Handling Salvage Items with VAT Calculation and Tax Inclusive Amount

XML and business rules
1

I’m reaching out on behalf of LIVA Insurance Company, one of our clients, regarding a specific VAT calculation scenario involving salvage items.

Scenario:

  • The invoice contains two-line items:
    • Item 1: The actual item with a VAT rate of 15%.
    • Item 2: A salvage item with a negative amount to offset Item 1.
  • VAT should not be calculated on the salvage item (Item 2).
  • The salvage item amount should be deducted from the tax-inclusive amount of Item 1.
    Example:
    image
    Total Amount = 20024.10 – 5000 ==> 15024.10
2

@sameer there are two options to deal with item 2:

  1. To exclude the amount of 5000 from XML and show this as deduction directly on human readable form.
  2. To include the amount of 5000 as document level allowance with VAT Category Code "out of scope. Here you will have to add 2 sub totals in VAT Breakdown level (one for the Standard rate and other for Out of scope).