How to Use Tax Service in the US Localization of SAP Business One

How-To Guide SAP Business One 9.2 PL08 and Higher Document Version: 1.0 2017-08-16 How to Use Tax Service in the US Localization of SAP Business One

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Contents 1 Introduction... 5 2 Setting Up Tax Service... 6 3 Working with Tax Service... 8 3.1 Raising an A/R Invoice with Tax Service... 9 4 2017 SAP SE or an SAP affiliate company. All rights reserved. Contents

1 Introduction This how-to guide will help you to work with Tax Service (Tax-as-a-Service) in the US localization of SAP Business One from version 9.2 PL08 and higher. Tax requirements in the US market are constantly evolving, with there being variation in requirements at the city, county, state and federal level. This makes tax requirement management in SAP Business One challenging. With the level of complexity, to keep up with ongoing changes, and to fulfill legal requirements on tax in the US market, a new approach is required. SAP Localization Hub, Tax Service (TaaS) connects SAP Business One to a tax service hub used across SAP to keep up to date with tax changes throughout the world. Tax Service capabilities include: o Predefined tax (for example sales tax, VAT) content for numerous countries o Tax updates are seamlessly pushed to the service o Time dependent tax exemptions and certificates o Time bound tax rates and jurisdictions o Tax nexus determination TaaS enables you to ensure tax compliance by accurately determining indirect taxes on transactions. TaaS works as a RESTFUL API, accepting request calls and responding in a JSON Format. TaaS provides SAP Business One with up-to-date sales tax and use tax information as and when required. TaaS removes the need for customers to maintain tax information in SAP Business One, reducing the administrative burden of doing so. As and when relevant marketing documents are produced in SAP Business One, a call is placed on TaaS to provide the required tax information, this information is then stored in SAP Business One. For more information, follow the link below: https://cloudplatform.sap.com/capabilities/business-services/tax.html Note Customers do not need a SAP Cloud Platform account for TaaS to function with SAP Business One. The SAP Business One US Localization is integrated with TaaS. Options exist in SAP Business One to activate TaaS and provide the required information. SAP Business One uses Tax Rate repository values from TaaS but all tax calculations are made in SAP Business One. Introduction 2017 SAP SE or an SAP affiliate company. All rights reserved. 5

2 Setting Up Tax Service The setting Use SAP Localization Hub Tax Service is available on the Accounting Data tab of the Company Details window (follow path Main Menu Administration System Initialization Company Details Account Data tab) to activate TaaS. For Use SAP Localization Hub Tax Service there are three options, depending on which part of your business you want to use TaaS with: o Do Not Use o Sales Only o Sales and Purchases 6 2017 SAP SE or an SAP affiliate company. All rights reserved. Setting Up Tax Service

Once Tax Service has been activated, the following information is required in the fields on the Accounting Data tab of the Company Details window for TaaS to work: o User Name: b1admin o Password: b1admin o OAuth Token Endpoint: https://oauthasservicesd99fc3b9d.us2.hana.ondemand.com/oauth2/api/v1/token o Tax Service URL: https://taxserviced99fc3b9d.us2.hana.ondemand.com/taas_lite/taxservlet/quote o Sales Tax Account for TaaS: according to the accounts used in your database (a default G/L Account is to be used when a new system Tax Code is created from the values or rates retrieved from Tax Service) o Purchase Tax Account for TaaS: according to the accounts used in your database (a default G/L Account is to be used when a new system Tax Code is created from the values or rates retrieved from Tax Service) You can deactivate individual Ship To addresses of business partners by selecting No in the option TaaS Enabled on the Addresses tab of Business Partner Master Data (follow path Main Menu Business Partners Business Partners Master Data Addresses tab). The TaaS Enabled option will be available in the table of properties grid for each Ship To entry of a particular business partner. The TaaS Enabled field controls business partner tax nexus in SAP Business One for the Ship To in question. Setting Up Tax Service 2017 SAP SE or an SAP affiliate company. All rights reserved. 7

3 Working with Tax Service Once activated, TaaS is used when there is a matching rate based on the marketing document and business partner properties. TaaS works as follows: o Tax jurisdictions are based on the marketing document row or header level ship-to address ZIP Code, Street, City, County and State. More inputs mean a more precise response. o Tax jurisdiction rates sent or received from TaaS are stored on marketing documents. o A system Tax Code is generated for each new jurisdiction combination created by a document. The system Tax Code is created by SAP Business One using rates and jurisdictions received from TaaS and recorded on marketing document rows. o A default Sales Tax G/L Account is required to add a Tax Code successfully, and then post a marketing document. The default Sales Tax G/L Account can be changed for subsequent Tax Codes on the Company Details window. The specific Sales Tax G/L Account used for a Tax Code can be changed at any time in Tax Jurisdictions setup. A similar logic applies to purchasing. o System Tax Codes begin with "#" and end with "SS" if service sales related, "SM" if item sales related, "PS" if service purchase related or "PM" if material purchase related. The digits (numbers) in the system Tax Codes represent ZIP Codes. System jurisdiction Codes also begin with "#". A new system Tax Code is finally added to the database and Tax Code repository only when a document is added. If the document addition is stopped, the Tax Code is not added either. o Service sales are determined by a non-inventory item flag in Item Master Data, service type marketing documents, or header and row freights. o Material sales are determined by an inventory item flag in Item Master Data. o The Tax Code Determination mechanism, that pre-dated TaaS, will stay inactive as long as a match exists in TaaS and the specific business partner is set up for TaaS. The system Tax Codes can be also used in Tax Code Determination if that is a future preference. Note o TaaS only works with domestic US business partners. o TaaS is not available for documents created through Service Layer, DI API nor DI Server. o TaaS does not currently support Minimum Taxable Amounts, Maximum Taxable Amounts or Flat Tax Amounts as featured in State Rates - Setup. o TaaS relies on an Internet connection to function. Without a Web connection SAP Business One will fall back to using the Tax Code Determination mechanism. 8 2017 SAP SE or an SAP affiliate company. All rights reserved. Working with Tax Service

3.1 Raising an A/R Invoice with Tax Service When raising an A/R Invoice (follow path Main Menu Sales - A/R A/R Invoice) for a business partner against their domestic US ship-to address, Tax Code is populated and tax is calculated based on information from TaaS and business partner master data. The following A/R Invoice example shows: o A single item priced at $100. o A Tax Code "#90245SM" generated based on the business partner's 90245 ZIP Code in El Segundo, CA, and the row being for an item, not a service. o Tax is calculated at $8.75. Drilling down into the Tax Code field via the arrow icon shows more information on the tax calculation: o State tax comes to $7.25, county tax comes to $1.50, city tax is zero. Working with Tax Service 2017 SAP SE or an SAP affiliate company. All rights reserved. 9

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