This chapter contains the steps for completing the tax configuration section for ERP systems and countries that use tax jurisdiction codes. If tax jurisdictions codes are used, the system requires the following items per invoice line in order to create the invoice.

• The invoice line item tax code.

• The invoice line item tax jurisdiction code.

This ERP system configuration is applied at the country level, such as the US, Canada, India and Brazil. Under this, the tax rate is calculated based on the part of the country where the item was bought or consumed and the tax jurisdiction code represents the rate of tax applied to the purchase. The tax code represents whether the item is taxable or nontaxable and acts as an instruction on how the ERP system must process the tax.

Often the rates connected to tax jurisdiction codes are held within a specialist tax application external to the ERP system, such as Vertex or Taxware. Tax jurisdictions are configured by profile ID in the Settings > Invoice Processing > Capture Profiles > Tax Settings > Tax Jurisdiction Codes tab.