Tax Type

Specify the tax type for this item.

  • 1-Sales – Tax amounts are payable to the vendor and are added to the invoice total. This tax amount is directly charged to Job Cost, Equipment, and GL.

  • 2-Use - Tax amounts are accrued, and will be paid at a later date to the appropriate State or Local taxing authority. Calculated tax amounts do not affect the gross or net balance due to the vendor. Instead, the transaction’s gross amount and tax amount is charged to Job Cost, Equipment, and GL account with an offsetting liability account as defined in HQ Tax Codes. Use the AP Tax Report to obtain an itemization of use tax amounts.

  • 3-VAT (Value Added Tax) - This tax is paid on goods and services at each stage of production or distribution, and is based on the value added at each stage. This tax is not directly expensed; it is tracked in the GL and reduces the payment to a taxing authority through an Input Tax Credit (ITC). Use the AP Value Added Tax Report to obtain an itemization of VAT amounts. This is the default tax type for Australian and Canadian companies (where Default Country in HQ Company Setup is AU or CA).

Note:

When generating work completed miscellaneous lines from AP Transaction Entry, the system posts the tax information to the work completed line based on the work order type, the billable status, and whether the invoice line is material related or non-material. For detailed information, see About Tax Calculations for Work Completed.

Intercompany Transactions

The tax type you select determines which company is responsible for paying tax, either the selling company or the purchasing company. The system determines the appropriate tax rate and tax code based on the responsible company’s associated tax group (HQ Tax Codes and Rates field, HQ Company Setup, Add’l Info tab).

For sales and value added tax, the system validates/defaults the tax code (in the Code field) based on the selling company’s tax group. For use tax, the system validates/defaults the tax code based on the purchasing company’s tax group.