Practice 2: How to override tax using Tax Classification?

Solution 1:

For override tax using Tax Classification we need default tax setup from Practice 1.

Default Tax setup:

-Tax Regime= Tax Regime 1
-Tax= Tax 1
-Tax Status= Tax Status 1
-Tax Jurisdiction= Tax Jurisdiction 1
-Tax Recovery Rate Code: Tax Recovery 1
-Tax Rate Code: Rate 1

1) We created a PO: # 313 with the setup from Practice 1.

In Tax Lines page we saw these information:
-Tax Regime= Tax Regime 1
-Tax= Tax 1
-Tax Rate Code: Rate 1
- Rate: 5
-Tax Amount=0.5

2) Create a tax rate: Rate 0%

1. Go Setup and Maintenance-> Procurement-> Transaction Tax-> Manage Tax Rates and Tax Recovery Rates
2. Choose Rate type:Tax Rates-> choose: Create button
3. Insert these information:

-Tax Regime= Tax Regime 1

- Configuration Owner: Global configuration owner
-Tax= Tax 1
-Tax Status= Tax Status 1
-Tax Jurisdiction= Tax Jurisdiction 1
-Tax Rate Code: Rate 0%
-Tax Rate Type: Percentaje
-Rate Percentaje: 0
-Effective Start Date: 1/1/18
4. Main details:
- Enable Allow ad hoc tax rate
- Adjustment for Ad Hoc Tax Amounts=Tax Rate
- Tax Inclusion Method: Standard noninclusive handling
- Enable Allow override and entry of inclusive tax lines
- Enable Allow tax exemptions
- Enable Allow tax exceptions

5) Insert Tax Account details:

-Ledger: InFusion Ledger US
- Business Unit: DOO Fusion CSPS Business Unit 1
- Insert Tax Recoverable Account=3231-10-21010-000-0000-3231
- Insert Tax Liability Account=3251-10-21010-000-0000-3251
Save and Close

3) Create Tax Determining Factor Set=TDFS 0%

Create Tax Determining Factor

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1. Navigate to Manage Tax Determining Factor Sets

2. Enter a Tax Determining Factor Set and Name: TDFS 0%

Set Usage: Tax rules
Tax Regime: Tax Regime 1
Determining Factor Class : 'Transaction Input Factor'
Determining Factor Name : 'Tax Classification Code'
3. Click on Save and Close.

4) Create Tax Condition Set=TCS 0%

Create Tax Condition Set

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1. Navigate to Manage Tax Condition Sets

2. Click on Create
3. Enter a Tax Condition Set and Name
Determining Factor Set : same as the one created above
Click on Continue.
Operator : 'Equal To'
Value/From Range : Enter the tax to be overridden (new tax created at step 2: RATE 0%)
Save and Close.

5) Create tax rule: RULE TAX CLAS.0%

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1. Navigate to Manage Tax rules

2. Tax rule Type: Direct Rate Determination rule
3. Create a new rule:
4. Insert these information:
- Configuration Owner: Global Configuration Owner
-Rule Code=Rule Name= RULE TAX CLAS.0%
- Tax Regime Code: RULE TAX CLAS.0%
- Tax: RULE TAX CLAS.0%
-Start Date= 1/1/18
- Tax Determining factor Set= TDFS 0%

5. Press: Next
Go to Tax Condition Set Code and insert value: TCS 0%, insert tax status code: TAX STATUS 1.
-at Result insert new tax created at step 2: RATE 0%
-Press Save and Next button
-Check Enable and insert a rule order that need to be unique

Submit.

6) Check if the tax is correct

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Navigate in Purchasing responsibility and search the PO created in step 1: Po: #313 and go on schedules-> insert
Tax Classification= RATE 0%-> Save and tax with percentaje 0 has been calculated
Note: If is necessary to create another Tax Clasification you cannot use the setup already created for previous Tax
classification.
You need to create the setup from the begin: Rate,Tax Determining Factor Set, Tax Condition Set,Rule.

Solution 2:

We can create a tax classification setup only from one step:

Going in Manage Tax Rule and choosing Tax Rule type: Tax Classification-Based Direct Tax Rate Rules like
below:

Tax Classification= Rate 1 from above means that this code when we will insert on Tax Clasification field on PO
the tax calculated will be 0.50 because percentage for RATE 1 is 5%.

And 5%*10(amount of PO in our case: PO: #313)=0.50.

This tax amount will be added to amount of the PO and Total amount will be 10.50.