Sales tax exemption
Certain countries or regions, for example the European Union, require companies to record justification for sales tax exemption. If no sales tax applies to trade documents, you must report why the sales order is sales tax exempted. To report sales tax exemption, you need to associate a sales tax-exempt description in trade documents.
The sales tax exempt description is saved on sales tax transactions for history and reprinting.
When you post sales orders in Finance:
- The sales tax group and sales tax rate are recorded automatically on the transaction.
- The actual invoice groups the sales tax transactions according to sales tax rates when the sales tax is not exempted.
If the invoice has sales tax exemptions, it groups the transactions according to sales tax exempt descriptions.