You are here:
Create a Tax Rate and Tax Code for Standard Tax Integrations
Salesforce Billing uses the tax rate object to store tax rates for standard tax integrations. To accurately perform tax calculations for a standard tax integration, Salesforce Billing requires a tax rate for every tax jurisdiction or address. (Salesforce Billing Managed Package)
Required Editions
| Available in: All Salesforce Billing Editions |
For standard tax integrations, Salesforce Billing applies a tax rate’s percentage value to an order product’s subtotal during tax calculation. The results of this calculation are sent to the order product’s Estimated Tax field. For example, if a 10% tax rate applies to a $1,000 order product, the estimated tax is $100.
- From the tax rate page, click New.
- Choose a tax identifier. This value represents the name of your tax rate record.
- Enter your address. Provide all the information above the lowest address level that you enter. For example, if your tax integration applies tax rates at the ZIP code level, your tax rate requires a ZIP code, city, state, and country. If your integration applies tax at the state level, your tax rate requires only the state and country. The address requires at least a country.
-
Enter a priority number. When multiple rates apply to a transaction with matching
priorities, Salesforce Billing combines the rates and applies them against the taxable amount.
When priorities differ, Salesforce applies the lowest priority tax rate first. The sum of the
taxable amount and the first tax rate is used as the taxable amount for the second tax rate
calculation, and so on.
For example, you have a $5,000 order amount with a 15% priority-0 tax rate and a 20% priority-1 tax rate. Salesforce Billing applies the following calculations.
- $5,000 * 0.15 = $750. $5,000 + 750 = $5,750.
- $5,750 * 0.2 = $1,150. $1,150 + $750 = Total estimated tax amount of $1,900.
-
Enter a legal entity or leave the Legal Entity field null.
If a tax treatment and tax rate have null Legal Entity fields, Salesforce Billing still matches them. They must both be null to match.
-
Enter a tax rate value. This value is a percentage used to calculate tax for all eligible
order products that fall under this tax rate.
Note After saving your tax rate, Salesforce Billing creates values for the rate’s Address Comparison and Priority Address Comparison fields. Salesforce Billing uses these fields only for internal reference. -
Enter a tax code. (Optional)
If a tax rate has a tax code, Salesforce Billing applies the tax rate to an order product only if the order product’s tax treatment has the same tax code. You can apply a tax code to multiple tax rates. Tax codes are useful for allowing different treatments to share a legal entity but inherit different tax rates.Salesforce Billing doesn’t use the order product and invoice line’s tax code fields for standard tax calculation. These fields are for reference only.
- If you gave your rate a tax code, go to the tax treatment of the tax rule that you want to associate with your tax rate. Set the treatment’s tax code to the code that you made in Step 7.
Your company needs a standard tax rate for taxing workstations and apps sold in Germany. Workstations are taxed at 10%, and apps are taxed at 5%. The workstation looks up to a Workstation Tax Rule with a Workstation Tax Treatment, and the app looks up to an App Tax Rule with an App Tax Treatment. Both treatments look up to a legal entity titled Germany Legal Entity.
First, you need two tax rates. Because this rate applies to all of Germany, define only the country in the tax rate’s address fields.
- Tax Rate 1
- Tax Identifier: Workstation Tax Rate - Germany
- Country: Germany
- Priority: 0
- Rate: 10%
- Legal Entity: Germany Legal Entity
- Tax Code: WKS
- Tax Rate 2
- Tax Identifier: App Tax Rate - Germany
- Country: Germany
- Priority: 0
- Rate: 5%
- Legal Entity: Germany Legal Entity
- Tax Code: APP
When a customer orders a workstation, Salesforce Billing connects it to Germany Legal Entity. The tax treatment then evaluates the legal entity’s tax rates for matching tax codes and finds the matching WKS code on Workstation Tax Rate - Germany. Salesforce Billing uses a 10% tax rate for the workstation’s order products and invoice lines.
When a customer orders the app, Salesforce Billing follows the same process to match the app’s treatment with the shared APP code on App Tax Rate - Germany. Salesforce Billing uses a 5% tax rate for the app’s order products and invoice lines.
If you plan to data-load tax rate records from an outside source, don’t disable Salesforce Billing triggers.
To test your standard tax integration, create an order containing products that look up to your tax rule, then invoice that order. In your invoice’s Price Information section, the Tax field should show the amount calculated based on your configured tax rate.
