Sales tax setup and configuration
In this section, we will be discussing the sales tax setup elements and the sales tax mechanism in Microsoft Dynamics 365 for Finance and Operations, in addition to different configuration options that affect sales tax calculation and posting.
Sales tax setup elements
At the heart of sales tax is sales tax code. It carries settlement periods, ledger posting groups, and tax calculations. The settlement periods contain settlement period intervals, terms of payment, and optionally, the vendor ID, which represents the sales tax authority. Then, there are two main groups where the tax code is attached. The first is the sales tax group, which is assigned to vendors, customers, or ledger accounts. The second group is the item sales tax group, which is assigned to items or ledger accounts.
The following diagram illustrates the sales tax elements:
To create a sales tax authority, go to Tax
| Indirect taxes
| Sales tax
| Sales tax authorities
. The Sales tax authorities...