Tax calculation

Whether LN calculates tax on advance payments depends on the Calculate Tax on Advance Payments/Receipts parameter in the CMG Parameters (tfcmg0100s000) session.

The way in which LN handles tax on deductions is explained in To adjust tax for deductions.

Usually, tax must be calculated for the individual transaction lines.

For purchase invoices to which only one tax code applies, you can calculate the tax at invoice header level. If several tax codes and/or tax types apply, you must calculate the tax by transaction line.

As a rule, you create manual sales invoices in Invoicing and LN calculates the tax for each transaction line. However, for sales invoices that you create manually in the Accounts Receivable module, you can select the Level of Tax Calculation or use the default value you selected in the ACR Parameters (tfacr0100s000) session.

If a maximum tax amount applies for a specific tax code, you can specify the amount in the Single Tax Rates (tcmcs0132m000) and the Multiple Tax Rates (tcmcs0133m000) sessions.

If the calculated tax amount exceeds the maximum tax amount, LN replaces the calculated tax amount with the maximum tax amount. For an example, refer to Example of maximum tax amount.

In some countries tax is charged on advance payments/receipts, which exceed a certain minimum amount. If you want to charge tax on advance payments/receipts, you must select the Calculate Tax on Advance Payments/Receipts check box in the CMG Parameters (tfcmg0100s000) session. You must also enter the minimum amount in the Minimum Amount for Tax Calculation field of the CMG Parameters (tfcmg0100s000) session.

LN enters the singular tax amount on the Purchase Tax on Advance Payments ledger account and the Sales Tax on Advance Receipts ledger account. You can define these ledger accounts in the Posting Data for Tax Codes (tfgld0171s000) session.

LN enters the multiple tax amount on the Purchase Tax on Advance Payments ledger account and the Sales Tax on Advance Receipts ledger account. You can define these ledger accounts in the Posting Data for Multiple Tax Codes (tfgld0170s000) session.

You can define the step at which settlement must take place in case of anticipated payments in the Posting Data by Bank/Payment Method (tfcmg0146s000) session.