Understanding Tax Rules by Company

You set up tax rules so that the system can calculate any applicable taxes when you enter transactions with taxes. Use the Tax Rules (P0022) program to define tax rules differently by company and by system. The system uses these rules to:

• Establish tolerance limits on changes that you make to the tax amount when you use VAT tax explanation codes (V, C, and B).

• Display a warning message (or reject a transaction) whenever you enter a tax amount that differs from the system-calculated tax.

• Determine whether transaction amounts should be calculated on the gross amount or the gross amount less the discount amount.

• Determine whether discount amounts should be calculated on the gross amount (including tax) or the net amount (excluding tax).

• Determine whether taxes are calculated for sales orders at the order or detail level.

• Allow taxes to be understated.

• (Release 9.2 Update) Determine whether the system should perform soft rounding of taxes for voucher match at either the tax explanation, tax area, and tax rate level or the tax explanation and tax area level.

  Note:

  If you do not set up rules for a specific company, the system uses the rules that you define for company 00000. If you do not set up rules for company 00000, the system uses only these default rules:

  Tolerance limits are set to zero.

  The system calculates tax on gross including discount.

  (Release 9.2 Update) The system performs soft rounding of taxes at the tax explanation and tax area level.

When you set up tax rules for the JD Edwards EnterpriseOne Accounts Payable system, you also set up rules for the JD Edwards EnterpriseOne Procurement system. When you set up tax rules for the JD Edwards EnterpriseOne Accounts Receivable system, you also set up rules for the JD Edwards EnterpriseOne Sales Order Management system.

The tax rules that you set up for the system consist of tolerance ranges and calculation rules. Not all of the tax rules apply to all systems.