Definition: What is it?

A tax authority is legal body usually the state (country) that imposes a financial levy on business transactions.

What is it used for?

In OFBiz tax authorities are used to calculate where business or related taxes are due.

Tax setup is very important as it links into the calculated price that you can charge your customers and also flows through into any related legal documents that are generated (eg Sales Order, Sales Invoice, Purchase Order etc).

Each country or region will have specific rules regarding what should or should not be taxed. There will also be very strict regulations on how taxable transactions should be recorded and tracked in the general ledger or chart of accounts.

Tax authority setup allows configuration of the following :

  • Income tax
  • Value Added Tax (VAT) / Goods and Services Tax (GST)
  • Import / Export tax /Custom and Excise Duty
  • State, City or County taxes

What's on the screen?

TO DO : Add a screen shot?
 

How do I add a new tax authority?

IMPORTANT: You will need to create a party in Party Manager for the tax authority before you can add a new tax authority in the accounting / tax authorities screen.

Steps to create the party to be used for the tax authority are as follows:

  • Create New Party Group
  • Fill in basic details (eg name, address etc)
  • Once the party record is created then add the role of 'Tax Authority' to the party

Only when the tax authority party record is created can you continue.

Example :To add a new tax authority

  1. Press the 'New Tax Authority' button
  2. The Edit Tax Authority screen is displayed
  3. Select or enter the code for the country, state or region that is applicable for the 'Geo' field
  4. Select or enter the party id of the Tax Authority party that has been created in Party Manager
  5. Leave the 'Require Tax Id for Exemption' field at its default of 'Y' (NOTE TO CHECK: Am unsure of what this does....Does it not calculate tax if a Tax Id or VAT number for a customer is specified? Need to understand what functionality this is linked to)
  6. Leave 'Tax Id Format Pattern' blank (NOTE TO CHECK: I think this specifies the format of the tax id so that it can be somehow validated)
  7. Fill in the 'Include Tax in the price' - the default is 'N'. (NOTE: If prices need to include tax such as GST or VAT in the price then change this to 'Y')
  8. Press the 'Update' button

NOTE: The above process creates the basic tax authority detail but there are further details that can be added via the other tax authority sub menus. There are six sub menus which make up the tax authority detail. These are as follows:

How do I update a tax authority?

Example: To update an existing tax authority

  1. Select the 'Edit' button next to the tax authority that you wish to update
  2. The 'Edit Tax Authority' screen is displayed
  3. Update the details of the tax authority as required including any submenus
  4. Press the 'Update' button

How do I delete / remove a tax authority?

Tax authorities cannot be deleted via the Tax Authority screens. If they need to be removed then it can be done via the Webtools and Entity Data maintenance.

NOTE: Be very careful removing tax authorities records unless you are completely certain that they have not been already used for transaction calculations.