You are here:
Create Tax Policies and Treatments
Create tax policies and their treatments to define the tax calculation for your invoices.
Required Editions
| Available in: Lightning Experience |
| Available in: Enterprise, Performance, Unlimited, and Developer Editions with the Revenue Cloud Advanced license or the Revenue Cloud Billing license |
| User Permissions Needed | |
|---|---|
| To create tax policies and tax treatments: | Tax Admin permission set |
Create Tax Policies
Tax policies are related to order products, which pass the policy on to the resulting billing schedules. Each tax policy requires at least one tax treatment.
- From the App Launcher, find and select Tax Policies.
- Click New.
- Enter a name for the tax policy.
- Select the status as Draft.
-
Select the treatment selection.
- To use the default tax treatment of the tax policy, select Default. If you don't specify a default tax treatment for the tax policy, the default tax treatment selected for your Salesforce org is used.
- To use the tax treatment of the related order product, select Manual.
- To use the tax treatment of the related order product's legal entity, select Legal Entity.
This table explains the usage of tax treatment.
Treatment Selection Scenario Behavior Manual No tax treatment selected for the related order product Uses the default tax treatment of the tax policy Manual No default tax treatment selected for the tax policy Uses the default tax treatment selected for your Salesforce org Manual No default tax treatment selected for your Salesforce org The tax calculation fails Legal Entity No legal entity specified for the related order product or order Uses the tax treatment of the default legal entity selected for your Salesforce org Legal Entity No default legal entity selected for your Salesforce org Uses the tax treatment related to the tax policy that has the same legal entity as that of the related order product Legal Entity No matching legal entity Uses the default tax treatment of the tax policy Legal Entity No default tax treatment selected for the tax policy Uses the default tax treatment of the tax policy Legal Entity No default tax treatment selected for your Salesforce org The tax calculation fails - If necessary, enter a description.
- If the treatment selection is Default, specify a default tax treatment.
- Save your changes.
After you create a tax policy, create and activate the related tax treatments.
Create Tax Treatments
Define the criteria for calculating taxes for invoices.
- From the App Launcher, find and select Tax Treatments.
- Click New.
- Enter a name for the tax treatment.
-
If you select Is Taxable, select the tax engine for the tax
treatment.
When tax is calculated for an order product, this tax engine of the product’s tax treatment is used.
- If necessary, enter the code of the product that the tax treatment applies to.
- Select the tax policy that you want to relate to the tax treatment.
- If necessary, enter a description.
-
Enter the reference code that's used to calculate tax as the tax code.
The tax code of the tax engine is populated as the invoice line tax’s tax code.
-
To calculate taxes based on your product codes, select Use Tax Treatment
Items.
When you select this option but don't have any tax treatment items for the tax treatment, Billing uses the tax code on the tax treatment. If you didn't define a tax code, Billing sends a null value to the tax engine.
- If you selected Use Tax Treatment Items, set the status of the tax treatment to Draft, associate the required tax treatment items, and then set the status of the tax treatment to Active. If you didn't select the Use Tax Treatment Items option, select Active as the status.
- To calculate tax for order products that are related to the tax policy, select Is Taxable.
- If the treatment selection of the parent tax policy is Legal Entity, select the legal entity that you want to relate to the tax treatment.
- Save your changes.
After you create an active tax treatment, change the status of the parent tax policy to Active. Only active tax policies can be used for tax calculation. Then, select the tax treatments for order products.
Note Make sure that the tax treatments or the orders products have a legal entity, or that a
default legal entity is selected for the Salesforce org.
Create Tax Treatment Items
Use tax treatment items to define how individual products are taxed within a tax treatment. Resolve tax codes based on both the legal entity and the product, providing more granular and accurate tax calculations.
Note To calculate taxes based on a product code, select Use Tax Treatment
Items on the tax treatment and associate the required tax treatment item.
Billing resolves the applicable tax treatment item by using the product code on the
transaction.
- From the App Launcher, find and select Tax Treatment Items.
- Click New.
- Enter a name for the tax treatment item.
- Select a tax treatment for the tax treatment item.
- Enter the product code for the product associated with this tax treatment item.
- Enter the tax code applicable for the selected product and for the legal entity.
- Select the product that you're creating the tax treatment items for.
- Save your changes.
Did this article solve your issue?
Let us know so we can improve!
