Set up a Tax

Security Note: You need the Allow the user to maintain taxes security right in the Marketing user group security rights group for this activity.

Activity Steps

  1. Open the Tax Editor.
  2. To create a tax category:
    1. Right-click in the Category field group and select New from the menu.
    2. Update the tax category Name if required.
  3. To create a tax:
    1. Select the tax category.
    2. Right-click in the Taxes field group and select New from the menu.
    3. Complete the following fields to update the tax details:
      • Name
      • Description
      • Tax Determination—Select from:
        • Percentage—Percentage of the gross amount.
        • Value Per Mass—Based on unit price.
      • Calculation Method—Method used to determine when the tax is calculated. Select from:
        • Calculate After Currency Conversion
        • Calculate Before Currency Conversion
      • Currency—Select from the currencies defined in the Currency/Exchange Editor.
      • Unit—Unit of measure associated with the tax determination. If Tax Determination is:
        • Percentage—Unit is %.
        • Value Per Mass—Unit is t (tonnes).
      • Basis—Basis by which the tax is determined. See Taxes for examples. If Tax Determination is by:
        • Percentage—Select from:
          • Invoice Total—Tax is calculated with the formula Invoice Value * Tax %.
          • Payable Total—Tax is calculated with the formula Payable Amount * Tax %.
          • Incremental Value—Tax is calculated with the formula (Invoice Value – Previous Invoice Value ) * Tax %.
        • Value Per Mass—Select from:
          • Gross Mass—Wet mass of the material.
          • Net Mass—Dry mass of the material.
      • Decimals—Number of decimal places used to calculate the applied tax.
      • Default Cumulative—Whether the tax is applied cumulatively by default. This can be overridden for individual tax rates. If checked, the tax rate is applied to the gross value, plus the value of the previously applied taxes. If unchecked, the tax rate is applied to the gross value only.
      • Price Inclusive—Whether the price entered already includes the tax. If checked, when the tax is applied, the price to which it is applied is considered to already contain the tax portion. Therefore, it will determine the pre-tax amount. If unchecked, when the tax is applied, the price to which it is applied is considered to not yet contain the tax portion. Therefore, it will determine the post-tax amount.
      • Allow Credit Notes—Whether negative tax amounts are calculated for credit notes that are created because the current sales/purchase/freight/service invoice value is less than the value of the previous invoice. If checked, tax is calculated for and included in all applicable invoices, including credit notes. If unchecked, the applicable tax for the credit note is zero. The total tax amount is the same as the previous invoice. Not applicable if Price Inclusive is checked. Default: Checked.
      • Apply Directly To Basis—Whether to apply the tax directly to the tax basis. Only applicable if Price Inclusive is checked.
      • Country—Country in which the tax is applicable. Select from the countries enabled in the Country Editor. The tax only applies if the country matches:
        • Sales despatch orders—The country in the address of the organisation or company in the Ship To field on the Despatch Order or else the address of the buyer organisation or company.
        • Purchase despatch orders—The country in the address of the organisation or company in the Receive From field on the Despatch Order or else the address of the seller organisation or company.
      • Applicable Dynamic Items—Dynamic invoice item types to be referred to when this tax is included on an invoice. Select from the Dynamic Invoice Item Types list items defined in the List Editor.
      • Applicable Services—Services to be referred to when this tax is included on an invoice. Select from the Service Activity, Freight Activity and Finance Activity list items defined in the List Editor.
      • Applicable Invoices—Default invoices for which the tax is applicable. Select from Standard Invoices Only, Accruals Only and All.
  4. To create a tax rate:
    1. Select the tax.
    2. Right-click in the Tax Rate table and select New from the menu.
    3. Complete the following fields in the Tax Rate table as required.
      • Start Date—The date range for the rate is open-ended, until the rate is superseded by another rate with a later start date.
      • Value—Percentage value of the tax rate.
      • Applicable States/Provinces—States and provinces where the tax rate applies. Select from the provinces/states defined in the Country Editor for the selected Country. The tax rate only applies if one of the selected provinces/states matches:
        • Sales despatch orders—The province/state in the address of the organisation or company in the Ship To field on the Despatch Order or else the address of the buyer organisation or company.
        • Purchase despatch orders—The province/state in the address of the organisation or company in the Receive From field on the Despatch Order or else the address of the seller organisation or company.
      • Applicable Products—Products for which the tax rate is applicable. Select from the products and brands defined on the Material panel of the Solution Explorer.
      • Not Applicable Products—Products for which the tax rate is not applicable. Select from the products and brands defined on the Material panel of the Solution Explorer.
      • Cumulative—Whether the tax rate is applied cumulatively. If checked, the tax rate is applied to the gross value, plus the value of the previously applied taxes. If unchecked, the tax rate is applied to the gross value only.

      Note: You can set up multiple tax rates with the same start date to account for different rates for different states/provinces or products.

  5. Click Save.