Set up sales tax codes

This article explains how to set up sales tax codes. Sales tax codes are created for every indirect tax or duty that the legal entity is obligated to calculate, collect, and pay to sales tax authorities.

This task uses the USMF demo company.

  1. Go to Navigation pane > Tax > Indirect taxes > Sales tax > Sales tax codes.

  2. Select New.

  3. In the Sales tax code field, type a value.

  4. In the Name field, type a value.

  5. Select a Settlement period by opening the pull-down list to specify which Sales tax authority and in which intervals this sales tax needs to be reported and paid.

  6. Select a Ledger posting group to specify the main accounts to post sales tax to the general ledger.

  7. Expand the Calculation FastTab. This includes multiple fields that control how sales tax amounts will be calculated. Fill these fields out as needed.

  8. On the Action Pane at the top of the interface, select Sales tax code.

  9. Select Values.

  10. Enter the value for this tax code in the value column.

    On the Calculation FastTab, in the Origin field, if Amount per unit is selected, the value will be multiplied by the quantity on the transaction to calculate the sales tax amount. If the tax code is not a unit-based tax, the value is a percentage that is applied on the Origin for this tax code to calculate the sales tax amount.

  11. Select Save.

  12. Close the page.

  13. Select Save.

As of Microsoft Dynamics 365 Finance version 10.0.22, if you're using the Tax service, and the Support multiple VAT registration numbers feature is enabled in the Feature management workspace, you can use Type of tax field to specify type of the tax code. The following values are available:

  • Standard VAT
  • Reduced VAT
  • VAT 0%
  • Excise
  • Other