Tax Calculation on Payables Transactions Using Tax Point Basis

Taxes are calculated on payables transactions using the tax point basis, the type of transaction and matching criteria.

Following are the payables transactions with varying matching scenarios that are subject to tax determination:

• Unmatched invoice

• Invoice matched with a purchase order

• Invoice matched with a receipt

• Invoice matched with a consumption advice

• Correction invoice

Unmatched Invoice

Taxes are calculated on the invoice based on the tax attributes.

Invoice Matched with a Purchase Order

Taxes are calculated on the invoice based on the tax attributes. If the option Enforce tax from reference document is enabled, the invoice uses the tax rate code on the purchase order and the corresponding rate period on the invoice date. The difference between purchase order taxes and invoice taxes is recorded using tax variance distributions.

Invoice Matched with a Receipt

Taxes are initially calculated on the invoice based on the tax attributes. When the tax point basis is Invoice, Accounting, or Payment, no further processing is required. When the tax point basis is Delivery, the delivery-based tax is reprocessed based on the configuration owner tax options and the receipt accounting status, as follows.

Allow Delivery-Based Tax Calculation	Report Delivery-Based Taxes on	Tax Point Date	Result
Not enabled			New tax point basis is Invoice.
Enabled	Receipt	Receipt date	If receipt accounting is: Complete, and the corresponding tax line is available, then tax is prorated on the invoice based on quantity matched. If a corresponding tax line is not available, then the tax point basis is set to Invoice. Not complete, then tax is recalculated using the receipt date as the transaction date, and the tax rate percentage on this date is used.
Enabled	Invoice	Receipt date	Tax is recalculated using the receipt date as the transaction date and marked as reportable on the invoice.
Enabled	Invoice	Invoice date	Tax is marked as reportable on the invoice.

The difference between receipt taxes and invoice taxes is recorded using tax variance distributions. If taxes are not configured for receipts, then the corresponding purchase order taxes are used for calculating the tax variance distributions.

Invoice Matched with a Consumption Advice

Taxes are calculated on the transaction line based on tax attributes. All delivery-based taxes on the consumption transaction are prorated on the invoice.

Correction Invoice

The tax determination process copies the taxes from the original invoice. The tax point basis of Delivery on the tax is updated to Invoice, and marked as reportable.