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<ManualTopic ID="/baanerp/tc/onlinemanual/000033" xml:lang="en">
   <Header>
      <Title>To use tax codes</Title>
      <Keyword type="header" order="d1e1446643">
         <Level1>Tax codes</Level1>
      </Keyword>
   </Header>
   <GeneralSection>
      <List>
         <ListIntro>You use tax codes to specify the following for each type of
		  tax:</ListIntro>
         <ListItem>The tax rates in each
		  country</ListItem>
         <ListItem>The way the tax must be
		  calculated</ListItem>
         <ListItem>The tax authority to
		  which the tax must be paid</ListItem>
         <ListItem>The ledger accounts to
		  which the tax amounts must be posted</ListItem>
         <ListItem>The text that must be printed on invoices to which the tax
		  applies</ListItem>
      </List>
      <Paragraph>Each type of tax is
		represented by a tax code. For example, you can use the tax code VAT to
		indicate value-added tax and DST to indicate destination sales-tax. For each
		tax code, you must select the <Link href="/baanerp/tc/domains/tvat" role="domain">VAT Type</Link>, which defines the way in which ERP Enterprise handles the tax, and
		the <Link href="/baanerp/tc/domains/ktax" role="domain">Kind of Tax</Link>.</Paragraph>
      <Paragraph>If you use a <Link href="/baanerp/tc/glossary/glossary#000013" role="glossary">tax provider</Link>, the information about the tax rates is not
		used. The tax provider contains all the data required to calculate the tax
		amounts and returns the amounts to ERP Enterprise. You must still define tax codes to specify the
		ledger accounts to which the tax amounts must be posted.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Tax codes by country</SectionTitle>
      <Paragraph>For the home country of
		each financial company, you must link the tax codes that apply to the country.
		You link tax codes to countries in the <GUIRef href="/baanerp/tc/mcs/tcmcs0536m000" role="session">Tax Codes by Country (tcmcs0536m000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Single tax rates</SectionTitle>
      <Paragraph>If a type of tax in a
		country consists of only one tax rate, you can define the tax code as a
		singular tax code. You specify the tax rate, the maximum amount, and other
		details, in the <GUIRef href="/baanerp/tc/mcs/tcmcs0132m000" role="session">Single Tax Rates (tcmcs0132m000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Multiple tax codes</SectionTitle>
      <Paragraph>If a type of tax in a
		country consists of several parts that must be paid to different tax
		authorities, you must define the tax as a multiple tax code for this country.
		For each part, you must create a multiple tax code line in the <GUIRef href="/baanerp/tc/mcs/tcmcs0535m000" role="session">Multiple Tax Code Lines (tcmcs0535m000)</GUIRef> session. ERP Enterprise assigns a sequence
		number to each line.</Paragraph>
      <List>
         <ListIntro>The tax on the multiple tax code lines can be calculated in
		  the following ways:</ListIntro>
         <ListItemHead>
            <GUIRef href="/baanerp/tc/domains/mcs.clcm#parallel" role="option">Parallel</GUIRef>
         </ListItemHead>
         <ListItem>Individually for each line</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/tc/domains/mcs.clcm#cumulative" role="option">Cumulative</GUIRef>
         </ListItemHead>
         <ListItem>Including the tax amounts of previous lines</ListItem>
      </List>
      <Paragraph>Next, you specify the tax
		rates for each multiple tax code line in the <GUIRef href="/baanerp/tc/mcs/tcmcs0535m000" role="session">Multiple Tax Code Lines (tcmcs0535m000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection ID="Notax">
      <SectionTitle>No-tax tax codes</SectionTitle>
      <Paragraph>ERP Enterprise cannot create, finalize, and post transactions if no tax code is available.
		Consequently, you must define a tax code for transactions that are not subject
		to taxation. To define the tax code for non-taxable transactions, select the <GUIRef href="/baanerp/tc/mcs/tcmcs0136s000#tcmcs036.ntax" role="manual">Tax Code for No Tax</GUIRef> check box in the <GUIRef href="/baanerp/tc/mcs/tcmcs0136s000" role="session">Tax Codes by Country (tcmcs0136s000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection ID="Zerotax">
      <SectionTitle>Zero rate tax codes</SectionTitle>
      <Paragraph>Taxable transactions on which no tax must be paid are considered
		as transactions with a zero tax rate rather than as non-taxable transactions.
