Understanding How Domestic Amounts Are Calculated on Foreign Vouchers with Taxes

When you enter a foreign voucher with taxes, the system calculates the tax and discount amounts on the foreign side of the transaction. Using those tax and discount amounts, the system retrieves the exchange rate and calculates the tax and discount amounts for the domestic side of the transaction. If the invoice or voucher has multiple pay items, the system performs soft rounding after it calculates the amounts for each side of the transaction.

This diagram shows how the system calculates the tax and gross amounts for a transaction that is entered in a foreign currency:

The foreign taxable amount is entered. To calculate the tax and gross amounts, the system performs these calculations:

• Multiplies the foreign taxable amount by the tax rate to determine the foreign tax amount.

• Adds the foreign taxable and tax amounts to derive the foreign gross amount.

• Multiplies the foreign taxable and tax amounts by the exchange rate, which is determined by the currency code and exchange rate date, to derive the domestic taxable and tax amounts.

• Adds the domestic taxable and tax amounts to derive the domestic gross amount.

  Note: The system does not multiply the foreign gross amount by the exchange rate to derive the domestic gross amount.