Understanding Tax Explanation Codes
You might be required to calculate, pay, collect, and track taxes on invoices that you receive from suppliers and send to customers. When this is necessary, you need to enter a tax explanation code on the transaction. You can enter the tax explanation code on the transaction entry form, or let the system use a default tax explanation code that you set up on the customer or supplier record.
Tax explanation codes are hard-coded values that exist in the Tax Explanation Codes (00/EX) user-defined codes (UDC) table. These codes specify the algorithm that the system uses to calculate the tax amount and which, if any, GL account is used to record tax information. Each tax explanation code specifies a particular algorithm that affects the amount to distribute in the general ledger. You can create your own tax explanation codes, but if they begin with B, C, E, S, U, or V, they will use the same algorithm and work exactly as the standard tax explanation codes. For example, S1 will function exactly as S and V7 will function exactly as V. If you create tax explanation codes for any other letter or number, the system uses the sales tax algorithm to calculate tax and distribution amounts.
The letter T follows some tax explanation codes. You use this type of tax explanation code when you want to enter only the tax portion of the transaction. For example, if you enter a voucher and do not include the tax information, you can enter another voucher and use the appropriate tax explanation code followed by the letter T to indicate that the entire voucher represents a tax amount.
Not every tax explanation code is applicable to every system in JD Edwards EnterpriseOne software.
These table lists the available tax explanation codes, the systems that use each code, and the gross and GL distribution amounts that the system calculates when the taxable amount is entered:
Tax Explanation Code |
Description |
System Used* |
Gross and GL Distribution Amounts |
|---|---|---|---|
S |
Seller-assessed sales tax |
AP, AR, PO, SO |
Gross = Goods + Sales tax Distribution = Goods + Sales tax |
ST |
Same as S, but taxes only |
AP, AR |
Gross = Sales tax Distribution = Sales tax |
U |
Self-assessed sales tax |
AP, PO |
Gross = Goods Distribution = Goods + Use tax |
UT |
Same as U, but taxes only |
AP |
Gross = 0 Distribution = Use tax |
V |
Value-added tax (VAT) |
AP, AR, GA, PO, SO |
Gross = Goods + VAT Distribution = Goods |
VT |
Same as V, but taxes only |
AP, AR, GA |
Gross = VAT Distribution = 0 |
V+ |
Same as V, but calculated as tax on a tax |
AP, AR, PO, SO |
Gross = Goods + VAT Distribution = Goods |
B |
VAT + Use tax |
AP, PO |
Gross = Goods + VAT Distribution = Goods + Use tax |
BT |
Same as B, but taxes only |
AP |
Gross = VAT Distribution = Use tax |
C |
VAT + Sales tax |
AP, AR, PO, SO |
Gross = Goods + VAT + Sales tax Distribution = Goods + Sales tax |
CT |
Same as C, but taxes only |
AP, AR |
Gross = VAT + Sales tax Distribution = Sales tax |
E |
Tax exempt |
AP, AR, PO, SO |
Gross = Goods Distribution = Goods |
*AP = JD Edwards EnterpriseOne Accounts Payable
AR = JD Edwards EnterpriseOne Accounts Receivable
GA = JD Edwards EnterpriseOne General Accounting (journal entries)
PO = JD Edwards EnterpriseOne Procurement
SO = JD Edwards EnterpriseOne Sales Order Management