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Deriving Tax From a Natural Account (Account Method)

In some countries and implementations, your chart of accounts may be constructed around tax compliance. If you set up your system with the Account Method, the system will automatically enter a tax name for a distribution based on the Account segment of the expense or asset account you enter for the distribution. With the Account Method, the system ignores any tax names at the supplier, supplier site, or financials options level. You may want to set up your system to do this for VAT reconciliation. For example, you may be taxed at a different rate based on the type of automobile you purchase. You can associate tax names with your automobile accounts to automatically enter one tax rate for your standard car account, and another tax rate for your luxury car account.

You can set up your tax defaulting hierarchy to enter the tax name based on the Account, and if a tax name is not associated with the account, the system will then look for a tax name value at the next level in your hierarchy.

Assigning a Tax Name to a Natural Account


   To assign a tax name to the Account segment of your expense or asset account:

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