1.2.2.1 Specifying the Tax Application Method
A tax can be a percentage of the component that is to be taxed (such as the principal, brokerage, and so on.), or a flat amount. If you choose to calculate tax as a flat amount, choose the Flat option. If you choose to calculate tax as a percentage of the transaction amount, choose the Rate option. If tax is to be calculated as a flat amount, specify the flat amount.
Example
Code | TX01 |
---|---|
Tax Currency | Local CCY |
Tax (Type) | Rate |
Rate | 1.5 |
Min. Amount | 1,000 |
Max. Amount | 10,000 |
- Min. Amount:USD 1900 (EUR 1000 * 1.9)
- Max. Amount:USD 19000 (EUR 10000 * 1.9)
The tax amount for this deal is calculated as follows:
90000 * 1.5/100 = USD 1, 350 (tax amount in deal CCY)
Tax amount in Local CCY = 1350/1.9 = 710.52 EUR
As this amount is less than the Minimum (Tax) Amount specified for this tax rule, a tax of 1000 EUR is levied on the deal, instead of 710.52 EUR. On the other hand, if the tax calculated was more than the maximum tax amount, 10,000 EUR would be applied as tax, since that is the maximum possible tax that can be levied.
If you have specified a flat amount for the tax rule, then you need not specify the minimum and maximum amount limits.
Note:
The minimum and maximum limits apply for specific rules linked to a Tax Scheme, and not for the entire scheme.Parent topic: Tax Rule Maintenance screen