To set up the tax rates

After you define and approve the tax codes, you can set up the tax rates. Take the following steps:

1. In the Tax Handling (tctax0138m000) session, specify the default tax codes for domestic tax and for various kinds of import and export transactions and freight orders for the home county of the financial company. You must also select the default tax code for transactions that are exempt from tax. If a tax code applies to a specific item, you can specify the item.

2. If you prefer, you can optionally link default tax codes to items in the following sessions:

   • Items - Sales (tdisa0501m000)
   • Items - Purchase (tdipu0101m000)

   For more information, refer to Item Tax Codes.

3. In the Tax Parameters (tctax0100m000) session, select the order in which LN uses various methods to determine the tax code and the tax country of taxable transactions.
4. Optionally, use the Test Tax Scenario (tctax8100m000) session to check whether LN returns the correct tax code, tax country, and tax rates in specific situations.

5. Define tax code exceptions as described in Defining tax exceptions, in the following situations:

   • If the derived default tax code is not correct.
   • If you set up withholding tax. For more information, refer to Setting up withholding tax and social contributions.