STEP 1: Go to your Dashboard, then click on Transactions.
STEP 2: Click on Add Transaction > Add Manual > Sales.
NOTE: There are 2 ways to add a transaction; Add manual and Import CSV. And, there are 3 types of transactions; Sales, Purchases, and Journals. For this example, we will add a manual transaction under Sales.
STEP 3: Fill out the table shown and select the correct Tax Type. In this transaction make sure the tax type is set to Sales to Government. You can do this for both Goods and Services type of transactions
STEP 4: After you’ve entered all the information go back to the Dashboard, click Tax Forms, choose Value Added Tax Return then select the Monthly Value Added Tax you made earlier.
STEP 5: Click on Edit Schedule 4.
STEP 6: Input the Tax Attributable to Sale to Government, enter your numbers in the appropriate text boxes then click Calculate to get the amounts. Hit the Save button to save your changes
Formulas needed for you to complete Schedule 4 of your 2550M form:
Standard Input Tax to Sale to Government
This kind of VAT on Sales is the result of taxable sales transactions to the government with 12% VAT multiplied with taxes withheld from sales coming from products/services sold by suppliers to the government (7%).
Formula: [Taxable Sales to Government X Amount of Input Tax not Directly Attributable]
If you have 1,400,000 of total sales, and 200,000 of it were sales to government, then:
200,000 x 0.07 = 14,000
Total Input Tax Attributable to Sale to Government
To calculate your total input tax attributable, you should get the sum of both your Input Tax Directly Attributable to Sale to Government with the Amount of Input Tax Not Directly Attributable. See formula below:
[Input Tax directly attributable to sale to government + Amount of Input Tax not directly attributable]
Input Tax on Sale to Govt. Closed to Expense (To Item 20B)
To get this amount, subtract your Total Input Tax attributable to sale to the government with your Standard Input Tax to sale to the government.
Formula: [Total Input Tax attributable to sale to the government - Standard Input Tax to sale to the government]
Please check this Help Center article if you are entering VAT on Sales to Government for Periods 2021 and above.
To read more about the RMC 36-2021, you may check our blog.
Visit this article for you to learn how to apply this process in the Xero integrated version of JuanTax.