Tax Code Type

Select the tax code type for this record. Valid types are:

  • Exemption
  • Rate

In a Tax System where Tax Mode is Area, tax codes with tax code type rate are only valid on the Header type forms, while tax codes with tax code type exemption are only valid on the item forms.

In case of an area-based tax system, a blank or a non-zero rated exempt tax code entered at the line/release level indicates that items should be taxed at the header tax code rate. If a zero rated exempt tax code is entered at the line/release level, then the item will be exempt from being taxed.

If the item tax code is blank, the item will be taxed at the rate set by the tax code on the header. Otherwise it is set to an exemption tax code and is therefore not included in the tax calculation.

For a Tax System with Tax Mode set to Item this logic is reversed. Tax codes with tax code type rates are valid only on the line items while tax codes with tax code type exemptions are only valid on the Header forms. When the header tax code is left blank, then individual items get taxed at the rate set by the tax codes entered at the line item level.

If the header code is entered and has a tax rate of 0, then the entire order is presumed tax exempt. (If the tax rate is non-zero, then it is considered a special tax code).