Considerations for Setting Up Tax Rates
Set up tax rates for your tax statuses and tax jurisdictions. For tax statuses, set up a tax rate record for each applicable tax rate that a tax status identifies.
For tax jurisdictions, set up tax rate records to identify the tax rate variations for a specific tax within different tax jurisdictions. For example, a city sales tax for a state or province may contain separate city tax jurisdictions, each with a specific rate for the same tax.
At transaction time, you can override tax rates on calculated tax lines depending on your setup.
Quantity-Based Tax Rates
You can define tax rates as a percentage or as a value per unit of measure. If you enter the UOM, there is validation that must be passed for the tax rate to be applied. This includes:
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The transaction must have a matching UOM. If the transaction has a different UOM, a UOM conversion between tax rate UOM and transaction UOM must be defined.
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Only one active tax rate can exist for any given tax rate period. You can't create one tax rate for each UOM that might be used within a single tax rate code.
Override of Tax Rates on Tax Lines
Part of the configuration options is to allow you to override the calculated tax rate on a tax line. You should consider the following controls during setup:
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Allow override of calculated tax lines: Select this option for a combination of configuration owner and event class if you want to manually override tax lines. This option exists on the Create Configuration Owner Tax Options page for the configuration owner and event class. If a configuration owner tax option doesn't exist, the value on the predefined event class setting is used.
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Allow override of calculated tax lines: Select this option on the associated tax record to be able to override values on a calculated tax line.
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Allow tax rate override: Select this option on the associated tax status record to be able to override tax rates on a calculated tax line.
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Allow ad hoc tax rate: Select this option on the tax rate record if you want to allow the flexibility of not being restricted to predefined tax rates and allow user entered rates on calculated tax lines.
If you allow ad hoc tax rates you must indicate if the adjustment to a tax amount updates the taxable basis or the tax rate.