You are here:
Set Up Tax Rates 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, a tax rate defines a percentage value to apply to an order product or invoice line during tax calculation. Upon record creation, Salesforce Billing evaluates the order product or invoice line’s tax treatment. If the tax treatment and tax rate have matching legal entities, Salesforce uses that tax rate to calculate tax for the order product or invoice line.
-
Create your tax rate.
- From the tax rate page, click New.
- Choose a tax identifier. This represents the name of your record and can be anything you want.
- Add a state, city, zip code, and/or country. You must provide all the information above the lowest address level that you populate. For example, if your integration applies tax rates at the zip code level, your tax rate requires a zip code, city, state and country. If you apply tax at the state level, your tax rate requires only the state and country.
-
Provide a priority number. When multiple rates apply to a transaction with matching
priorities, Salesforce Billing aggregates the rates and applies them against the taxable
amount. When priorities differ, Salesforce applies the lowest priority first. The taxable
amount will add to the first tax amount according to priority level. The sum of the taxable
amount and the first tax rate is used as the taxable amount for the second tax rate applied,
and so on.
For example, let’s say you had a $5000 order amount with a 15% priority 0 tax rate and a 20% priority one tax rate. Salesforce Billing applies these calculations:
$5000 * .15 = $750. $5000 + $750 = $5750
$5750 * .2 = Total estimated tax amount of $1900
- Choose a tax code. Tax codes are unique labels that group items together, likes products, services, or charges. You can use tax codes with tax rules to create custom taxation setups.
- Choose a tax rate value (as a percentage) to apply for this tax jurisdiction.
- Choose a legal entity. Salesforce Billing applies taxes to order products and invoice lines if the tax rate’s legal entity matches the legal entity on the order product/invoice line’s tax treatment.
-
Configure tax treatment records.
- To calculate tax accurately on order products and invoice lines, a tax rate and tax treatment must have matching tax codes.
-
Configure product records.
- Configure your tax rules on your product records. Your order products inherit their parent product’s tax rule, but you can change the tax rule if necessary. Remember, Salesforce Billing applies a tax treatment to an order product if the records have matching legal entities.
Your company needs a standard tax rate for taxing software services in Germany. Remember, this rate applies to all of Germany, so you need to define only the country in the tax rate’s address fields.
- Tax Identifier: Software Services — Germany
- Country: Germany
- Priority: 0
- Rate: 20%
- Legal Entity: Germany Legal Entity
After changing a tax record, Salesforce Billing doesn’t store that record’s historical data. Administrators must manage changes to tax rates over time. Make sure that you have an historical data storage plan in place if this information is critical to business operations and overhead.
