Examples of Exemption Types and Percentages

The following scenarios illustrate how the exemption rate type and exemption percentage apply to the tax rate.

Applying a Discount

Your company receives a discount of 20% because it sells educational materials. You set the Exemption Rate Type option as Discount or surcharge and enter 20 in the Exemption Percentage field. For example, the tax rate for your transaction is 10%, but the application applies 8% due to the 20% discount (10% - (10% * 20%)).

Applying a Surcharge

Your company is required to apply a surcharge to the tax rate of 10% to a specific item it sells to a customer. For this customer and item, you set the Exemption Rate Type option as Discount or surcharge and enter 110 in the Exemption Percentage field. For example, the tax rate for your transaction is 10%, but the application applies 11% due to the 10% surcharge (10% + (10% * 10%)).

Applying a Special Rate

Your company is required to apply a special tax rate of 5% for a specific customer. For this customer, you set the Exemption Rate Type option as Special rate and enter 5 in the Exemption Percentage field. For example, the tax rate for your transaction is 10%, but the application applies 5% due to the 5% special rate (it replaces the tax rate).