International Transactions, Value Added Tax (VAT)
Value Added Tax (“VAT”) is a form of sales tax, imposed at each stage of the sale cycle. It is a mandatory consumption tax, used by most countries, differing from US Sales tax in the method of calculating and reporting. Exactor’s EXACTOVAT module provides real time calculation of global value added taxes. Exactor maintains rate accuracy, and the merchant does not perform any data-update maintenance service.
The EXACTOVAT module can also generate and file VAT returns in most countries, focusing on Europe, Australia and East Asia.
The EXACTOVAT module is designed for the Global Marketplace. It allows accurate calculation of sales and consumption taxes in all countries independent of the location of the buyer and seller, adjusting and accounting for local rules. For example most VAT rules are destination based, relying upon the place of delivery. In some economic zones however, such as the European Union, the rules are complicated by requiring the seller to calculate and collect taxes either by the location of the seller or the place of delivery. The EXACTOVAT module determines and accurately calculates taxes according to any of the relevant rules.
VAT taxes typically need to be specifically listed in the invoice. The EXACTOVAT module assures that the accurate taxes are seamlessly inserted into the invoice in real time without stopping or impacting the transaction. In many countries, the seller is obligated to specifically identify in the invoice the sale price and the VAT tax charged. When the quoted sale price already includes the VAT tax, as is typically the case, the EXACTOVAT module will automatically extract from the quoted total price the accurate VAT taxes, as per the location of the transaction, and automatically insert into the invoice the required break-down between the net sales price and VAT taxes owing.