The Tax Rate is used to calculate the tax amount for the related item by referencing the Sales Order Line's Sale Price. While the amount appears as a Sales Order Line, the Tax Percentage will not appear to users during checkout. System Admins can create multiple Tax Rates within a Tax Class. These rates will be applied to transactions based on their associated Tax Locale.

How to Create a Tax Rate:

  1. From the Item Class tab, select the Tax Class that you will be adding a Tax Rate to.

  2. From the Tax Class record, click Related to access the related lists. 

  3. Locate the Items related list and click New. The New Item modal will open.

  4. In the Information section, type a name in the Item Name field.

  5. In the Business Group field, Select the Business Group that the Item Class will be connected to.

  6. Check the Is Active checkbox.

  7. In the Tax Rate section, Check the Is Tax checkbox.

  8. In the Tax Locale field, Select the Tax Locale that the Tax Rate (item) is associated with.

  9. Enter a value in the Tax Percent field to designate the rate to be used to calculate the tax amount to be assigned to taxable items.

  10. Click Save.

How does purchasing a Taxable Item affect my records in Salesforce?

When purchasing a taxable item, the Tax Rate will create the following records (when applicable):

  • Sales Order Line(s)

  • Invoice Line(s)

  • Receipt Line(s)

  • ePayment Line(s)

You will also notice the following adjustments (Closings and Postings) of your Sales Order journals:

  • debit to the Cash account for the total amount on the Sales Order.

  • credit to the Revenue Account for the sale price of the item.

    • credit to the Tax Liabilities GL account for the amount of the Sales Tax or VAT.

When multiple items are purchased with different tax classes, the Sales Order reflects all the taxes that apply.

You’re now ready to set your Tax Locale.