VAT - Value added tax

help-wanted

#1

Hello All,

I’m wondering if there is a way to send a VAT factor (different from trade to trade) that multiplied by the Quantity results in the VAT amount in an FX trade (USD against local currency).

Trade Quantity = $1’000,000 USD
VAT amount = $142,500 <local_currency>
VAT factor = 0.1425 (142500 = 0.1425 * 1000000)

I’m planning to use MiscFeesGrp component (element of TradeCaptureReport(35=AE) and ExecutionReport(35=8)) and it seems clear how to send an absolute VAT amount (option 1) but not sure if it is ok to send the VAT factor as in the below option 2.

Option 1:
MiscFeeAmt(137) = 142500
MiscFeeCurr(138) = <local_currency>
MiscFeeType(139) = 22 (Value Added tax - VAT)
MiscFeeBasis(891) = 0 (Absolute value)

Option 2:
MiscFeeAmt(137) = 0.1425
MiscFeeType(139) = 22 (Value Added tax - VAT)
MiscFeeBasis(891) = 1 (Per Unit)

Thanks in advance

Alexe


#2

Alexe,
Your solution is exactly correct according to the FIX standard. But if you include both options of MiscFeesGrp in your messages you should add a statement in your Rules of Engagement that the Per Unit instance duplicates the Absolute Value instance. Otherwise the client my try to apply the fee twice in its calculations.
Regards,
Dean


#3

Many thanks Dean

Is there any option that is most widely used, Absolute or Per Unit?

It is most likely to choose one to send the VAT data but it would be useful to know whether some method is generally preferred. Of course, I will take your recommendation if finally both options are sent out.

Regards.

Alexe


#4

Alexe,
There is no “right” answer to your question - both options are provided in order to satisfy differing business needs. From my own experience clients prefer to receive fully-calculated absolute values for the financial attributes of a trade. But why not take your question to the person on your staff with responsibility for the client relationship?
Dean


#5

Thanks again Dean.

We’ll check internally and with the clients to implement the most suitable option.

Best regards.

Alexe