Creating tax entities

Select Financials > Payables > Tax Setup > Tax Entities.

Or select Financials > Receivables > Tax Setup > Tax Entities

Click Create.

Specify this information:

Tax Entity

Select the tax entity.

Name

Provide a name for the tax entity.

Tax System

Specify the tax system to use. Your selection determines the method by which taxes are calculated. Specify the tax entity code and description.

Taxable Amount Edit

When this field is selected, the total taxable amount on the invoice lines is edited against the total taxable amount on the invoice header. The invoice lines must equal the total taxable amount on the Payables invoice for VAT taxing.

Use Tax Code Accounts

Select this check box to assign your general ledger accounts at the tax code level. If your company is defined in Global Ledger as requiring VAT Return Reporting, select this check box.

Clear this check box to assign your general ledger accounts at the company level. Clear this check box if your tax point date is set to Payment Date and input and output due accounts are required for your company.

Approval Required

Select this check box to require approval.

Vendor Group

Select the vendor group.

Accounts Payable Tax Accrual Code

Select the Payables accrual account that you previously defined in Invoice Accrual Code .

Input

Specify the global ledger accounting string that is used for input taxes. Input taxes are paid by the company in Payables.

Input Due

This account is a temporary account to post the tax amount on invoices when the tax point date is set to the Payment Date. When the entity pays the vendor, the tax posting is moved from this account to the Input accounting string.

Output

Output taxes are collected by the entity in Receivables Receivables.

Output Due

This is a temporary account to post the tax amount on invoices when the tax point date is set to Payment Date. When the customer pays the invoice, the tax posting is moved from this account to the Output accounting string.

Tax Identification

Specify the tax identification number.

Accrued or Invoiced

Specify how the tax code affects taxable transactions. Accrued tax represents no increase to the transaction. Invoiced tax represents an additional charge to the transaction.

Tax Point

The tax point date can be overridden during order entry or when invoices are created. Select the date type to use to calculate sales tax:

Invoice Date
Tax is calculated when you release an invoice or invoice batch.
Shipping Date
Tax is calculated when you perform shipping feedback in Warehouse.
Payment Date
Tax is calculated on the date of payment. It is temporarily calculated and posted to the input due account at the time of invoice.
GL Date
Tax is recognized on the general ledger posting date. The tax is calculated using the invoice date.

Tax Terms

Specify whether to calculate the tax before or after payment terms are applied.

Allow Account Changes

Select this check box to override the default global ledger accounts when taxes are calculated.

Landed Cost

This field is used with Purchasing and Inventory Control. Select this check box if tax on an item is included in the item cost.

Post Option

Select a post option.

Delay Tax Processing

This field is available when One Source is the Tax System. See the Requisitions User Guide for more information about delaying the processing of tax until the requisition is released.

In the Tolerances section, specify this information:

Taxable Tolerance Limit: Specify a minimum taxable amount for tolerance checking. Tolerance checking applies to verifying a tax amount, for example, sales tax is verified on an invoice by Payables. If the taxable amount is greater than or equal to this amount, then an error may occur unless a date range is specified. The tolerance rate must fall within the range that is specified. If this field is blank and the date range is blank, then there is a zero tolerance. That is, the tax amount to be verified must be exactly the same as the system-calculated tax amount.
Rate Range: Specify a rate range percentage. This field contains the lowest acceptable tax rate for tolerance checking. Tolerance checking applies to verifying a tax amount. Any transaction with a calculated tax rate that is outside of the range that you define can cause an error. If the tolerance limit and the rate range are blank, then there is zero tolerance. That is, the tax amount to be verified must be exactly the same as the system-calculated amount.
Tax Amount Tolerance Limit: Specify a tax amount tolerance limit for tolerance checking. Tolerance checking is used to verify a tax amount. For example, sales tax amounts on an invoice is verified by Payables. If the difference between the passed tax amount exceeds the tax tolerance amount, then an error will occur.

On the VAT/Intrastat tab, specify this information:

Intrastat Identification: Select this check box if the entity is subject to Intrastat reporting.

Branch Identification: Specify the branch identification if required for Intrastat reporting.
VAT Registration Country.: Select the country component of the VAT registration number. This and the VAT Registration Number equal the VAT Registration Number
VAT Registration Number: Specify the number component of VAT Registration number. This field and the VAT Registration Country equal the VAT Registration Number.

Click Save.