How to Set Up Use Tax and Purchase Tax | Microsoft Docs

Sales tax includes taxes that companies pay for using items:

To set up use tax for a purchase order

  1. Choose the Search for Page or Report icon, enter Purchase Orders, and then choose the related link in Order Processing.
  2. On the Purchase Orders page, on the Home tab, in the New group, choose New.
  3. On the Lines FastTab, fill in the fields as necessary. Hover over a field to read a short description.
  4. On the Invoicing FastTab, fill in the fields as described in the following table.

    Field Description
    Tax Liable Select to set up tax liability. Important: This field is available on the Purchase Header page, but it is not shown by default. To select the field, you must first add the column that shows this field. You can change how certain UI elements are displayed. For more information, see Personalizing Your Workspace.
    Tax Area Code The tax area code of the vendor. Important: This field is available on the Purchase Header page, but it is not shown by default. To select the field, you must first add the column that shows this field. You can change how certain UI elements are displayed. For more information, see Personalizing Your Workspace.
    Tax Exemption No. The company's tax exemption number. You can enter a maximum of 30 alphanumeric characters. Important: This field is available on the Purchase Header page, but it is not shown by default. To select the field, you must first add the column that shows this field. You can change how certain UI elements are displayed. For more information, see Personalizing Your Workspace.
    Provincial Tax Area Code The tax code for the province. Important: This field is available on the Purchase Header page, but it is not shown by default. To select the field, you must first add the column that shows this field. You can change how certain UI elements are displayed. For more information, see Personalizing Your Workspace.
  5. Choose the OK button.

To set up use tax details

  1. Choose the Search for Page or Report icon, enter Tax Details, and then choose the related link.
  2. On the Tax Details page, choose the New action.
  3. On the New - Tax Details page, fill in the fields as described in the following table.

    Field Description
    Tax Jurisdiction Code The tax jurisdiction code for the tax detail entry.
    Tax Group Code The tax group code for the tax detail entry.
    Tax Type Sales and Use Tax – To apply both sales tax and use tax to the tax detail entry.

    –or–

    Excise Tax – To apply excise tax to the tax detail entry.

    –or–

    Sales Tax Only – To apply only sales tax to the tax detail entry.

    –or–

    Use Tax Only – To apply only use tax to the tax detail entry.
  4. Choose the OK button.

To set up purchase tax for a company

  1. Choose the Search for Page or Report icon, enter Company Information, and then choose the related link.
  2. On the Company Information page, on the Tax FastTab, fill in the fields as described in the following table.

    Field Description
    Tax Area Code The company's tax area code. The tax area code is used in conjunction with a tax group code field and the Tax Liable field to find the necessary information for calculating sales tax.
    Tax Exemption No. The company's tax exemption number. You can enter a maximum of 30 alphanumeric characters.
    Provincial Tax Area Code The tax code for the province.
  3. Choose the OK button.

To set up purchase tax for a location

  1. Choose the Search for Page or Report icon, enter Locations, and then choose the related link.
  2. On the Locations page, select the required location, and then choose the Edit action.
  3. On the General FastTab, fill in the fields as described in the following table.

    Field Description
    Do Not Use For Tax Calculation Select to specify whether the tax information included on this location record is to be used for sales tax calculations on purchase documents.
    Tax Area Code The tax area code for the location. The tax area code is used in conjunction with a tax group code field and the Tax Liable field to find the necessary information for calculating sales tax.
    Tax Exemption No. The company's tax exemption number. You can enter a maximum of 30 alphanumeric characters.
    Provincial Tax Area Code The tax code for the province.
  4. Choose the OK button.

To set up purchase tax for non-recoverable tax

  1. Choose the Search for Page or Report icon, enter Tax Details, and then choose the related link.
  2. On the Tax Details page, choose the New action.
  3. Select the Expense/Capitalize check box.

    NOTE

    This check box must be selected if the tax paid is not recoverable.

  4. Choose the OK button.

See Also

United States Local Functionality
Reporting Sales Tax in the US
Finance
Setting Up Finance



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