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Set up item tax groups

This article explains how to set up item tax groups in the Tax Calculation feature. It also explains how to set up the item tax group applicability rule matrix and configure lines in the matrix.

The concept of item tax groups in the Tax Calculation feature resembles the concept of item sales tax groups in Microsoft Dynamics 365 Finance. They are groups of tax codes. The Tax Calculation feature uses the intersection of a tax group and an item tax group to determine the tax codes.

Important

The setup of item tax groups in the Tax Calculation the of Globalization studio workspace is legal entity–agnostic. When you enable the Enable advanced tax calculation in the Tax calculation, item tax groups are automatically synced to the Item sales tax groups for the selected legal entity.

Set up an item tax group

Follow these steps to set up an item tax group.

  1. In Finance, open the Globalization Studio workspace, select Globalization services, and then select the Tax Calculation tile.

  2. On the Tax calculation features page, select the feature and version that you want to set up, and then select Edit.

  3. On the General tab, select Configuration version.

  4. On the Item tax group tab, select Manage column. If you're setting up an item tax group for the first time, the fields in the Manage column dialog box are automatically set.

  5. In the list on the left, expand the Lines node, and select the checkbox for Item Tax Group.

    Item Tax Group selected under the Lines node in the Manage columns dialog box.

  6. Select the right arrow button to add Item Tax Group to the Selected columns list on the right.

    Item Tax Group added to the Selected columns list.

  7. Select OK.

Configure an item tax group

After you set up an item tax group, the applicability rule matrix is created. You can add lines to the matrix to configure the item tax group.

  1. On the Item tax group tab, select Add.

  2. In the Item tax group field, enter the name of the item tax group.

    Important

    We recommend that you limit the name of the item tax group to 10 characters. This name is synced with Finance, which has a limit of 10 characters for the names of item sales tax groups.

  3. In the Tax codes field, select the checkbox for each tax code that you want to include in the item tax group. You can include multiple tax codes in one item tax group.

    Multiple tax codes selected in the Tax codes field.

  4. Repeat steps 1 through 3 to add more item tax groups.