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Split Payment Automation

Split Payment Automation

Owned by Ben Catalan
Apr 10, 2024
2 min read

In Poland, the split payment mechanism is a tax strategy designed to combat tax fraud and enhance tax collection. It's obligatory for specific transactions in sectors prone to tax evasion, where buyers must pay the net amount to the supplier and the VAT amount into a separate VAT account. This safeguards VAT payments by locking them until tax authorities release them, reducing fraudulent practices. Both buyers and suppliers must report split payments on their VAT returns to ensure transparency. The objective is to enhance tax compliance, diminish fraud, and ensure proper VAT collection.

The triggers for the split payment mechanism follow a hierarchy. It becomes obligatory when the transaction amount exceeds 14,999 Zloty, or when the item is flagged for split payment, or when a vendor requests split payment, which is a setting that can be configured on the vendor's record. However, if the vendor does not meet the criteria, users can select for the input tax procedure, MPP.

Below are the pre-requisites and steps for this automation:

Setup for Split Payment:

Item

Automatically initiates a split payment when the item is selected on the transaction.

  1. Go to Lists > Accounting > Items > Lists > Edit the item

  2. Mark the Split Payment Mechanism checkbox under Staria Poland Localization tab.

  1. Click Save.

Vendor

Automatically initiates a split payment when the vendor is selected on the transaction.

  1. Go to Lists > Relationships > Vendor > Edit the vendor

  2. Mark the Split Payment Mechanism checkbox under Staria Poland Localization tab.

  1. Click Save.

Scenario 1:

Transaction total is =>15,000 zł

Automatically initiates a split payment when the transaction total is =>15,000 zł.

Steps:

  1. Create a Vendor Bill. (Transactions > Payables > Enter Bills)

  2. Select a Vendor.

  3. Select the Items. Input the quantities and review the rates, amounts, and the tax codes assigned to the items.

  4. Set the Vat Date.

  5. Fill out any other necessary information or fields needed in the transaction.

  6. Click Save.

  7. Pay the bill by clicking on the Make Payment button on the vendor bill.

  8. Select the Bank account to be used for paying the bill.

  9. Click Save on the Bill Payment.

Result: