Setting up the North American sales tax functionality

The following describes how to set up and use the North American sales tax functionality, which includes sales tax handling for the U.S. and Canada. Sales tax is usually calculated as a percentage of the purchase price of goods and services and is collected by the seller.

DC1 provides an interface that allows you to use tax packages, such as Vertex, to calculate taxes. This feature ensures that tax jurisdiction rules applicable in different states/provinces can be accommodated.

Note: If you are using a different tax module than Vertex tax processing, refer to the customized instructions provided by DC1 for your tax module.

Table/File	To do
Work with companies	To activate the tax functionality, select the applicable company and set the Sales tax handling field to YES. On the first Additional products/Company activation panel, select the North American tax module you want to use, e.g., Vertex and click OK until you exit the routine.
Work with percentages	You must set up a zero percent percentage code which you will need in order to set up the VAT handling codes to be able to use the North American sales tax handling. On the detail panel, enter 00 in the Code field and a description in the Description field.
Work with VAT handling codes	These codes are used to track the tax in DC1 Financials. To set up Vertex, for example, the following VAT handling code records must be set up in this table: If you are using Vertex for only United States, ST must be set up. If you are using Vertex for only Canada, PST and GST must be set up. If you are using Vertex in both the United States and Canada, ST, PST, and GST must be set up. On the detail panel, complete the following fields: VAT handling code Enter ST, PST, or GST, depending on the record you are setting up. Description Enter a description of the record. Percentage code This field is only displayed if DC1 Distribution is installed. Enter 00 for all records. Base amount (AAA) Enter the code for MANDATORY in the Inp cde column for all records. VAT amount (BBB) Set to NO in the Inp cde column for all records. Invoice tot control Enter AAA for all records. On the third VAT handling code table maintenance panel, complete the following fields: Goods transaction Set to NO for all records. Cash discount Set to NO for all records. Turnover amount Set to NO for all records.
Work with countries	You can set up specific countries for tax handling. The following describes how to set up the Country table to use the North American sales tax handling. On the detail panel, the following fields that you must complete are only displayed if sales tax handling is activated in your system. This is done by setting field Sales tax handling to YES in Work with companies as described in Activate tax functions above. Complete the following fields: Validate state Mandatory entry. Enter code for MANDATORY, OPTIONAL, or NOT ALLOWED, indicating how a state code is used for entering addresses for this country. This field can be used to require the entry of a state code if your tax package requires the code to retrieve sales tax. For setting up Vertex, the code for MANDATORY must be entered. Validate county Mandatory entry. Enter code for MANDATORY, OPTIONAL, or NOT ALLOWED, indicating how a county code is used for entering addresses in this country. This field can be used to require the entry of a county code if your tax package requires the code to retrieve sales tax. For setting up Vertex, the code for MANDATORY, OPTIONAL, or NOT ALLOWED can be entered. Sales tax handling Mandatory entry. Indicate if the sales tax handling function will be used for this country. For this example, enter YES. Allow jur. override Mandatory entry. Indicate if the tax jurisdiction field can be changed by the user for customer, warehouse, and service addresses. For this example, enter YES. Sales tax code 1 Enter a code from the VAT handling code table to indicate the sales tax used for this country. The code entered in this field is used to track the sales tax in DC1 Financials. For Vertex, enter the code ST. Sales tax code 2 Enter a code from the VAT handling code table to indicate the sales tax used for this country. The code entered in this field is used to track the sales tax in DC1 Financials. For this example, leave this field blank.
States table	Prerequisites: To be able to define states for a country, field Validate state in the Country table must be set to the code for MANDATORY or OPTIONAL for that country. On the detail panel, complete the following fields: Country Enter the country code to which you will be adding a state. State Enter a code for the state. Description Enter a description of the state. Tax handling code 1 Enter a code from the VAT handling code table to indicate the sales tax used for this state. The code entered in this field is used to track the sales tax in DC1 Financials. For Vertex, enter the code ST. Tax handling code 2 Enter a code from the VAT handling code table to indicate the sales tax used for this state. The code entered in this field is used to track the sales tax in DC1 Financials. For this example, leave this field blank.
Counties table	Note: Vertex tax processing does not require the entry of counties. However, other tax modules may require it. Please refer to the customised instructions provided by DC1 for your tax module. Prerequisites: To be able to define counties for a country/state, fields Validate state and Validate county in the Country table must set to the code for MANDATORY or OPTIONAL for that country. On the detail panel, complete the following fields: Country Enter the country code to which you will be adding a county. State Enter the state code to which you will be adding a county. County Enter a code for the county you are adding. Description Enter a description of the county.
Business partner file (A/R basic data panel)	To activate a customer for tax processing, set the Sales tax field to YES.

Using address fields with sales tax handling activated

Once you have activated North American sales tax handling, the address fields used in conjunction with customers or countries that are set up with tax handling will have additional fields. In addition, any customer (or object in the system that has an address, such as a bank) will have additional fields if it is set up with a country code that is set up with sales tax handling.

How an address field functions in the system (i.e. which fields are required) will depend on how the address is defined for the country code associated with the customer. Certain fields should be set up as mandatory if your tax package requires certain codes to retrieve sales tax.

For the Work with sales orders, Delivery address panel, the following fields are relevant:

Address: Note that the fifth address line has three fields; the two-character field will only be displayed on this line if the Validate state field in the Country table is set to the code for MANDATORY or OPTIONAL. This field is mandatory for Vertex handling.
County: This field will only be displayed on this line if the Validate county field in the Country table is set to the code for MANDATORY or OPTIONAL. This field is mandatory for Vertex handling.
Tax jurisdiction: This field is automatically filled in if you have an automatic tax package such as Vertex. Otherwise, the value in this field needs to be manually assigned if you have a user-defined tax interface. This value can be changed if the Allow jur override field in the Country table is set to YES.