Tax Parameters (tctax0100m000)

Use this session to define the parameters that control how your company registers and reports tax amounts.

Tax determination method

In the Search Sequence Tax Libraries area, you must select these details:

  • Tax Exempt Level

    The method you use to set up tax exemptions. For details, refer to Tax exemption setup methods.

  • Search order

    The order in which the application uses various methods to determine the tax code and the tax country of taxable transactions. For details, refer to Search Order Tax Defaults.

    In the Search Sequence 1 field, select the method that applies to your transactions. If destination sales tax applies to most transactions, select Destination Sales Tax. If you model tax exceptions or exemptions, select the corresponding option. In all other situations, select Standard.

    If the order origin is Purchase and you use an Exemptions by Country search order, the application first checks whether you defined an exemption for the warehouse.

Note: You can only select Destination Sales Tax if the Destination Sales Tax Applicable check box is selected in the COM Parameters (tccom0000s000) session.

Tax conditions

In the Ignore as Tax Condition area, you can select a number of criteria to be ignored when the application determines the tax code and tax country.

You can select these criteria:

  • The delivery terms.
  • The Department. The country of the department's address is not considered to determine the tax code and tax country.
  • The item on the order. If you have linked a tax code to the item, the application uses the item's tax code provided that tax code details exist for the tax code in the determined tax country.

Field Information

Introduction Date

The date and time when the parameters become effective. The parameters are valid up to the effective date of a more recent parameter setting.

By default, LN fills this field with the date and time at which you changed and saved the parameter settings.

Description

The description of the parameter set. For example, you can indicate why you change the parameters.

Company

The financial company for which the parameters are valid.

In a multicompany structure, if this field is empty the parameters apply to all the financial companies.

Standard Tax Handling
Search Sequence Tax Libraries
Tax Exempt Level

The tax exemption setup method.

Select Extended if you want to specify tax exemption certificates and exempt reasons, and if you set up destination sales tax with or without a tax provider. For details, refer to Tax exemption setup methods.

Select Limited in these situations:

  • You indicate on the order headers whether the order is exempt from tax.
  • You do not want to set up tax exemptions.

Search Sequence 1

The first method LN uses to determine the tax code, the tax country, and the business partner's tax country of taxable transactions.

Standard

The tax system is based on value added tax and the tax details can be found with the standard method.

Exceptions by Country

The tax system is based on VAT and the tax details for a transaction can be found based on the data defined in the Tax Exceptions by Country (tctax1100m000) session. If no tax code and country can be found in the defined exceptions, LN uses the standard method.

Exceptions by Country Set

The tax system is based on VAT and the tax details for a transaction can be found based on the data defined in the Tax Exceptions by Country Set (tctax1101m000) sessions. If no tax code and country can be found in the defined exceptions, LN uses the standard method.

Destination Sales Tax

Destination sales tax applies.

Exemptions by Country

The tax system is based on destination sales tax and tax exemptions are defined in the Tax Exceptions by Country (tctax1100m000) session. If no exempt tax code can be found in the defined exceptions, LN uses the destination sales tax method.

Exemptions by Country Set

The tax system is based on destination sales tax and tax exemptions are defined in the Tax Exceptions by Country Set (tctax1101m000) session. If no exempt tax code can be found in the defined exceptions, LN uses the destination sales tax method.

Not Applicable

The tax method is not relevant.

If LN does not find the tax details with this method, LN continues the search according to the method selected in the Search Sequence 2 field.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Unused concepts in Tax Handling.

Search Sequence 2

The second method LN uses to determine the tax code, the tax country, and the business partner's tax country of taxable transactions. For details, refer to Search Order Tax Defaults.

LN uses this method if no tax code and tax country are found with the method selected in the Search Sequence 1 field. If LN does not find the tax details with this method, LN continues the search according to the method selected in the Search Sequence 3 field.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Unused concepts in Tax Handling.

Search Sequence 3

The third method LN uses to determine the tax code, the tax country, and the business partner's tax country of taxable transactions. For details, refer to Search Order Tax Defaults.

