This chapter contains these topics:
To understand the types of taxes you work with in A/P
To set up tax authorities (agencies and governments) that assess taxes
To set up tax rates and areas (jurisdictions and rates for the tax authorities)
To control how taxes are assessed using tax explanation codes
To understand which AAIs are used by taxes
To set up tax rules for companies in your organization
Various tax authorities assess and collect taxes. In order to comply with governmental tax regulations, you need to set up tax information in your Accounts Payable system. After you set up this information, you can:
Track taxes according to different tax rates and areas
Assign a default tax rate to a supplier
Apply a tax rate to an entire voucher or individual pay items
Enter a tax amount or have the system calculate the amount
Track tax history in a separate table
A/P tax setup consists of:
Setting up tax authorities for A/P
Setting up tax rates and areas for A/P
Understanding tax explanation codes for A/P
Setting up AAIs for A/P taxes
Setting up tax rules by company for A/P
Alternatively you can set up your taxes with Vertex(tm). This consists of:
Working with Vertex for A/P
Vertex, Inc. (tm), Vertex (tm), and GeoCode (tm) are trademarks of Vertex, Incorporated.
After you set up your tax information, you designate tax amounts in the supplier master record or when you enter a supplier's invoice.
You might be assessed one of the following types of taxes:
| Tax Type | Description |
|---|---|
| Sales Tax | This tax is calculated on the gross sales price of the goods. Customers who buy goods for their own use pay sales tax at the time of purchase. Suppliers who buy goods for resale do not pay sales tax. |
| Use Tax | This tax is a sales tax, calculated and self-assessed by the buyer. A use tax might be levied when a company keeps the goods it manufactures for its own use. For example, a pencil manufacturer might owe a use tax when it keeps some of the pencils it manufactures for the use of its own employees. A use tax might also be levied when a buyer in one tax area is responsible for direct payment of local sales taxes on goods and services purchased outside the local tax area. For example, a catalog company in New York does not collect sales taxes from buyers in Colorado, but the buyers must pay the Colorado tax authorities directly. |
| Value Added Tax (VAT) | This tax is collected at each stage in the production and distribution of goods and services as value is added. As a business adds value to a product, the business pays VAT on the added value. |
| Canadian Goods and Services Tax (GST) and Provincial Sales Tax (PST) | In Canada, the federal government assesses a GST. The provincial governments assess a PST. The tax rates vary from province to province and are calculated using the value of the goods or the value plus GST. |
Tax types are not exclusive to a single country. For example, VAT is used worldwide and encompasses a variety of value added taxes, such as:
IVA in Italy
TVA in Belgium
GST in Singapore
See Also:
JD Edwards World Tax Reference Guide for more detailed information about taxes and related tax reports