Transaction Level Rounding
Transaction level rounding refers to the rounding method where multiple tax lines with the same tax rate, properties, and behavior are rounded together. The total tax amount for the tax rate is rounded according to the rounding method and precision set on nexus record. For more information about rounding methods, see Setting Up Nexus Preferences.
If you choose the Transaction level rounding method, items with the same rate, properties, and behavior are rounded together, by default. For example, in a transaction there are six line items, three of them have 10 % tax rate and the other three have 20 % tax rate. Consequently, three items with the tax rate of 10 % are rounded together and three items with the tax rate of 20 % are rounded together.
To be rounded together, items do not only have to have the same tax rate, properties, and behavior. They should also have a special property set on the tax type which is related to the tax code. For example, 10% VAT rate cannot be rounded together with 10% withholding tax or with 10% VAT subject to reverse charge. The only acceptable combination is with the special property “Post to Item Cost” used for nondeductible tax.
The total tax displayed on the individual item lines should correspond to the total tax of the items rounded together. If the total tax on the individual lines is not the same as the total tax of all the items rounded together, the tax is then adjusted by the rounding difference. If there is a rounding difference, it is primarily distributed to the last tax line of the items rounded together.
Setting up Rounding Groups
Besides the default functionality, there is also a possibility to set up rounding groups. A rounding group is a list of tax codes that should be primarily rounded together. The rounding group has priority over the default transaction level rounding functionality.
To set up rounding groups:
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Go to Setup > SuiteTax Engine > Rounding Groups.
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Click New Rounding Group.
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In the Name field, enter a name for this rounding group.
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From the Nexus list, choose the nexus this rounding group will apply to. Only active nexuses assigned to the account appear in this list.
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OPTIONAL: In the Description field, enter a sentence no longer than 500 characters describing this tax group.
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Choose at least one tax code from the Tax Codes list.
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Click Save.
The tax codes displayed in the tax codes list are filtered based on the property of the tax code on the first line. The available tax codes have the same behavior and property.
You can add tax codes with a different tax rate to the rounding group. However, a tax code is a part of the group only if its tax rate has the same tax point date as the other tax codes.
You can see how this works on transaction in the following example.
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Rounding group is created
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Rounding group 1
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Nexus = Germany
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Tax codes (TC) in the group:
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TC 1 – rate = 7% from 1 Jan 2020 until 31 Dec 2025
Based on Tax type 1 (no special property)
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TC 2 – rate = 7% from 1 Jan 2020 until 31 Dec 2024, 16% since 1 Jan 2025
Based on Tax type 2 (“Post to Item Cost” special property)
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Tax codes which are not within this rounding group:
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TC 3 – rate = 7% from 1 January 2020 until 30 October 2024, 16% since 1 November 2024
Based on Tax type 1 (no special property)
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TC 4 – rate = 7% from 1 January 2020 until 30 October 2024, 16% since 1 November 2024
Based on Tax type 3 ("Does Not Add to Transaction Total” special property)
Rounding preferences for Germany Nexus
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Tax rounding level = Transaction level
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Tax rounding method = Round off
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Tax rounding precision = 1 and below
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Transaction
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Tax point date (TPD) = 16 May 2024
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Items:
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Item 1: amount = EUR 10, subject to TC1
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Item 2: amount = EUR 10, subject to TC2
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Item 3: amount = EUR 10, subject to TC3
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Tax lines with default tax details line level preference
Tax Line
Amount
Tax Code
Tax Rate
Tax Amount (Not Rounded)
Tax Amount (Rounded)
1 (Item 1)
EUR 10
TC 1
7%
0,7
1
2 (Item 2)
EUR 10
TC 2
7%
0,7
1
3 (Item 3)
EUR 10
TC 3
7%
0,7
1
4 (Item 4)
EUR 10
TC4
7%
0,7
1
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Tax lines with transaction level rounding preference
Tax Line
Amount
Tax Code
Tax Rate
Tax Amount
Details
1 (Item 1)
EUR 10
TC 1
7%
1
Total item per rounding group = 20 (10+10)
Total tax = 1 (20 * 7%=1,4, rounded off to 1)
TC 1 and TC2 have different properties, but this is an acceptable combination as explained above.
2 (Item 2)
EUR 10
TC 2
7%
0
Rounding difference distributed, so the total tax amount on the first and second line equals 1
3 (Item 3)
EUR 10
TC 3
7%
1
Rounded separately because it is not a part of a rounding group and cannot be rounded together with TC
These two methods of rounding have different special properties.
4 (Item 4)
EUR 10
TC 4
7%
1
Rounded separately
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TPD = 1 January 2025
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Tax lines with default tax details line level preference
Tax Line
Amount
Tax Code
Tax Rate
Tax Amount (Not Rounded)
Tax Amount (Rounded)
1 (Item 1)
EUR 10
TC 1
7%
0,7
1
2 (Item 2)
EUR 10
TC 2
16%
1,6
2
3 (Item 3)
EUR 10
TC 3
16%
1,6
2
4 (Item 4)
EUR 10
TC4
16%
`1,6
2
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Tax lines with transaction level rounding preference
Tax Line
Amount
Tax Code
Tax Rate
Tax Amount
Details
1 (Item 1)
EUR 10
TC 1
7%
1
Rounded separately
2 (Item 2)
EUR 10
TC 2
16%
2
Cannot be rounded as a part of the rounding group 1 because its tax rate is different per tax point date. So, it is rounded as not being part of the rounding group. It is then rounded together with tax line 3, as they have the same rate of 16%.
Total per same rate (16%) = 20 (10+10)
Total tax = 3 (20 * 16%= 3,2, rounded off to 3)
3 (Item 3)
EUR 10
TC 3
16%
1
Rounded together with tax line 2, and the rounding difference is distributed. So, the total tax amount on the second and third lines equals three.
4 (Item 4)
EUR 10
TC 4
16%
2
Rounded separately because it has a different tax type property