VAT accounting on import items paid at customs

Through this post I am seeking a solution from accounting experts on the forum. Background is as follows

Company A (importer) imports items valued at 1000 from Company Z located in another country. Company A local laws states that VAT of 5% is to be charged on invoice value by Customs authorities at the time of shipment clearance.

Company Z doesn’t charge any VAT to company A. Importer makes a purchase invoice against the seller without vat. When shipment is sent the invoice value maybe reduced to save on customs and import duty. Or actual value is taken into consideration. Customs authorities clear the shipment and give their invoice that reflects the seller invoice value without vat.

Importer has to file VAT quarterly in which it needs to enter total purchases value and the system automatically calculates vat amount.

Now there can’t be 2 purchase invoices in the system or if JV is passed then import value will be higher than actual amount and vat calculation is incorrect as per local law.

How can this be accounted correctly in both scenarios. Actual purchase value or reduced (fictitious) value.

Any idea would be greatly appreciated. Thank you.

Hi @Muzzy,

Have you tried Landed cost Voucher, I guess this will solve your problem of accounting the custom charges on any purchase transaction.

Thanks @Salman_Mulani The issue of accounting VAT. I am aware of LCV but this does not work.