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<ManualTopic ID="/baanerp/tc/onlinemanual/000075" xml:lang="en">
   <Header>
      <Title>Overview of tax handling</Title>
      <Keyword type="header" order="d1e1142075">
         <Level1>Tax</Level1>
         <Level2>overview</Level2>
      </Keyword>
      <Keyword type="header" order="d1e1142080">
         <Level1>VAT</Level1>
         <Level2>overview</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <List>
         <ListIntro>Tax handling in LN consists of the following processes:</ListIntro>
         <ListItemHead>Tax registration</ListItemHead>
         <ListItem>
            <Paragraph>Tax registration consists of the calculation and posting of
			 the tax amounts for taxable transactions.</Paragraph>
            <Paragraph>The tax registration
			 setup defines the way LN calculates and posts tax amounts. The LN tax handling setup
			 is very flexible and detailed so that for most situations and types of
			 transactions, the default tax rates and the calculated tax amounts are correct.
			 For details, refer to <Link href="/baanerp/tc/onlinemanual/000031" role="manual">Setting up tax registration</Link>.</Paragraph>
         </ListItem>
         <ListItemHead>Tax declarations</ListItemHead>
         <ListItem>
            <Paragraph>Processing a tax declaration consists of preparing and
			 submitting the tax declaration to the tax authorities, and paying the due
			 amounts to the <Link href="/baanerp/tc/glossary/glossary#000428" role="glossary">collection office</Link>. For each type of tax declaration, you
			 must define a tax declaration master.</Paragraph>
            <Paragraph>For details, refer to <Link href="/baanerp/tc/onlinemanual/000137" role="manual">To set up a tax declaration</Link> and <Link href="/baanerp/tc/onlinemanual/000429" role="manual">To process tax declarations</Link>.</Paragraph>
            <Paragraph>In some countries, you must submit the tax declaration
			 through electronic transfer of the declaration file to the collection office.
			 For details, refer to <Link href="/baanerp/tc/onlinemanual/000426" role="manual">Automatic transfer of tax declarations</Link>.</Paragraph>
         </ListItem>
      </List>
      <Note>
         <SectionTitle>Note</SectionTitle>
         <Paragraph>If you do not want to use the LN tax functionality,
		  you must perform the steps described in <Link href="/baanerp/tc/onlinemanual/000444" role="manual">Deactivating tax functionality</Link>.</Paragraph>
      </Note>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Tax systems</SectionTitle>
      <List>
         <ListIntro>LN distinguishes the following types of tax systems:</ListIntro>
         <ListItem>
            <Link href="/baanerp/tc/glossary/glossary#000421" role="glossary">Sales tax</Link>, which is also called
		  Destination Sales Tax or Sales and Use Tax.</ListItem>
         <ListItem>
            <Link href="/baanerp/tc/glossary/glossary#000338" role="glossary">Value added tax (VAT)</Link>.</ListItem>
      </List>
      <Paragraph>Value added tax can be combined with <Link href="/baanerp/tc/glossary/glossary#000401" role="glossary">withholding tax</Link>.</Paragraph>
      <Paragraph>For all types of tax, you can define exceptions and <Link href="/baanerp/tc/glossary/glossary#TaxExempt_tc" role="glossary">exemptions</Link>.</Paragraph>
      <Paragraph>For all types of tax, you must define <Link href="/baanerp/tc/glossary/glossary#TaxCodes_tc" role="glossary">tax codes</Link>. For details, refer to <Link href="/baanerp/tc/onlinemanual/000033" role="manual">To use tax codes</Link>.</Paragraph>
      <Paragraph>To determine the tax rates for transactions and invoice lines to
		which tax applies, LN uses the tax code and the <Link href="/baanerp/tc/glossary/glossary#000337" role="glossary">tax country</Link>. Among other details, LN compares the
		financial company's home country with the buy-from or the sold-to country of
		the order to determine whether <Link href="/baanerp/tc/glossary/glossary#000339" role="glossary">domestic tax</Link>, or <Link href="/baanerp/tc/glossary/glossary#000342" role="glossary">import</Link> or <Link href="/baanerp/tc/glossary/glossary#000343" role="glossary">export</Link> tax applies to a transaction.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Sales tax</SectionTitle>
      <Paragraph>Sales tax is a kind of
		tax to be paid on goods and services when they are delivered to the consumer.
