About the sales tax calculation methods in the Origin field [AX 2012]

Updated: November 16, 2010

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012

For each sales tax code that you create in the Sales tax codes form, you must select the method of calculation to apply to the tax base amount in the Origin field.

The Percentage of net amount calculation method is the default value in the Origin field. The sales tax is calculated as a percentage of the purchase or sale amount, excluding any other sales taxes.

The invoice line shows a quantity of 10 items at 1.00 each, and the customer is allowed a 10% line discount.

Net amount: 9.00

Sale tax: 25% x 9 = 2.25

Total amount: 9 + 2.25 = 11.25

If you select the Percentage of gross amount method, the sales tax is calculated as a percentage of the gross sales amount, which in the following example includes all other sales taxes or duties.

The tax authority has imposed special duties on an item.

The duty amounts are added to the net amount before sales tax is calculated. You must set up the following sales tax codes:

  • Duty 1 = 10%, using the Percentage of net amount calculation method

  • Duty 2 = 20%, using the Percentage of net amount calculation method

  • Sales tax = 25%, using the Percentage of gross amount calculation method

If the net amount is 10.00, then Duty 1 is 1.00 (10.00 x 10%) and Duty 2 = 2.00 (10.00 x 20%).

The amounts would be as follows:

Gross amount: Net amount + Duty 1 amount + Duty 2 amount (10.00 + 1.00 + 2.00) = 13.00

Sales tax: 13.00 x 25% = 3.25

Total duties and sales tax: 1.00 + 2.00 + 3.25 = 6.25

Total amount: 10.00 + 6.25 = 16.25

When you select Percentage of gross amount in the Origin field, you can also select a sales tax in the Sales tax on sales tax field.

NoteNote

When you select a sales tax code in the Sales tax on sales tax field, only that sales tax is included in the gross amount for the sales tax calculation. If no sales tax code is selected in the Sales tax on sales tax field, the calculation includes all sales taxes in the gross amount for the sales tax calculation.

  1. In the Sales tax codes form, select a sales tax code for which Percentage of gross amount is selected in the Origin field.

  2. On the Calculation tab, in the Sales tax on sales tax field, select a sales tax or duty to include in the gross amount in the sales tax calculation.

The tax authority has imposed special duties on an item.

One of the duty amounts must be added to the net amount before sales tax is calculated. You must set up the following sales tax codes:

  • Duty 1 = 10%, using the Percentage of net amount calculation method

  • Duty 2 = 20%, using the Percentage of net amount calculation method

  • Sales tax = 25%, using the Percentage of gross amount calculation method, with Duty 1 in the Sales tax on sales tax field

Net amount: 10.00

Duty 1: 10.00 x 10% = 1.00

Duty 2: 10.00 x 20% = 2.00

Gross amount: Net amount + Duty 1 amount (10.00 + 1.00) = 11.00

Sales tax: 11.00 x 25% = 2.75

Total duties and sales tax: 1.00 + 2.00 + 2.75 = 5.75

Total amount: 10.00 + 5.75 = 15.75

When you select Percentage of sales tax in the Origin field, sales tax is calculated as a percentage of the sales tax that is selected in the Sales tax on sales tax field. The sales tax that is selected in the Sales tax on sales tax field is calculated first. The second sales tax is then calculated based on the first sales tax amount.

You must set up the following sales tax codes:

  • Duty 1 = 10%, using the Percentage of net amount method

  • Duty 2 = 20%, using the Percentage of sales tax method, with Duty 1 in the Sales tax on sales tax field

  • Sales tax = 25%, using the Percentage of gross amount method

Net amount: 10.00

Duty 1: 10.00 x 10% = 1.00

Duty 2: 1.00 x 20% = 0.20

Gross amount: 10.00 + 1.00 + 0.20 = 11.20

Sales tax: 11.20 x 25% = 2.80

Total sales tax: 1.00 + 0.20 + 2.80 = 4.00

Total amount: 10.00 + 4.00 = 14.00

When you select Amount per unit in the Origin field, sales tax is calculated as a fixed amount per unit. The unit is selected in the Unit field and the amount is specified in the Values form.

Sales tax is calculated as:

  • USD 1.00 per box

  • EUR 0.25 per kilo

NoteNote

If the transaction is entered in another unit, it is converted automatically based on the unit conversions that are set up in the Unit conversions form.

On the Calculation tab, you can select whether the duty is calculated before the sales tax. This determines whether the duty amount is included in the sales tax calculation.

  • Select Percentage of gross amount for the sales tax calculation and calculate a duty as an Amount per unit calculation. The duty amount is added to the net amount and is included in the gross amount in the sales tax calculation.

  • Select Percentage of net amount for the sales tax calculation and calculate a duty as an Amount per unit calculation. The duty amount is not added to the net amount and is excluded from the sales tax calculation.

  • Select Percentage of net amount for the sales tax calculation, calculate a duty as an Amount per unit calculation, and select the Calculate before sales tax check box on the Calculation tab for the duty calculation. The duty amount is added to the net amount and included in the calculation of sales tax.

Duty 1: 5.00

Origin field value: Amount per unit

Sales tax: 25%, using the Percentage of gross amount method

The Calculate before sales tax check box has no effect, because sales tax is calculated as a percentage of the gross amount.

Net amount: 10.00

Duty 1: 1 x 5.00 = 5.00

Gross amount: 10.00 + 5.00 = 15.00

Sales tax: 15.00 x 25% = 3.75

Total sales tax: 5.00 + 3.75 = 8.75

Total amount: 10.00 + 8.75 = 18.75

Duty 1: 5.00

Origin field value: Amount per unit

Sales tax: 25%, using the Percentage of net amount method

The Calculate before sales tax check box is not selected for the duty calculation.

Net amount: 10.00

Duty 1: 1 x 5.00 = 5.00

Sales tax: 10.00 x 25% = 2.50

Total sales tax: 5.00 + 2.50 = 7.50

Total amount: 10.00 + 7.50 = 17.50

Duty 1: 5.00

Origin field value = Amount per unit

Sales tax: 25%, using the Percentage of net amount method

The Calculate before sales tax check box is selected for the duty calculation.

Net amount: 10.00

Duty 1: 1 x 5.00 = 5.00

Sales tax: (10.00 + 5.00) x 25% = 3.75

Total sales tax: 5.00 + 3.75 = 8.75

Total amount: 10.00 + 8.75 = 18.75

The result of Example 3 and Example 1 is the same, because there is only one duty.

Assume that you have two duties, and only one of them is included in the net amount for the sales tax calculation:

Duty 1: 5.00, using the Amount per unit method, and the Calculate before sales tax check box is selected

Duty 2: 2.50, using the Amount per unit method, and the Calculate before sales tax check box is not selected

Sales tax: 25%, using the Percentage of net amount method

Net amount: 10.00

Duty 1: 1 x 5.00 = 5.00

Duty 2: 1 x 2.50 = 2.50

Net amount subject to sales tax: 10.00 + 5.00 = 15.00

Sales tax: 15.00 x 25% = 3.75

Total sales taxes, including duties: 5.00 + 2.50 + 3.75 = 11.25

Total amount: 10.00 + 11.25 = 21.25

The 25 percent sales tax is calculated for the sum of the net amount (10.00) + Duty 1 (5.00) = 15.00. Duty 2 is added to the tax amount after the sales tax is calculated.

The Calculated percentage of net amount calculation method is used in Germany.

Net amount: 10.00

Tax rate: 25%

Sales tax: Net amount x tax rate (10.00 x 25%) = 2.50


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