How Taxes are calculated in Purchase Order Processing

Applies to: Microsoft Dynamics GP 2015Dynamics GP 2013Dynamics GP 2010

TechKnowledge Content


SUMMARY

This article describes how taxes are calculated in Purchase Order Processing.


MORE INFORMATIONStep1 Advanced versus Single Schedule

Go to Company Setup Options(Setup - Company - Company - Options).If the Use Shipping Method when Selecting Default Tax Schedule option ismarked, the following table will explain which tax schedule will default on a Purchase Order in Purchase Order Entry (Transactions- Purchasing - Purch. Order Entry). If it is not marked,the default tax schedule assigned to the vendor’s purchase address will be the default.


The Tax Calculation option listed in the tablebelow can be foundwithin Purchase Order Processing Setup Options (Setup - Purchasing - Purchase Order Proc. - Options).


Tax Calculation OptionPurchase Order TypeShipping MethodDefault Tax SchedulePrompt Name
Advanced
Drop-ship
Not applicable
Blank
Tax Schedule
Advanced
Standard
Pickup
Tax schedule assigned to the vendor’s purchase address
Purch Addr Tax Sched
Advanced
Standard
No Shipping Method
Tax schedule assigned to the vendor’s purchase address
Purch Addr Tax Sched
Advanced
Standard
Delivery
Purchases Tax Schedule assigned in Company Setup (Setup-Company-Company)
Company Tax Sched
Single Schedule
Not Applicable
Not Applicable


Tax schedule that is assigned as Single Schedule in
Purchase Order Processing Setup Options (Setup-Purchasing-Purchase Order Proc.-Options)

Tax Schedule ID


Step 2 The Item's Purchase Tax Option

In Item Maintenance (Cards -Inventory - Item) look at the Item's Purchase Tax Option line.The following table will explain which tax schedule will default for the item in Purchasing Item Detail Entry (Transactions - Purchasing - Purchase Order Entry - expansion box to the right of Item)


The tax schedule specified in Item Maintenance (Cards - Inventory - Item is always compared to determine which tax details to use. The item tax schedule that defaults for the item in Purchasing Item Detail Entry (Transactions - Purchasing - Purchase Order Entry - expansion box to the right of Item) is explained below:


ItemDefault tax schedule
Inventoried Item - Taxable
Purchase tax schedule assigned to the item in Item Maintenance (Cards - Inventory - Item)
Inventoried Item - Nontaxableblank
Inventoried Item - Based on vendordefault tax schedule assigned to the vendor's purchase address.
Non-inventoried Item
Tax schedule assigned to the non-inventoried items in the Purchase Order Processing Setup Options window

Based on Vendor Inventory Item:
If the shipping method that is assigned to the transaction is a PICKUP type, taxes are calculated for each detail in the schedule that is assigned to the purchase address of the vendor. No comparison is made. If the shipping method that is assigned to the transaction is a DELIVERY type, taxes are calculated for each detail in the schedule that is assigned to the default site. No comparison is made.

Step 3 Comparing tax schedules

The tax schedule defaulting within Purchasing Item Detail Entry (Transactions - Purchasing - Purchase Order Entry - expansion box to the right of Item) will be compared to another tax schedule. The other tax schedule used for comparison is listed in thetable below:


NoteThe tax details that are common between the two schedules will be used.
Tax Calculation OptionInventory ControlShipping MethodDefault Tax SchedulePrompt Name
Advanced
Not Applicable
No Shipping Method
Tax schedule assigned to the purchase order in Purchase Order Entry
Purch Addr Tax Sched
Advanced
Not Applicable
Pickup
Tax schedule assigned to the purchase order
Purchase Order Entry
Purch Addr Tax Sched
Advanced
Registered
Delivery
Purchase tax schedule assigned to the site in Site Maintenance (Cards - Inventory - Site)
Site Tax Schedule ID.
Advanced
Not Registered
Delivery
Purchases tax schedule assigned in Company Setup (Setup-Company-Company)
Company Tax Sched
Single Schedule
Not Applicable
Not Applicable
Tax schedule that is assigned as the single tax schedule in Purchase Order Processing Setup Options (Setup-Purchasing-Purchase Order Proc.-Options)
Tax Schedule ID


This article was TechKnowledge Document ID:26277