How Taxes are calculated in Purchase Order Processing

SUMMARY

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

MORE INFORMATION


Step 1 Advanced versus Single Schedule

Go to Company Setup Options (Setup - Company - Company - Options). If the Use Shipping Method when Selecting Default Tax Schedule option is marked, 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 table below can be found within Purchase Order Processing Setup Options (Setup - Purchasing - Purchase Order Proc. - Options).  

 Tax Calculation Option PO Type Shipping Method Default Tax Schedule Prompt Name
 AdvancedDrop-ship  N/A Blank Tax Schedule
 Advanced Standard Pickup Tax schedule assigned to the vendor's purchase address Purch Addr Tax Sched
 Advanced Standard No Shiping 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 N/A N/A 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:

 Item Default Tax Schedule
 Inventoried Item - Taxable Purchase Tax Schedule assigned to the item in Item Maintenance (Cards-Inventory-Item)
 Inventoried Item - Non Taxable blank
 Inventoried Item - Based on vendor default 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 the table below: 

Note The tax details that are common between the two schedules will be used.

 Tax Calculation Option Inventory Control Shipping Method Default Tax Schedule Prompt Name
 Advanced N/A No Shipping MethodTax schedule assigned to the purchase order in Purchase Order Entry   Purch Addr Tax Sched
 Advanced N/A PickupTax schedule assigned to the purchase order in 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 N/A N/A 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




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Microsoft Dynamics GP 2016, Microsoft Dynamics GP 2015, Microsoft Dynamics GP 2013, Microsoft Dynamics GP 2010, Microsoft Dynamics GP 10.0, Purchase Order Processing, Purchase Order Processing

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