Define item related tax

Manage the item related tax transactions by initially setting up the basic programs. This table shows the various programs related to item related tax:
Program Description
'Item Related Tax ID. Open' (TXS080) You can define an item related tax header ID in this program. You can create the tax header ID by country and state. The header ID contains the type or transactions applicable for the tax report, the basic tax calculation method, and how often the report is declared. You can also specify a report event trigger to trigger supported events when a proposal is ready.
'Item Related Tax ID. Connect Lines’ (TXS081) You can define item related tax ID lines in this program. A line is used to identify the categories of each tax header ID that are subjected to reporting. In this program, you can define the valid from and to date, the pricing of the line, and the tax reporting unit of measure.
'Item Related Tax ID. Connect Items' (TXS085) You can connect item and warehouse combinations that are applicable for item related tax to one or more tax line IDs in this program. You can define the valid from and to date, the taxable item quantity, and optional settings related to deductions.
‘Item Related Tax ID. Open Columns’ (TXS082) For each item related tax header, you can define the amount and quantity columns updated when generating the report in this program..
'Item Related Tax ID. Connect Limits' (TXS083) You can apply any limits to a combination of a tax ID line and column in this program.

Flowchart

This diagram shows an overview of the process for defining item related tax and its key programs:

Defining item related tax flowchart

Define item related tax header

These are the steps to create an item related tax header:

  1. Start (TXS080).
  2. On the (TXS080/B) panel, specify a tax header ID, country, and state, if applicable, and select the 1='Create' option.
    Note: When you create a record with a blank state, a blank state record must exist for the country in ‘States per Country. Open’ (CRS046).
  3. On the (TXS080/E) panel, specify this information:
    • 'Description': Provide a description for the header.
    • 'Name': Specify the name of the header.
    • 'Tax point': Select whether the tax is deemed due at the purchase date, issue date, or delivery date. The tax becomes due either at the date of purchase order receipts, consumption or issuance of material to a manufacturing order or a work order operation, or delivery of customer and service orders. See the stock transaction types that each tax point covers in Update tax transactions.
    • 'Periodicity': Select how often tax is declared. The value of this field is later used as selection criteria when generating the tax report to ensure that only applicable tax header IDs are included in the tax report.
    • 'Tax method': Select whether the tax is calculated based on a specified price per unit of measure or a percentage of the price of the transaction. For percentage, the tax point is used to decide the price used in the calculation, that is, the purchase price, inventory accounting price, or sales price.
    • 'Report event trigger': Optionally, specify a report event trigger. You can use this field to indicate an event that the tax report automatically triggers when the report proposal is ready. If there is no need to trigger an event for the report, leave this field blank.
  4. Click NEXT to create the record and go back to (TXS080/B).

Define item related tax lines

These are the steps to create an item related tax line:

  1. On the (TXS080/B) panel, select the 11='Lines' related option to open (TXS081/B).
  2. Specify a tax line ID and from date, then select the 1='Create' option. The from date indicates from which date the tax is applied to the items connected to the line.
  3. On the (TXS081/E) panel, specify this information:
    • 'Description': Provide a description for the line.
    • 'Name': Specify the name of the line.
    • 'To date': Specify the date up to which the tax is applied to the items connected to the line. Leave this field blank if the date is unknown.
    • 'Price per unit of measure': Specify the price per reporting unit of measure used to calculate the tax. See Calculations in item related tax proposals section in Report item related tax. This field is only available when the tax method of the header is 2='Price per UoM'.
    • 'Reporting unit of measure': Specify the reporting unit of measure used in tax reporting. The reporting unit of measure can differ from the basic unit of measure of an item. This field is only available when the tax method of the header is 2=’Price per UoM'.
    • 'Percentage': Specify the percentage of the price used to calculate the tax. See Calculations in item related tax proposals section in Report item related tax. This field is only available when the tax method of the header is 1=’Percentage'.
  4. Click NEXT to create the record and go back to (TXS081/B).

Connect an item and warehouse combination to an item related tax line

These are the steps to connect items and warehouses to one or more item related tax lines:

  1. Start (TXS085). Alternatively, from TXS081/B, select the 11='Items' related option.
  2. Specify a unique combination of tax ID, country, state, tax line ID, item number, warehouse, and from date and select the 1-'Create' option.
    Similar in (TXS081), the from date is used to indicate from which date the tax is applied to the items connected to the line. To eventually calculate the tax, you must not set the transaction date of the stock transaction before the from date in (TXS081) or (TXS085).
    Note:  In the case of multiple records with similar key values in (TXS081) or (TXS085) but with different from dates, only the last record before or at the transaction date is used when applying the calculation.
  3. On the (TXS085/E) panel, specify this information:
    • 'Description': Provide a description for the item and warehouse connection to the line ID.
    • 'Name': Specify the name of the item and warehouse connection to the line ID.
    • 'To date': Specify the date up to which the tax is applied to the item and warehouse combination connected to the line. Leave this field blank if not applicable.
    • 'Deduction rate': If applicable, specify the deduction rate the item and warehouse combination is entitled to, which, for example, is the case for items that are considered to have a lower negative impact on the environment. The deduction amount is calculated after any limits are applied. If the deduction rate is specified, you must specify a column number as a connection to the column definition in (TXS082), as this indicates which report column the deduction amount should populate.
    • 'Column number': If applicable, specify the column number that the item and warehouse combination deduction amount should populate when creating the tax report.
  4. Click NEXT to create the record and return to (TXS085/B).

Define report columns

Before generating an item related tax report, you must define the columns to update.
  1. Start (TXS080) and select the 12='Columns' related option.
  2. Specify this information:
    • 'Column value type': Select the value type of the column. Select amount or quantity.
    • 'Column number': Select the number for the column. The maximum column number is 10.

      The column number and the column value type indicate which column a value is populated in the report. For example, for column number 1 with column value type 1=’Amount’, the amount is placed in amount column 1. For column number 1 with column value type 2=’Quantity’, the quantity is placed in quantity column 1.

  3. On the (TXS082/B) panel, select the 1=’Create’ option.
  4. On the (TXS082/E) panel, specify this information:
    • 'Description': Provide a description for the column.
    • 'Name': Specify the name of the column.
    • 'Amount type': This field is only valid when the column value type is 1=’Amount’.

      Select whether the column is used for gross tax, deduction, or total amounts. Gross tax is the calculated tax amount before any deductions. Deductions are amounts calculated according to the deduction rate in (TXS085) and are based on the gross tax amount after any limits applied. Totals are the sum of all gross tax amount columns before or after any deductions, depending on the selected total type.

    • 'Limit method': This field is only valid when the amount type is 1=’Gross tax’ or the column value type is 2=’Quantity’.

      Select whether a limit is connected to the column. If you add a limit connected to the applicable column and line in (TXS083), the limit is applied to the column for the transaction. If you do not add a record for the column and line in (TXS083), no limit is applied. See the Define column and line limits section.

    • 'Totals type': This field is only valid when the amount type is 3=’Totals’.

      Select if the column is updated with the total gross or net tax, which is the sum of all gross tax amount columns before or after any deductions..

    • 'Quantity type': This field is only valid when the column value type is 2=’Quantity’.

      Select if the column is updated with the quantity as expressed in the basic unit of measure or the reporting unit of measure.

  5. Click NEXT to create the record and return to (TXS082/B).

Define report column and line limits

You can apply column and line limits to amount columns using amount method 1=’Gross tax’ and quantity columns, as defined in (TXS082). Limits are used to manage quantities and amounts based on how the calculated tax amount of a unit relates to a minimum or maximum limit. To apply the limit in the calculation, you must first specify that there is a column and line limit connection in the limit method for applicable columns in (TXS082). To define limits connected to the columns and lines of the report, follow these steps:
  1. Start (TXS080) and select the 11='Lines' related option on the report header to define the column and the line limits.
  2. On the (TXS081/B) panel, select the 12=’Limits’ related option for the applicable line.
  3. In (TXS083), select the 1=’Create’ option after selecting which column, as defined in (TXS082), the limit is applied.
  4. On the (TXS083/E) panel, specify this information:
    • 'Limit types': Select minimum, between, or maximum limit.

      If you select a minimum limit and the calculated tax amount per unit is below the minimum amount, the amount or quantity populates the column according to the amount method or quantity type. If the calculated tax amount per unit is equal to or above the minimum amount, the column is not populated.

      If you select a between limit and the calculated tax amount per unit is within the minimum and maximum amount range, the amount or quantity populates the column according to the amount method or quantity type. If the calculated tax amount per unit is not within the minimum and maximum amount range, the column is not populated.

      If you select a maximum limit and the calculated tax amount per unit is equal to or above the maximum amount, the amount or quantity populates the column according to the amount method or quantity type. If the calculated tax amount per unit is below the maximum amount, the column is not populated.

    • 'Minimum amount': This field is only valid when the limit type is 1=’Minimum’ or 2=’Between’.

      Specify the minimum amount limit according to the limit type.

    • 'Maximum amount': This field is only valid when the limit type is 2=’Between’ or 3=’Maximum’.

      Specify the maximum amount limit use according to the limit type.

    • 'Amount method': This field is only valid when the column value type is 1=’Amount’.

      Select whether the column is updated with the minimum, maximum, or actual calculated tax amount in case the limit is applied.

  5. Click NEXT to create the record and return to (TXS083/B).

Define number series for item related tax proposals

Before creating an item related tax report proposal, you must define the proposal number series 64 in 'Number Series. Open’ (CRS165).

Related topics
  • Create Numbering Series
  • Manage Virtual Fields
  • Manage Views