Overview
Work 365 supports tax calculated based on rates configured into the system. There are two modes of tax calculation, and these are configured at the Tax Service configuration using the Use rates directly field. The effect this field has on the tax computation is as follows
Value of Use Rates Directly field | Tax Computation Behavior |
|---|---|
| Yes | Tax is computed on the whole invoice. The rate applied to the tax calculation is the rate configured on the Billing Contract. Individual subscriptions can be excluded from taxation using the Is Taxable field on the subscription.Choose this option if you require a flat taxation rate applied to your invoice such as VAT or GST. |
| No | Tax is computed per invoice line. The rate applied to the tax line is chosen based on the tax category configured in the tax service. Individual subscriptions can be excluded from taxation using the Is Taxable field on the subscription or using a 0% rate applied for the associated category.Choose this option if you require a more complex setup where rates applied are per line. |
Multiple Tax Services
It is possible to configure multiple tax services in Work 365 and apply them selectively at the Billing Contract. This is useful when a partner has multiple locations and needs to compute tax differently based on the customer's location and their own business location.
Concepts
Tax Service
A set configuration for calculating taxes in Work 365. The Tax Service brings together different taxation components and binds them to cohesively compute tax on the Invoice.
Tax Rate Group
The Tax Rate Group provides a way to apply a group of tax rates. This is useful when taxes are applied at multiple jurisdictions such as taxes in United States that have a federal, state, county and possibly city component. By attaching a single rate group, all these rates can be applied collectively.
Tax Rate
The tax rate is the lowest level of tax configuration in Work 365. At its core, it is a percentage value that will be applied (via the Tax Rate Group).
Name the Tax Rate based on the Tax Authority / Jurisdiction
It is highly recommended that Tax Rates be named using the Tax Authority or Jurisdiction which is collecting the tax. As shown later in this article, Tax Breakups will provide a convenient way to determine how much tax is owed to different entities.
The
Levelfield in the tax rate is used in specific scenarios where jurisdictions require calculation of tax on other taxes. Unless this applies, set the value of theLevelfield = 1
Tax Category
Tax Categories provide an abstraction layer to be applied to taxable Products. Categories can vary based on the tax jurisdictions and the activities that a business undertakes. Some examples of Tax Categories would be "Services", "Hardware", "Subscription Software", or even "Firewall", "Keyboard" etc. Work 365 simplifies tax configuration by attaching a tax category to multiple products and a tax rate group to a category.
Tax Breakup
Tax Breakup is the result of tax computation on the Invoice. It provides details of how much tax was charged against each rate in the Tax Rate Group. Tax Breakups are available as related entities on the Invoice entity.
Updated 5 months ago