Examples of Tax Rounding

During the rounding process, the tax precision and minimum accountable unit details are derived from the tax setup.

The rounding process derives the rounding rule and rounding level details through the predefined processing hierarchy of configuration owner tax options, event classes, party tax profiles, and taxes. These examples illustrate how the rounding process works.

Scenario

The following examples show how the rounding process determines the tax rounded amount based on transaction, tax setup, and rounding details.

The transaction and tax setup details for the two examples are:

• Invoice header amount: 5579 USD

• Invoice line 1 amount: 1333 USD

• Invoice line 2 amount: 1679 USD

• Invoice line 3 amount: 2567 USD

• Applicable taxes:

  • State tax, rate percentages of 12.5%, 6.75%, and 3.33%

  • City tax, rate percentages of 7.5%

The rounding details for the two examples are:

• Rounding level: Header

• Rounding Rule:

  • State tax: Up

  • City tax: Nearest

• Tax precision: 2

• Minimum accountable unit: 0.01

Example 1 represents the rounding details applied at the header level. Applying these factors, the rounding process calculates the invoice amounts, all in USD currency, as follows:

Document Level	Amount	Tax and Tax Rate	Tax Amount Not Rounded	Step 1: Line amounts truncated per tax precision and rounding criteria applied at the header level	Step 2: Difference between the header amount and the sum of the line amounts	Step 3: Apply the difference amount to the maximum tax line amount	Tax Amount Rounded
Header	5579	State tax City tax	395.8082 418.425	395.81 418.43	0.01 0.02		395.81 418.43
Line 1	1333	State tax: 12.5% City tax: 7.5%	166.625 99.975	166.63 99.98			166.62 99.97
Line 2	1679	State tax City tax: 7.5%	55.9107 125.925	55.91 125.93			55.91 125.92
Line 3	2567	State tax City tax: 7.5%	173.2725 192.525	173.27 192.53		0.01 0.02	173.28 192.54

Example 2 represents the rounding details applied at the line level. Applying these factors, the rounding process calculates the invoice amounts, all in USD currency, as follows:

Document Level	Amount	Tax and Tax Rate	Tax Amount Not Rounded	Step 1: Rounding criteria is applied at the line level	Step 2: Line amounts are added to obtain revised header amounts	Tax Amount Rounded
Header	5579	State tax City tax	395.8082 418.425		395.82 418.44	395.82 418.44
Line 1	1333	State tax: 12.5% City tax: 7.5%	166.625 99.975	166.63 99.98		166.63 99.98
Line 2	1679	State tax City tax: 7.5%	55.9107 125.925	55.92 125.93		55.92 125.93
Line 3	2567	State tax City tax: 7.5%	173.2725 192.525	173.27 192.53		173.27 192.53