Setting Up Tax Rate Areas

Enter a code that identifies a tax or geographic area that has common tax rates and tax authorities. The system validates the code you enter against the F4008 table. The system uses the tax rate/area in conjunction with the tax explanation code and tax rules to calculate tax and GL distribution amounts when you create an invoice or voucher.

Enter the date when a transaction, contract, obligation, preference, or policy rule becomes effective, or ceases to be in effect.

Enter the address book number of the tax agency that has jurisdiction in the tax area. You pay and report sales, use, or VAT taxes to this agency. Examples include states, counties, cities, transportation districts, provinces, and so on. You can specify up to five tax authorities for a single tax area.

Enter a code that indicates how to locate the tax account for general ledger entries. This field points to automatic accounting instructions (AAIs) that, in turn, point to the tax account. Examples are:

PTyyyy - for AP (VAT only)

RTyyyy - for AR (VAT only)

GTyyyy - for GL (VAT only)

4320 - for Sales Orders

4400 and 4410 - for Purchase Orders

When setting up VAT and Canadian GST, PTyyyy, RTyyyy, and GTyyyy are the only valid values. For the AP system, a second GL Offset (PT_ _ _ _) is required when the tax setup involves VAT plus use taxes (tax explanation code B). Use AAI PT_ _ _ _ to designate the use tax portion of the setup.

Only tax explanation code V uses the GL Offset for the 2nd and subsequent tax authorities. The system ignores the field for all other tax explanation codes.

For sales taxes, the JD Edwards EnterpriseOne Accounts Payable and JD Edwards EnterpriseOne Accounts Receivable systems ignore the values in this field. However, the JD Edwards EnterpriseOne Sales Order Management and JD Edwards EnterpriseOne Procurement systems require values in this field.

Enter a number that identifies the percentage of tax that should be assessed or paid to the corresponding tax authority, based on the tax area.

Enter the percentage as a whole number and not as the decimal equivalent. For example, to specify 7 percent, enter 7, not .07.

If you use tax explanation codes B (VAT + Use) or C (VAT + sales), you must enter the VAT tax authority and tax rate on the first line of the tax rate/area. The nonrecoverable percent applies to the first tax rate only when using tax explanation codes C and B. For other tax explanation codes, the system multiplies the nonrecoverable percent by the total tax, but applies it to the first tax authority only.

For Canadian taxes, always specify on the first line the tax authority and tax rate for the GST portion of the tax.

Select this option that is used in Canada to specify whether to calculate PST tax after GST has been added to the product value.

The system calculates the PST before GST has been added to the product value.

For example, suppose that you have a tax area set up with 7 percent GST and 8 percent PST, and you select the option to calculate tax on tax. If you enter a voucher for a taxable amount of 1000 CAD, the system calculates the GST as 70 CAD, adds it to the taxable amount, and multiplies the PST by that result (1070 CAD). If you do not use compound taxes, the system calculates PST on the taxable amount only.

Note: This option is valid only for tax explanation codes that begin with the letters B and C. To calculate compound taxes for tax explanation code V, use tax explanation code V+.

This code is available only for the second tax authority (line 2 in the list on this form) and must identify a non-GST tax authority.

Select this option that indicates the percent of VAT that is not recoverable. You enter the nonrecoverable percentage in the Tax Rate field to the left of this option.

Note: This option is valid only with tax explanation codes that begin with the letters C, B, and V.

This code is available only for the third, fourth, fifth tax authorities (lines 3 through 5).

Enter a number that the system assigns to an item. It can be in short, long, or third item number format.

The number of the item or item grouping to which the tax applies.

Values for item groupings are 3 through 8. If you specify a value for an item grouping, you must ensure that the processing option to validate item numbers, which appears on the Edit tab, is set to 0 (off). If this processing option is not set correctly, the system attempts to validate the item grouping number as an actual item number.

Enter a number that identifies the maximum amount that an item can be taxed. If the unit cost of an item is more than the amount that you specify in this field, the maximum unit cost becomes taxable.

Note: This field is used for processing sales and purchase orders only. This field is required for processing taxes in the state of Tennessee.