reverse Charge is applicable where the supplier is non-resident and not registered for VAT. In this case buyer has to account for VAT as Output VAT and buyer also record Input VAT because its his purchase also.
So technically buyer is not actually paying anything to FTA. Its just a bookish entry which has to be made and also needs to be reported in VAT return.
If in case the buyer is not registered for VAT then he cannot claim input VAT, therefore VAT become his cost
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@ushashmi so how do i record it? I understand that technically we dont need to pay anything to FTA. So I would leave Taxes & Charges empty. But as you mentioned I would need to record it , so i just pass a manual entry One to Output Vat & another to INput Vat technically cancelling the payable value?
Basically there will be no payable generated becuase the supplier invoice will not have any VAT. However, you can record the taxes in the same purchase invoice and add one more line under the taxes and make actual, select output GL and put the same amount of VAT in negative
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Have anyone achieved it and how does it gets reported ?
essentially the entry cancels itself out, the total of the cancelled values is shown on the vat report, there is a line for reverse charge total.