Always calculate a tax rate

When setting up and VAT or GST based tax, I would advise that a tax rate is always calculated, so even when the tax is not known, use a tax rate call ‘tax not known’ for example.

This way, you will have a tax rate on every transaction, if one is not there then you know there has been an error rather than not knowing if the system has calculated the tax correctly or not! Secondly, if you don’t calculate a tax rate then you cannot report it. Having a tax rate on every transaction means that your tax reports will also have every transaction on them making the reporting thorough and reconciliation easier.

Of course there will be times when you won’t need a tax, on prepayments for example or if you create internal transactions that are just used for internal use and no tax is required, but if its for a sale or purchase, then have a tax rate.

The US Sales and Use eBTax solution is a jurisdictional based solution and many of the exemptions are handled by item exceptions or customer exemptions. But a VAT or GST based eBTax solution is a rules based solution and instead of using exemptions and exceptions, rules should be used to handle any exemptions.If we use rules, we can easily determine a tax rate such as ‘NO TAX’ or ‘OUT OF SCOPE’ where no tax is needed but with the US, the exemptions and exceptions either remove the tax line completely or reduce the tax amount to zero. Neither of these ways make it easy to identify that the right tax was calculated or not. So, should we also look at using rules for the exemptions and exceptions in a US tax solution and calcualte a rate of NO TAX instead of the current way exemptions are handled?