Understanding Alternate Tax Rate/Area Definitions

You use the Alternate Tax Rate/Area Definition program (P40081) to define the alternate tax rate/areas that the system automatically assigns for transactions on sales orders, purchase orders, invoices, and vouchers. Using this program, you define combinations among the following fields:

• Company

• Two Country Codes (Ship From, Ship To)

• Transaction Source

• Customer or Supplier Number

The country codes represent the countries from the entities involved in the transactions with taxes associated. These entities vary depending on the transaction source. The following table describes the relationship between transaction sources and countries:

Transaction Source	Country 1	Country 2
Sales order / Invoice	Ship From entity (branch/plant or business unit) country.	Ship To entity (customer) country.
Purchase Order or Voucher	Ship To entity (branch/plant or business unit) country.	Ship From entity (supplier) country.

The system stores the alternate tax rate/area definitions in the Alternate Tax Rate/Area Definition table (F40081).