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.Note: Service Management (SM) billable items cannot charge use tax.
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.Note: This option is the default for Canadian and Australian companies (i.e. Default Country field in HQ Company Setup is AU or CA).
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.