Temporary Changes to the VAT Rate
The standard rate of VAT was temporarily cut from 23% to 21% as part of the Government July stimulus package. This 21% rate of VAT applied from September 1st 2020 until the 28th February 2021.
NOTE: The standard rate of VAT will revert back to 23% from 01/03/2021.
Below we have detailed the 5 steps you will need in order to disable the 21% rate and re-enable the 23% rate from 01/03/2021 and to update the Tax Codes on Customer records, Vendor records and Tax Schedules in NetSuite.
1. Update Tax Codes:
To amend tax codes for rate 21% and 23%
- Go to Setup > Accounting > Tax Codes
- Filter by Country = Ireland and Identify all the Tax Codes that have Rate = 23% or 21%
(The column Rate can be sorted in descending order to identify all the tax codes with Rate = 23% or 21%)
- Right click Edit against each of the tax codes and open in new tab.
- For 21% codes set the Valid Until date to 28/02/2021.
- For 23% codes set the Effective from date to 01/03/2021.
- If the 23% tax codes contain a prefix of ‘OLD’, please remove the prefix.
- It is optional to rename the 21% tax code with a prefix ‘OLD-‘.
- You may choose to ignore renaming the 21% Tax Code if the rate is in the title of the Tax Code
- Save the tax codes.
2. Update Tax Schedules:
Tax schedules determine how NetSuite calculates taxes for items in each nexus.
To update Tax Schedules:
- Go to Setup > Accounting > Tax Schedules
- Click on each of the Tax Schedules. If any of the Tax Schedules are using a 21% tax code for Ireland nexus, click Edit and change to Tax Code of Rate = 23%
3. Update Tax Codes on Customers
If a tax code is set on the customer record, this will be the tax code taken into consideration for calculation on sales transactions. The Tax Codes on customers can be updated in bulk using Mass Updates. To do so:
- Go to Lists > Mass Update > Mass Updates
- Expand General Updates and select Type as Customer
- Set the Criteria as: Formula (Text)
- Select Field in pop-up as Tax Item
- Set Formula (Text) as => is not empty
(Additional Criteria can be set where applicable, i.e., Subsidiary = Ireland, Stage = Customer, Inactive = False etc.)
- Click Set and switch to the Results tab.
- Set Sort By to Tax Item (all Customers with the same Tax Item will be displayed together)
- Add only the following fields:
- Tax Item
- Go to tab Mass Update Fields.
- Mark the field Tax Item and select 23% tax code.
- Click the Preview button at the top of the page. The resulting list will display all the customers grouped by Tax Code.
- Go to the customers where the 23% Tax Code is replacing the 21% Tax Code and mark apply against only those customers.
- Click ‘Perform Update’ once the relevant Customers are selected in the list. A confirmation message shows that the field has been updated successfully on all the selected Customers.
4. Update default tax code on Vendor record:
- Navigate to Lists > Relationships > Vendors
- On the vendor record, click Edit
- On the Financial subtab, check the field Tax Code. If it is set to a 21% Tax Code, change it to the new 23% Tax Code.
NOTE: If you are using OneWorld, click the Subsidiary subtab and ensure that the Tax Code listed for Ireland subsidiary/nexus is not a 21% tax code. If it is, change it to the 23% tax code.Save the vendor record for the changes to apply.
5. Update Tax Code on Open Transactions:
To create new Saved Search to identify open transactions:
- go to Lists > Search > Saved Searches > New
- Select Type as Transaction
- Set Filter to following:
- Main Line = False
- Tax Line = False
- COGS Line = False
- Type = any of Sales Order, Purchase Order
- Tax Item = any of **select all 21% Tax Codes**
- On the Results tab, set Sort by to Date. Add the following fields in the Results:
- Internal ID
- Document Number
- Tax Item
- Line ID
(Additional fields like Amount (Tax), Amount (Net) etc. can be added if required)
- Give a name to the Saved Search and select Save & Run.
NOTE: You could choose to manually go into each of the transactions and make the changes.
NOTE: Alternatively, you could perform a CSV import to update the Transactions in bulk. To do so, click on the ‘Export – CSV’ option on the Saved Search results page.
- Go to Setup > Accounting > Tax Codes
- Check for the Internal ID of the 23% Tax Codes. Replace the Tax Item on the CSV file with the Internal ID of the relevant 23% Tax Code.
- For example, replace SR-IE-21% with 515 which is the Internal ID of the 23% Tax Code SR-IE-23%
NOTE: If Internal IDs are not showing against the Tax Codes, go to Home > Set Preferences, under General tab, Defaults section, enable the option ‘Show Internal IDs’ and refresh the Tax Codes page
- Once all the Tax Codes are replaced on the CSV file, they should be separated into 1 file for each of the Transactions as each Transaction should be imported separately.
- Go to Setup > Import/Export > Import CSV Records
- Set Import Type = Transactions
- Record Type = Sales Order/Purchase Order
- Select the relevant CSV file which contains updated Tax Codes and click Next.
- Data Handling = Update
- Select the relevant Form and enable the option ‘Run Server SuiteScript and Trigger Workflows’
- Map as follows:
- Internal ID > Internal ID
- Tax Item >Sales Order Items : Tax Code
Click on the icon on the left against Tax Item and select Choose Reference Type as Internal ID
- Line ID > Sales Order Items : Line ID
- Click Next, give the Import a unique name and select Save & Import
An import should run that would update the line items on the transactions with the 23% Tax Codes.
If you would like to download and keep a copy of the above Step by Step Guide to changing the VAT Rates in NetSuite, click below:
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The OSSM Team