Bad Debts for JPKV7 Report
- Ben Catalan
Bad Debts, in the context of VAT, is the associated amount of VAT that a business is eligible to reclaim from the tax authority when their customers fail to pay for goods or services. In VAT regulations, bad debts are a specific category of transactions that can result in a VAT refund for the business. Businesses can claim a VAT refund on the unpaid invoices that are considered bad debts, provided certain conditions and documentation requirements are met.
Here are the suggested steps in NetSuite to record for bad debts and include them to the JPKV7 Report for Sales and Purchase perspectives:
Sales
Writing off of Bad Debts
Role: Administrator
Steps:
Create a Journal Entry. (Transactions > Financial > Make Journal Entries)
Select the Subsidiary.
Enter the Date of Sale, Date of Delivery/Receipt, and Date of Issue.
Select the Register Type.
On the Lines tab, input the GL accounts for the writing-off of bad debts. Debit the Bad Debts/Doubtful account and credit Accounts Receivable. On the debit line, ensure the Tax Code matches the original invoice, choose the corresponding customer in the Name field, specify the transaction type as [STA] VAT TXN TYPE, and enter the invoice's document number in the [STA] PL Invoice #.
Click Save.
JPKV7 Result:
Purchases
Art. 89b. [Correction of Declaration]
In the event of failure to settle the amount due arising from an invoice documenting the supply of goods or provision of services within the territory of the country within 90 days from the date of expiry of the payment deadline specified in the contract or invoice, the debtor is obliged to correct the deducted tax amount resulting from this invoice in the settlement for the period , on which the 90th day has passed since the payment deadline specified in the contract or invoice.
1a. The provisions of section 1 shall not apply if the debtor settled the debt no later than on the last day of the settlement period in which the 90th day from the date of expiry of the payment deadline for this debt has expired.
1b. (repealed).
In the event of partial settlement of the receivable within 90 days from the expiry of the payment deadline specified in the contract or invoice, the correction applies to the input tax relating to the unpaid part of the receivable. The provision of section 1a shall apply accordingly.
(repealed).
In the event of settlement of the amount due after making the correction referred to in section 1, the taxpayer has the right to increase the amount of input tax in the settlement for the period in which the amount due was settled by the amount of tax referred to in section 1. In the event of partial settlement of the amount due, the input tax may be increased in relation to this part.
(repealed).
(repealed).
Recognition of Bad Debts
Correction of input tax referred to in Article. 89b paragraph. 1 of the Act
Role: Administrator
Steps:
Create a Journal Entry. (Transactions > Financial > Make Journal Entries)
Select the Subsidiary.
Enter the Date of Delivery/Receipt, and Date of Issue.
Select the Register Type.
On the Lines tab, input the GL accounts for the recognition of bad debts. Debit the Accounts Payable and credit a Cost of Goods Sold account. On the credit line, select the Tax Code, choose the corresponding vendor in the Name field, specify the transaction type as [STA] VAT TXN TYPE, and enter the vendor bill's document number in the [STA] PL Invoice #.
Click Save.
JPKV7 Result:
Bad Debts Reversal
Correction of input tax referred to in Article. 89b paragraph. 4 of the Act
Role: Administrator
Steps:
Create a Journal Entry. (Transactions > Financial > Make Journal Entries)
Select the Subsidiary.
Enter the Date of Delivery/Receipt, and Date of Issue.
Select the Register Type.
On the Lines tab, input the GL accounts for the reversal of bad debts. Debit a Cost of Goods Sold account and credit the Accounts Payable account. On the debit line, enter the Tax Code for bad debts reversal, choose the corresponding vendor in the Name field, specify the transaction type as [STA] VAT TXN TYPE, and enter the vendor bill's document number in the [STA] PL Invoice #.
JPKV7 Result: