Tax Determination 

Use

The system automatically determines the amount of tax and how the tax is distributed among jurisdictions. Several factors influence tax determination such as the origin and destination of goods and the material/customer taxability.

In a sales transaction, the ship-to location determines the jurisdiction code. In a purchasing transaction, the location where consumption occurs determines the jurisdiction code.

Other factors that influence the tax rate include:

Some customers such as non-profit organizations may be tax exempt.

Raw materials used for manufacturing will typically be exempt while finished goods are typically taxable. Another example - race horses may have a different tax rate than farm horses.

Indicators on the customer and material master records allow you to determine taxability. These indicators are used in condition records to specify the tax code in transactions. For example, the customer and material taxability indicators are criteria in determining tax codes in a sales transaction.