Understanding Tax Calculations on Foreign Invoices, Vouchers, and Purchase Orders

When you enter a foreign invoice or voucher with taxes or process a foreign purchase order with taxes, the system uses the tax rate/area to calculate the foreign tax amount, and then adds the foreign taxable amount to the foreign tax amount to derive the foreign gross amount. (If you enter the foreign gross amount, instead of the foreign taxable, the system calculates the foreign tax amount and subtracts it from the foreign gross amount to derive the foreign taxable amount.) Then, the system uses the exchange rate to calculate the domestic taxable and tax amounts, and adds the two amounts together to derive the domestic gross amount.

This graphic illustrates how the system calculates domestic amounts from foreign amounts entered on invoices, vouchers, and purchase orders: