Use this screen to set up tax codes for automatic computation of sales or value added tax in various modules throughout the system.
Before using this screen, you must complete three setup screens: the Maintain Countries screen, the Maintain States and Provinces screen, and the Maintain Tax Types screen.
Once you have set up tax codes in this screen, return to the Maintain States and Provinces screen and enter the default tax code for each state and province.
Enter up to six alphanumeric characters for the tax code that needs to be set up.
Enter a descriptive name for the tax jurisdiction. In most cases, this will be the state or province, but it can also be another jurisdiction that has its own rate.
Enter, or use Lookup to select, the state or province to which the tax code applies. This must be a valid state or province already set up in Maintain States and Provinces screen. This is for informational purposes only, but is required. The unlabeled field to the right will display the State/Province name.
The country is automatically brought in if the state or province is entered, but you can overwrite it. This entry must be a valid country already set up in the Maintain Countries screen. The unlabeled field to the right will display the name of the country.
Select this checkbox if the tax code is exempt from tax.
If the Exempt checkbox is selected, enter the tax exemption certificate number in this field.
Select this checkbox if this tax code will require Value Added Tax or Customs declarations.
Enter, or use Lookup to select, the account that should be used for the tax payable for this tax code. Every sales tax code must have at least one account.
The account name for the selected Account is automatically displayed in this non-editable field.
Enter, or use Lookup to select, the organization that is responsible for the tax liability for this tax code. You can set up multiple sales codes for the same jurisdiction, if multiple organizations are responsible for collecting and paying taxes in those jurisdictions.
Enter, or use Lookup to select, the tax type for this tax code line. If you use Lookup, you will see the types entered in the Maintain Tax Types screen.
Enter the tax rate that should be applied when this tax code is in use.
Select the checkbox for taxes that will be compounded. Compounding occurs when a tax is applied not only to the item sold, but also to other taxes applied to the same item.
Example: your company purchases an item for 1000.00 currency units (dollars, Euro, etc.). Two types of tax are charged (national and state/province). The national rate is 1.5% of the purchase price and the state/province rate is 4% of BOTH the purchase price and the national tax charged on the purchase.
Because the second (state/province) tax is compounded, the tax that is charged on this purchase is 15.00 for national and 40.60 for state/province.
If no taxes are compounded, the tax that is charged on this purchase is 15.00 for national tax and 40.00 for state/province.
This column displays the effective tax rate. For those taxes that are NOT compounded, the Effective Tax Rate will match the Tax Rate. For compounded taxes, the Effective Tax Rate may be greater than the Tax Rate.
Select this checkbox to indicate that this tax is recoverable. The recoverable status is linked with the Tax Type and is maintained in the Maintain Tax Types screen. Recoverable taxes are those that are refunded by the taxing authority (government) and are most often Value Added Taxes (VAT). After a recoverable tax has been paid, proof of payment is submitted to the taxing authority, which later provides a refund.
Enter, or use Lookup to select, the appropriate reference number 1 and/or reference number 2 values in these fields if Ref 1 and/or Ref 2 are being used for data entry.
Highlight a row from the table and select this pushbutton to designate accounts and organizations for those taxes that are recoverable. Recoverable taxes are those that are refunded by the taxing authority (government) and are most often Value Added Taxes (VAT).
The rates in the table window are automatically added together and the result shown in this non-editable field. This is the rate that will be used when the code is in use. For example, in some cases there are two or more jurisdictions that actually collect sales tax, but the rate is applied as only one rate.
This field displays the percent of the total Composite Tax Rate that is recoverable. If the Composite Tax Rate is 7.50% and one fourth of this is recoverable, 25.00% will display in this field.
Changes to this screen update the following tables:
SALES_TAX
SALES_TAX_ACCT