		The party that delivers the end product to the customer is liable for paying
		the tax. The destination location determines to which authorities the tax must
		be paid.</Paragraph>
      <Paragraph>In North America and
		Canada, sales tax usually must be paid to the tax jurisdictions with authority
		over the location where the goods or services are received or consumed. If the
		point of origin and the destination location reside in different jurisdictions,
		sales tax applies. In many cases, multiple jurisdictions have authority over
		the same location. You can use a <Link href="/baanerp/tc/glossary/glossary#000013" role="glossary">tax provider</Link> to calculate
		the various tax amounts. For details, see <Link href="/baanerp/tc/onlinemanual/000105" role="manual">Sales tax</Link>.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>1099-MISC income tax</SectionTitle>
      <Paragraph>In the United States, the Internal Revenue Service (IRS) is the
		government agency responsible for enforcing the tax regulations. 1099-MISC is
		one of the types of revenue included, and certain supplier payments are subject
		to reporting under these regulations.</Paragraph>
      <Paragraph>You can set up 1099-MISC payment reporting. For details, refer
		to <Link href="/baanerp/tf/onlinemanual/US0001" role="manual">1099-MISC reporting</Link>.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Value added tax</SectionTitle>
      <Paragraph>Value added tax is an indirect percentage tax to be paid on all
		goods an services supplied either to the consumer or to other businesses, for
		example, on final products delivered to a distributor or dealer, and on
		intermediary products delivered to a manufacturer. The place of supply
		determines to which authorities the tax must be paid.</Paragraph>
      <List>
         <ListIntro>Organizations that use value added tax must usually apply two
		  sets of tax rates:</ListIntro>
         <ListItem>
            <Link href="/baanerp/tc/glossary/glossary#000339" role="glossary">Domestic tax</Link> rates for sales and purchase
		  transactions within the home country.</ListItem>
         <ListItem>Tax rates for <Link href="/baanerp/tc/glossary/glossary#ImportExport_tc" role="glossary">import and export</Link> transactions.</ListItem>
      </List>
      <Paragraph>Organizations that are
		based in EU countries must also report their transactions with other EU member
		countries. For details, refer to <Link href="/baanerp/tc/onlinemanual/000076" role="manual">EU transaction reporting</Link>.</Paragraph>
      <Paragraph>You can set up value added tax as described in <Link href="/baanerp/tc/onlinemanual/000031" role="manual">Setting up tax registration</Link>.</Paragraph>
      <List>
         <ListIntro>LN also supports the following special types of value added tax:</ListIntro>
         <ListItemHead>Consumption tax</ListItemHead>
         <ListItem>Consumption tax is a form of value added tax to which specific
		  rules apply. This type of tax is levied in Japan. For details, refer to <Link href="/baanerp/tc/onlinemanual/000410" role="manual">Consumption tax</Link>.</ListItem>
         <ListItemHead>Stamp tax</ListItemHead>
         <ListItem>If you use trade notes, in some countries you must pay <Link href="/baanerp/tc/glossary/glossary#000400" role="glossary">stamp tax</Link> on trade notes. Stamp tax is a type of tax that is imposed on trade
		  notes. Stamp tax consists of a fixed amount instead of a percentage. Depending
		  on the country of your company, if you issue trade notes you can be obliged to
		  pay stamp tax on the trade note.</ListItem>
         <ListItem>To minimize the amount of stamp tax to be paid, you can divide
		  the amount payable of a trade note. Instead of issuing one trade note for the
		  entire amount, LN generates multiple trade notes that together cover the amount. For details,
		  refer to <Link href="/baanerp/tc/onlinemanual/000400" role="manual">To set up stamp tax</Link>.</ListItem>
         <ListItemHead>Tax on freight orders</ListItemHead>
         <ListItem>For freight order lines and for freight invoices, LN supplies the default
		  tax country and tax code. In all cases, you can manually change the tax country
		  and the tax code if this is required. For details, refer to <Link href="/baanerp/tc/onlinemanual/000427" role="manual">Tax codes for freight orders</Link>.</ListItem>
      </List>
      <GeneralSection>
         <SectionTitle>Withholding income tax and social
		  contributions</SectionTitle>
         <Paragraph>In many countries, in specific situations, companies are
		  legally required to retain payable income tax and/or social contributions from
		  the payments of purchase invoices, and pay the amount directly to the tax
		  collector’s office. For example, withholding income tax and social
		  contributions can apply to services provided by subcontracting companies,
		  employment agencies, and self employed workers.</Paragraph>
         <Paragraph>For details, refer to <Link href="/baanerp/tc/onlinemanual/000420" role="manual">Withholding tax and social contributions</Link>.</Paragraph>
         <Paragraph>If you must pay <Link href="/baanerp/tc/glossary/glossary#000400" role="glossary">stamp tax</Link> on <Link href="/baanerp/tf/glossary/glossary#000436" role="glossary">trade notes</Link>, you can set up
		  stamp tax as described in <Link href="/baanerp/tc/onlinemanual/000400" role="manual">To set up stamp tax</Link>.</Paragraph>
      </GeneralSection>
   </GeneralSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000033" role="manual">To use tax codes</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000031" role="manual">Setting up tax registration</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000444" role="manual">Deactivating tax functionality</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000137" role="manual">To set up a tax declaration</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000105" role="manual">Sales tax</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000076" role="manual">EU transaction reporting</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000451" role="manual">Tax parameters - overview</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>