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:
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Invoice header amount: 5579 USD
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Invoice line 1 amount: 1333 USD
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Invoice line 2 amount: 1679 USD
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Invoice line 3 amount: 2567 USD
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Applicable taxes:
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State tax, rate percentages of 12.5%, 6.75%, and 3.33%
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City tax, rate percentages of 7.5%
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The rounding details for the two examples are:
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Rounding level: Header
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Rounding Rule:
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State tax: Up
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City tax: Nearest
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Tax precision: 2
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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 |
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Header |
5579 |
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Line 1 |
1333 |
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Line 2 |
1679 |
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Line 3 |
2567 |
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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 |
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Line 1 |
1333 |
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Line 2 |
1679 |
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Line 3 |
2567 |
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