Using Tax Free Imported Materials

You must set up parameters and codes for tax-free imported materials. Then you can use transfer orders or purchase orders to move the tax-free imported items.

  1. Set up system parameters:
    1. On the Inventory Parameters form, select Track Tax-Free Imported Materials. The system then automatically selects the Lot Tracking field, and sets the Lot Track field, on the Items form, as selected, by default, when you add an item. Parent items that contain tax-free imported material, however, must use a current BOM and be lot tracked.
    2. Enter a value for Days To Retain Import Documents, which is used by the Delete Tax Free Imports utility.
    3. On the Product Codes form, in the Tax Free Days field, specify a default number of days items are considered tax-free for the specified product code. This value then defaults to the Tax Free Days field on the Items form.
  2. Designate items as tax free:
    1. On the Items form, to designate items as tax-free imported materials, select Tax-Free Imported Material.
    2. In the Tax-Free Days field, specify a number or accept the default. Items that are tax-free imported materials must have a costing method of either FIFO or specific. You can also specify the Safety Stock Percent for this tax-free imported material.
  3. Define IDs for import documents:
    1. Open the Tax-Free Imports form, and create import ID records as needed. Import documents are official documents prepared by the taxing authority and required for importing tax-free materials.
    2. Enter additional details, such as country of origin, as appropriate to further define the Import Document ID.
    3. (Optional) Click the Items button to open the Tax Free Import Items form, where you can view the items associated with the currently selected Import Document ID.
  4. Define export types for each customer:
    1. Open the Customers form and select the Codes tab.
    2. In the Export Type field, select the customer's export type. This indicates whether the customer can receive materials that are tax free. The type selected here defaults to any orders created for this customer.
  5. Assign an export document ID to finished goods:
    1. Open the Tax-Free Imports form.
    2. Assign an Export Document ID to finished goods containing tax-free imported materials shipped to a foreign customer for direct export, and local customers for indirect export in the shipping transaction. Finished goods can belong to customer orders, transfer orders, or projects that have an Export Type of either Direct or Indirect.
  6. Enable lot tracking for parent items:
    1. Open the Tax-Free Imported Materials Process Utility form.
    2. Specify an item and product code range, then click Process. The utility searches current Bills of Material (BOMs) to find parent items that contain tax-free imported materials. Lot tracking is then enabled for the parent items that contain tax-free imported materials. The utility starts searching at the material item level and ends at parent items.
  7. After the setup is complete, you can perform either of these tasks with tax-free imported materials:
    • Transfer between sites:
      1. Open the Transfer Orders form.
      2. Create a transfer order header, and select the appropriate Export Type.
      3. When you add lines to the order, only select items for which Tax-Free Imported Material is selected on the Items form at both sites.
    • Create a purchase order:
      1. Open the Purchase Orders form.
      2. Create the order and select Contains Tax-Free Material.
      3. When you add lines to the order, only select items for which Tax-Free Imported Material is selected on the Items form.
Note:  To remove an expired tax-free status for a specific material, use the Quantity Move form. Select Remove Tax-Free Status.
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