LN uses this method if no tax code and tax country are found with the method selected in the Search Sequence 2 field. If LN does not find the tax details according to this method, LN continues the search according to the method selected in the Search Sequence 4 field.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Unused concepts in Tax Handling.

Search Sequence 4

The fourth method LN uses to determine the tax code, the tax country, and the business partner's tax country of taxable transactions. For details, refer to Search Order Tax Defaults.

LN uses this method if no tax code and tax country are found with the method selected in the Search Sequence 3 field. If LN does not find the tax details according to this method, LN continues the search according to the method selected in the Search Sequence 5 field.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Unused concepts in Tax Handling.

Search Sequence 5

The fifth method LN uses to determine the tax code, the tax country, and the business partner's tax country of taxable transactions. For details, refer to Search Order Tax Defaults.

LN uses this method if no tax code and tax country are found with the method selected in the Search Sequence 4 field. If LN does not find the tax details according to this method, continues the search according to the method selected in the Search Sequence 6 field. If the Search Sequence 6 field is not available, LN returns an error message.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Unused concepts in Tax Handling.

Search Sequence 6

The sixth method LN uses to determine the tax code, the tax country, and the business partner's tax country of taxable transactions. For details, refer to Search Order Tax Defaults.

The sixth method is only available if you set up destination sales tax.

LN uses this method if no tax code and tax country are found with the method selected in the Search Sequence 5 field. If LN does not find the tax details according to this method, LN returns an error message.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Unused concepts in Tax Handling.

Options
Use Tax Numbers of other Financial Companies

If this check box is selected, and the tax country of a transaction changes, LN can replace the tax number on the transaction. LN can replace your tax number on, for example, order acknowledgements and sales invoices with the tax number of the financial company in the new tax country.

If this check box is cleared, LN always retrieves your tax number from the financial company in the country of the sales office, purchase office, or service department of the order.

Note: This check box is displayed only if the Registration by Tax Country field is set to Inactive in the Global Registration Parameters (tctax2100m000) session.

BP Tax Number for Purchase Transactions is Mandatory

If this check box is selected, LN registers always value added tax on purchase orders if the business partner's tax number is not available.

If this check box is cleared, LN searches the tax code setup data to derive the tax code and calculate the tax amount, even if the business partner's tax number is not yet available.

If you create a purchase order for a new business partner, you do not know the business partner's tax number until you receive the purchase invoice. To avoid tax registration for such purchase orders, you can clear this check box.

Allow Simplified Triangulation between Own Entities

If this check box is selected, LN uses the ICT ABC Transactions tax code for triangular trade transactions between enterprise units of your company.

If you select the Use Tax Numbers of other Financial Companies check box, you can select this check box.

In situations in which the simplified triangular trade procedure applies, your organization does not have to be registered for tax in the country of the customer.

You can define the ICT ABC Transactions tax code in the Tax Handling (tctax0138m000) session.

Tax Number Webservice URI

The webservice location associated with the tax number.

Fiscal ID Webservice URI

The webservice location associated with the fiscal ID.

Update Direct Delivery Sales Order Tax

If this check box is selected, LN updates the tax data of a direct delivery sales order based on the tax data of the corresponding purchase order.

If you select this check box, if you change the tax data of the purchase order, LN automatically changes the tax data of a related sales invoice.

You can select this data:

  • Only for ABC Transactions

    For triangular trade transactions, LN updates the tax data of a direct delivery sales order.

  • Always

    If you change the tax data of the purchase order, LN automatically changes the tax data of a related sales invoice.

  • Never

    If you change the tax data of the purchase order, LN does not change the tax data of a related sales invoice.

  • Not Applicable

    If you change the tax data of the purchase order, LN does not check whether related sales invoices exist.

You can define the ICT ABC Transactions tax code in the Tax Handling (tctax0138m000) session.

Note: This field only applies to transactions within the European Union.

Performance aspects

The setting of this field could affect system performance and database growth. For more information, refer to Update direct delivery sales order tax

Extended Tax Configuration

Indicates the status of the extended tax functionality.

