Tax and Global

Get Involved. Join the Conversation.


    Katherine Kissel
    Accounts Receivable Taxes
    Topic posted May 16, 2019 by Katherine Kissel, tagged Receivables 
    90 Views, 2 Comments
    Accounts Receivable Taxes
    Configuring AR Taxes

    Hi there,

    I am configuring taxes and plan to configure different taxes for accounts receivable and payables.  What is the best way to configure AR taxes?  Based on some documentation, I thought this could be done with a Tax Rule?

    Please assist if you have experience doing this.







    • Maria Centeno

      Hi Katie,

      The complexity of the tax configuration depends on the business scenarios you need to model in the system: from no tax calculation rules at all (just defaults always applied to all transactions) to complex tax rules (for example to model intra-EU transactions). Have a look at the points here that should be considered on your evaluation (Tax Rule Configuration: Points to Consider and Tax Reporting Configuration)

      In terms of setting up separate taxes for AR and for AP, that is really NOT recommended. One of the advantages of using the tax engine is that you can centralize the setup of tax for O2C and P2P. No need to setup taxes or tax rate codes for AP and AR. When needed you can define separate rules to handle P2P differently to O2C by making use of determinants like transaction type in the tax rules (again the example of intra-EU transactions, where input tax is in general self-assessed on the AP side and output tax is zero on the AR side). The recommendation is always to minimize the number of taxes and to make use of tax determinants on tax rules to model the various scenarios.

      Reading material to help:

      Tax Implementation Guide

      Tax Box Allocations and Reporting Topical Essay

      Transaction Tax Reports Topical Essay

    • Kallol Sinha

      Hi Katherine,

      I won't recommend you anything, just to have what you are looking for, you need to check either order to cash or procure to pay or both in Tax Classification Code Set Assignments. This sits under define tax rates and recovery rates> Create Tax rates.