		For such transactions, you must set up tax codes with zero rates.</Paragraph>
      <List>
         <ListIntro>Tax exemption can apply, for example, for the following
		  reasons:</ListIntro>
         <ListItem>The goods or services are not taxable.</ListItem>
         <ListItem>The goods transfer to or from specific countries is not
		  taxable</ListItem>
         <ListItem>The transactions are related to service operations in specific
		  situations.</ListItem>
         <ListItem>The business partner holds an exempt certificate.</ListItem>
      </List>
      <Paragraph>Usually, if no tax is levied on a transaction, some additional
		information, such as a reference to the tax law that states the exception, or
		the business partner's tax exemption certificate number, must be printed on the
		invoice. Depending on the type of tax, you can use a reason code linked to the
		tax code or you can link a text to the tax code to contain this information.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Tax ledger accounts and dimensions</SectionTitle>
      <List>
         <ListIntro>You must specify the ledger accounts to which ERP Enterprise must post the tax
		  amounts, for each financial company. In each financial company of your system,
		  use the following sessions:</ListIntro>
         <ListItem> 
            <Link href="/baanerp/tf/gld/tfgld0571m000" role="session">Posting Data for Single Tax Codes (tfgld0571m000)</Link>,
		  for single tax codes.</ListItem>
         <ListItem> 
            <Link href="/baanerp/tf/gld/tfgld0570m000" role="session">Posting Data for Multiple Tax Codes (tfgld0570m000)</Link>, for multiple tax codes.</ListItem>
      </List>
      <Paragraph>If dimensions are linked
		to the tax ledger accounts, for invoices ERP Enterprise derives the
		dimensions from the financial business partner group control accounts. For
		journal vouchers, ERP Enterprise derives the dimensions from the ledger account of the journal.</Paragraph>
      <Paragraph>If mandatory dimensions
		are linked to the tax accounts and no dimensions are defined for the
		transaction ledger account, ERP Enterprise uses the dimensions that you specify in the <GUIRef href="/baanerp/tf/gld/tfgld0171s000" role="session">Posting Data for Tax Codes (tfgld0171s000)</GUIRef> or the <GUIRef href="/baanerp/tf/gld/tfgld0170s000" role="session">Posting Data for Multiple Tax Codes (tfgld0170s000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Shifted tax</SectionTitle>
      <Paragraph>The responsibility for the payment of value added tax can be
		shifted from the supplier to the customer. In such a situation, you can define
		a value added tax code of the <GUIRef href="/baanerp/tc/domains/tvat#shifted" role="option">Shifted</GUIRef> type. ERP Enterprise does not add
		the calculated tax amount to the invoice amount but posts the tax amount to a
		separate ledger account to be dealt with later.</Paragraph>
      <List>
         <ListIntro>The shifted tax amount is posted to the sales tax account or
		  the purchase tax account. Simultaneously, a reverse entry is generated on a
		  shifted tax contra-account. In the tax analysis the amount is included twice:</ListIntro>
         <ListItem>As an entry on the
		  purchase tax account or the sales tax account.</ListItem>
         <ListItem>As a reverse entry on
		  the Shifted Purchase Tax or Shifted Sales Tax account.</ListItem>
      </List>
      <List>
         <ListTitle>Uses of shifted tax codes</ListTitle>
         <ListIntro>Among others, shifted tax is used as follows:</ListIntro>
         <ListItem>Shifted tax is used in The Netherlands in relation to
		  legislation concerning the responsibility for tax payment on the invoices from
		  subcontractors to the main contractor.</ListItem>
         <ListItem>In the European Union, shifted tax can be used for purchase
		  invoices from other EU countries. Such purchase invoices do not state any tax,
		  but when you post them you must calculate a fictitious tax amount against the
		  national tax rate. This tax amount is included on the tax report as both
		  chargeable and payable.</ListItem>
         <ListItem> 
            <Link href="/baanerp/tc/glossary/glossary#000333" role="glossary">Direct pay</Link> sales tax codes for purchases must be of the <GUIRef href="/baanerp/tc/domains/tvat#shifted" role="option">Shifted</GUIRef> type.</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Group tax codes</SectionTitle>
      <Paragraph>A group tax code is a method to link multiple individual tax
		codes to a transaction. If withholding tax and/or social contributions apply to
		an invoice as well as value added tax or sales tax, you can use a group tax
		code.</Paragraph>
      <List>
         <ListIntro>A group tax code must include:</ListIntro>
         <ListItem>One tax code of the <GUIRef href="/baanerp/tc/domains/ktax#vat" role="option">VAT</GUIRef> kind of
		  tax, set up either for <Link href="/baanerp/tc/glossary/glossary#000338" role="glossary">value added tax</Link> tax or for <Link href="/baanerp/tc/glossary/glossary#000421" role="glossary">sales tax</Link>.</ListItem>
         <ListItem> 
            <List>
               <ListIntro>One of the following:</ListIntro>
               <ListItem>One or multiple tax codes of the following kinds, as
				required: <List>
                     <ListItem>
                        <GUIRef href="/baanerp/tc/domains/ktax#income.tax" role="option">Withholding Income Tax</GUIRef>
                     </ListItem>
                     <ListItem>
                        <GUIRef href="/baanerp/tc/domains/ktax#social.contrib" role="option">Withholding Social Contribution</GUIRef>
                     </ListItem>
                     <ListItem>
                        <GUIRef href="/baanerp/tc/domains/ktax#social.cont.exp" role="option">Social Contribution (Company Expense)</GUIRef>
                     </ListItem>
                  </List>
               </ListItem>
               <ListItem>One or multiple <GUIRef href="/baanerp/tc/domains/ktax#excl.of.withhld" role="option">Exclude from Withholding</GUIRef> tax codes.</ListItem>
            </List>
         </ListItem>
      </List>
      <Paragraph>If the invoice-from business partner's <Link href="/baanerp/tc/glossary/glossary#000424" role="glossary">tax classification</Link> indicates that payments of their
		invoices are subject to withholding tax and social contributions, ERP Enterprise can link a group tax
		code to the transaction.</Paragraph>
      <Paragraph>ERP Enterprise verifies that the group tax code corresponds to the business partner's tax
		classification. For example, if the tax classification indicates that
		withholding income tax applies and withholding social contributions does not
		apply, the group tax code must contain a tax code of the <GUIRef href="/baanerp/tc/domains/ktax#income.tax" role="option">Withholding Income Tax</GUIRef> kind and cannot contain a tax code of the <GUIRef href="/baanerp/tc/domains/ktax#social.contrib" role="option">Withholding Social Contribution</GUIRef> and/or the <GUIRef href="/baanerp/tc/domains/ktax#social.cont.exp" role="option">Social Contribution (Company Expense)</GUIRef> kind.</Paragraph>
      <List>
         <ListIntro>You can only use group tax codes for the following types of
		  transactions:</ListIntro>
         <ListItem>Purchase invoices for cost items and for service items. The
		  invoices must not be self-billed.</ListItem>
         <ListItem>Purchase orders for cost items and service items.</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Tax authorities</SectionTitle>
      <Paragraph>A tax authority is a
		government body with jurisdiction over the sales taxes in a specific area. For
		example, the state of California, the province of Ontario, the county of Dade,
		and the city of Atlanta.</Paragraph>
      <Paragraph>ERP Enterprise uses tax-authority codes and
		tax-authority groups to identify the jurisdiction of a specific tax code or tax
		code level. You can optionally link a tax authority to a single tax code or to
		a line of a multiple tax code.</Paragraph>
      <Paragraph>You can select and sort
		tax-analysis report data by tax-authority codes and by tax-authority groups,
		and you can update the tax rates at once for all the tax codes linked to a tax
		authority or a group of tax authorities.</Paragraph>
   </GeneralSection>
   <GeneralSection ID="items">
      <SectionTitle>Item tax codes</SectionTitle>
      <List>
         <ListIntro>You can link default tax codes to items and to service orders,
		  contracts, and so on from specific service departments, in the following
		  sessions:</ListIntro>
         <ListItemHead>For sales orders:</ListItemHead>
         <ListItem>
            <GUIRef href="/baanerp/td/isa/tdisa0102s000" role="session">Item - Sales Defaults (tdisa0102s000)</GUIRef> and <GUIRef href="/baanerp/td/isa/tdisa0501m000" role="session">Items - Sales (tdisa0501m000)</GUIRef>
         </ListItem>
         <ListItemHead>For purchase orders:</ListItemHead>
         <ListItem>
            <GUIRef href="/baanerp/td/ipu/tdipu0102m000" role="session">Items - Purchase Defaults (tdipu0102m000)</GUIRef> and <GUIRef href="/baanerp/td/ipu/tdipu0101m000" role="session">Items - Purchase (tdipu0101m000)</GUIRef>
         </ListItem>
         <ListItemHead>For service orders:</ListItemHead>
         <ListItem>
            <GUIRef href="/baanerp/ts/mdm/tsmdm1100m000" role="session">Service Departments (tsmdm1100m000)</GUIRef>
         </ListItem>
      </List>
      <ProcedureList>
         <ListIntro>For value added tax, in sessions and transactions in which a
		  tax code is required, ERP Enterprise can display the default tax code. If you use the <GUIRef href="/baanerp/tc/domains/tax.src1#standard" role="option">Standard</GUIRef> search order, ERP Enterprise retrieves the tax
		  codes from the following sessions, in the following order:</ListIntro>
         <ListItemHead>
            <GUIRef href="/baanerp/tc/tax/tctax0138m000" role="session">Tax Handling (tctax0138m000)</GUIRef>
         </ListItemHead>
         <ListItem>The tax code for the tax country and item combination, if you
		  specify one.</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/td/isa/tdisa0501m000" role="session">Items - Sales (tdisa0501m000)</GUIRef>
         </ListItemHead>
         <ListItem>The tax code for the item if you specify one.</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/tc/tax/tctax0138m000" role="session">Tax Handling (tctax0138m000)</GUIRef>
         </ListItemHead>
         <ListItem>The tax code you define for the tax country and an empty <GUIRef href="/baanerp/tc/tax/tctax0138m000#tctax038.item" role="manual">Item</GUIRef> field.</ListItem>
      </ProcedureList>
   </GeneralSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000075" role="manual">Overview of tax handling</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000031" role="manual">Setting up tax registration</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000422" role="manual">Setting up withholding tax and social contributions</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000105" role="manual">Sales tax</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>