Allowed values

  • Inactive
  • In Preparation
  • Active
Jurisdiction at State/Province Level

If this check box is selected, jurisdiction for tax configuration is applicable at state or province level.

Note: 
  • This field is enabled only if the Extended Tax Configuration field is set to In Preparation or Active.
  • By default, this check box is cleared.
Goods and Service Categories

If this check box is selected, the tax defaulting set up based on goods and service category, is applicable.

Note: 
  • This field is enabled only if the Extended Tax Configuration field is set to In Preparation or Active.
  • By default, this check box is selected when the Extended Tax Configuration field is set to In Preparation.
Tax Rounding
By Line

The tax is calculated based on the individual invoice lines.

By Tax Code

The amount of all invoice lines with the same tax code are consolidated, and based on this amount the tax amount is calculated.

Note: The tax amount for internal invoices, Invoicing and Accounts Payable is calculated by tax code or by line.

Default value

Not Applicable

Note: 

  • This parameter setting only applies to:

    • Invoices created via Invoicing .
    • Internal invoices generated in the Generate Self-Billing Purchase Invoices (tfacp2290m000) session.
  • This parameter setting does not affect tax calculation on regular invoices in Accounts Payable and Accounts Receivable .
Tax Exception Modeling
Tax Exception Lookup Sequence
Lookup Sequence 1

Use this field to indicate the order in which LN must retrieve tax exceptions.

Lookup Sequence 2

Use this field to indicate the order in which LN must retrieve tax exceptions.

Lookup Sequence 3

Use this field to indicate the order in which LN must retrieve tax exceptions.

Ignore as Tax Condition
Delivery Terms

If this check box is selected, you cannot use the delivery terms as a criterion for tax exceptions in the Tax Exceptions by Country (tctax1100m000) and the Tax Exceptions by Country Set (tctax1101m000) sessions.

Department

If this check box is selected, you cannot use the department as a criterion for tax exceptions in the Tax Exceptions by Country (tctax1100m000) and the Tax Exceptions by Country Set (tctax1101m000) sessions.

Item

If this check box is selected, you cannot use the item as a criterion for tax exceptions in the Tax Exceptions by Country (tctax1100m000) and the Tax Exceptions by Country Set (tctax1101m000) sessions.

Economic Zone Type

If this check box is selected, you cannot use the economic zone type as criteria for tax exceptions in the Tax Exceptions by Country (tctax1100m000) session and the Tax Exceptions by Country Set (tctax1101m000) session.

Note: 

By default, this check box is selected.

You can clear this check box only if one or more economic zone types are defined in the Economic Zone Types (tccom1187m000) session.

Options
Step Size for Tax Exceptions

The number by which LN increases the generated line numbers in the Tax Exceptions by Country (tctax1100m000) and the Tax Exceptions by Country Set (tctax1101m000) sessions.

Customer and Supplier List Italy
Mandatory Tax Number

If this check box is selected, the mandatory tax number is included in the list.

Mandatory Fiscal ID

If this check box is selected, the mandatory fiscal ID is included in the list.

Max Number of Lines per File

Specify an upper limit for the number of customers and suppliers on the list.

Tax Reporting Currency

This default tax currency in which the tax reporting is performed for the financial company.

Note: 
  • This field is applicable only if the Registration by Tax Country is set to Active or In Preparation in the Global Registration Parameters (tctax2100m000) session.
  • By default, local currency of the financial company is displayed. However, this can be modified only if Registration by Tax Country is set to In Preparation in the Global Registration Parameters (tctax2100m000) session.
Tax Reporting Rate Type

The exchange rate type used for converting non-national currency invoices to tax reporting currency invoices.

Note: 
  • This field is applicable only if:
    • the Registration by Tax Country is set to Active or In Preparation in the Global Registration Parameters (tctax2100m000) session.
    • the tax reporting currency is not a home currency of the financial company.
  • You must specify the value in this field if the tax reporting currency is not a home currency of the financial company.
  • You can change the exchange rate type. However, changes are effective only for the new transactions.
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