Tax Codes Workspace

Use this workspace to set up tax codes.

If you sell or purchase an activity or an item, Maconomy applies a tax rate from a tax table if a tax table is available and the tax table criteria are met. If not, Maconomy applies the tax code that is associated with the item or activity.

Tax reporting systems can vary substantially from country to country. Different tax rates may be applied based on the purchaser's location, the type of buyer (retail/wholesale), or the type of product/service provided (tax-free, tax-exempt, or rate). Additionally, multiple regional tax reporting units exist in some countries, including the United States, India, and Brazil.

Postings

Maconomy automatically posts the tax amounts to the correct accounts, depending on whether the transaction is a purchase or sale.

Another option is to use G/L tax codes, which you set up in the G/L Tax Codes workspace. These codes let you explicitly determine whether a tax amount should be posted to receivable or payable accounts.

Three Levels of Taxes

Maconomy lets you use up to three different tax levels, labeled Tax Code 1, Tax Code 2, and Tax Code 3. For example, you could use the three levels for national tax, regional tax, and local tax. To use this functionality, select the Show Three Tax Levels or Show Two Tax Levels system parameter in the System Parameters workspace.

Maconomy can calculate all three levels from the base amount, or they can be cumulative.

For example, assume that you are creating an invoice for an item that costs $100 before taxes. $100 is the base amount. You have three tax levels: 5% national tax, 7% regional tax, and 8% local tax.

If Maconomy calculates the tax from the base amount, the total invoiceable amount after applicable taxes is $120 (100 + 5 + 7 + 8 = 120).

If the tax is cumulative, the total invoiceable amount is $121.34 (100 x 1.05 = 105; 105 x 1.07 = 112.35; 112.35 x 1.08 = 121.34).