Tax calculation and registration through the tax provider

For sales tax , the tax amounts are calculated on order line and invoice line level.

If you use a tax provider, the tax provider calculates the tax amounts and passes the calculated tax amounts to LN for posting to the General Ledger and for the updates of the business partner order balances. LN only uses the tax code to determine the tax posting data.

Tax provider register

The tax provider calculates the tax amounts and stores the amounts in the tax provider registers, as well as other data. You can use this data to track and report the tax amounts. The tax register includes the following types of information:

  • Transaction type
  • Document number or invoice number
  • Invoice date
  • Tax amount payable to the tax jurisdiction
Registration of tax amounts

The tax provider automatically updates the tax provider register for the following transactions:

  • Final invoices generated in Invoicing.
  • Manually created invoices in Accounts Receivable if they are finalized.
Note

For other financial transactions such as manually created journal entries, you must use the Tax Provider Calculation Utility (tctax6212m000) session to calculate the tax amounts and update the tax provider register.

Calculating the tax amount

If you use a tax provider, the tax provider calculates the tax for a number of transactions and documents created in LN. The tax amounts are calculated per line.

Major transactions and documents:

  • Sales invoices
  • Purchase contracts
  • Purchase orders
  • Purchase invoices
  • Project bids
  • Sales quotations, orders, and contracts
  • Service contracts and contract quotations
  • Service orders

The tax provider calculates the applicable tax amount from:

  • Tax jurisdiction
  • Taxable amount
  • Order type, for example, Sales Order or Service Order
  • Type of product sold or purchased
Note

For transactions and documents other than sales invoices created in Invoicing and Accounts Receivable, the tax provider calculates the tax amount without updating the tax provider register.

Determining the tax jurisdiction

To determine the tax jurisdiction for each order, the tax provider uses these addresses:

  • Ship-from
  • Ship-to
  • Administrative Ship-from
  • Administrative Ship-to

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