Example: Using the Pct. exempt from sales tax field [AX 2012]

Updated: May 24, 2011

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

The following example illustrates how your legal entity can use the Pct. exempt from sales tax field in the Values form. (Click General ledger > Setup > Sales tax > Sales tax codes. Click Values.)

A transaction might qualify for a percentage of its amount to be exempt from sales tax if other taxes have been applied to the transaction. Legal entities that have revenue that is partially tax exempt are often required to deduct only part of the incoming taxes on their raw materials.

Only part of the sales tax on the raw materials is deducted when sales tax payments are calculated. The remaining sales tax is posted together with the cost of the purchase.

The sales tax rate is 10 percent. Only 90 percent of the sales tax is deductible.

You enter 10 in the Pct. exempt from sales tax field.

When you post an invoice of 100.00, the sales tax is 10.00. Ten percent of the sales tax, or 1.00, is not deductible when the sales tax payment is calculated.

The results are as follows:

  • An amount of 9.00 is posted on the sales tax account.

  • The 1.00 that is not deductible is posted as an expense.

  • The expense balance, 101.00, is posted on the appropriate profit and loss account.

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