Intercompany expenses
A worker who is employed by one legal entity in an organization might perform work for another legal entity in the same organization. In this situation, you can use the intercompany expense feature to assign the worker’s expenses to the legal entity for which the work was performed. The legal entity that employs the worker is referred to as the "loaning legal entity." The legal entity for which the worker incurs expenses is referred to as the "borrowing legal entity."
Set up tax posting for intercompany expenses
If you want to use tax groups that are associated with the loaning legal entity instead of the borrowing legal entity in your expense report, you must configure it on the General ledger parameters page, on the Sales tax FastTab. When the Legal entity for intercompany tax posting field is set to Source and the Apply sales tax taxation rules field is set to No, the tax combination for the loaning legal entity will be used.
If the Legal entity for intercompany tax posting field is set to Destination, the tax combination for the borrowing legal entity is used. Counties and regions might have different rules.
For example, in the United States, when this parameter is set to Source, the Sales tax receivable field must also be configured on the new Ledger posting groups page.
The accounting engine uses the information from this field for tax-related accounting entry. The behavior is consistent for expense lines that are posted with or without a project.