NetSuite Connector Tax Handling

This topic covers how NetSuite Connector handles different tax concepts.

NetSuite Legacy Tax and SuiteTax

You can configure NetSuite Connector to work with NetSuite Legacy Tax or with NetSuite SuiteTax.

If you are using NetSuite Connector with NetSuite Legacy Tax, your tax setup in NetSuite needs to be configured accordingly. See Tax Setup Overview for more information.

If you have SuiteTax enabled in your NetSuite, you need to configure specific settings in NetSuite and NetSuite Connector. For more information, see Setting Up SuiteTax for NetSuite Connector.

After setting up Legacy or SuiteTax, you can refer to the topics in this section for tax configuration specific to NetSuite Connector.

Taxable Items

Items in NetSuite are assigned a tax schedule. The assigned tax schedule determines whether the item is taxable.

You can determine the tax schedule of an item from the Tax Schedule field in the Accounting subtab of the item record. By default, NetSuite assigns S1 as a taxable tax schedule and S2 as non-taxable tax schedule.

For more information, read Setting Up Tax Schedules.

Tax Setting for Customers

NetSuite enables a taxable customer to associate with both taxable as well as non-taxable orders. However, a non-taxable customer can only be associated with non-taxable orders. In NetSuite Connector, the marketplace or cart determines whether the customer pays tax on the order. Therefore, it is essential to allow for a taxable order on every customer even if the tax is charged by error.

A new customer created by NetSuite Connector is always set to taxable. If NetSuite does not set customers taxable by default, an error occurs when NetSuite Connector attempts to create a new customer as taxable. Thus, the order fails to import in NetSuite.

Applying Tax to Settlement Items

If you manually set up settlement item SKUs, make sure you assign them to a nontaxable schedule.

When using NetSuite Connector’s automated creation of settlement SKU process, NetSuite Connector attempts to automatically assign the nontaxable tax schedule to the settlement item SKU. However, if such a schedule does not exist, then the item SKUs are assigned taxable tax schedules. Therefore, make sure you create a nontaxable tax schedule and then assign the tax schedule to your settlement item SKUs.

For more information, read Tax Schedule Errors.

Value Added Tax (VAT) in NetSuite Connector

Value Added Tax (VAT) is the sales tax method used in most parts of the world. With VAT, when you show an item price to customers, the price already includes the tax amount in it. Therefore, a customer knows the final price of the item without having to perform any calculations.

In NetSuite, VAT is the same as any other tax. In a typical configuration, NetSuite applies tax to the item and calculates the final item price. Therefore, item prices synced to NetSuite must not include the tax.

In all current marketplaces NetSuite Connector connects to and in most shopping carts, the item price sent on the order includes the VAT. You can configure some shopping carts to provide the pre-VAT prices.

NetSuite Connector can handle both pre-VAT and post-VAT prices. To record the correct item price, you must confirm whether the prices include VAT in the orders that your storefront provides.

VAT and Tax Rounding

You must configure rounding precision in NetSuite, else you may see order total variance due to tax rounding. NetSuite provides different tax rounding options for different countries:

For United Kingdom (UK), NetSuite does not provide a rounding option and a fixed rounding precision of four decimal places is applied. NetSuite Connector matches NetSuite’s precision by rounding four decimal places for orders shipping to the UK.
For orders shipping to United States (US), the taxes that are used are rounded to a four decimal place precision by both NetSuite and NetSuite Connector.
For countries that allow a configurable rounding precision, NetSuite sets the rounding precision by default to two decimal places. NetSuite Connector assumes a two decimal place rounding precision for orders shipping to those countries.

You can check and set the rounding precision from the Tax Rounding Precision field in the Set Up Taxes page of NetSuite. The field is available only for the countries that allow configuring rounding precision.

For more information about configuring NetSuite Connector with VAT, read Configuring VAT in NetSuite Connector.

NetSuite Connector VAT Calculation

Before sending orders into NetSuite, NetSuite Connector can subtract Value Added Tax (VAT) from orders. You can configure this using the tax settings for each account on the connector.

For more information about VAT settings, read Configuring VAT in NetSuite Connector.