Transactions that are subject to sales taxes must be associated with both a sales tax group and an item sales tax group. Sales tax is calculated only for the sales tax codes that are included in both the sales tax group and the item sales tax group.

1. Click General ledger> Setup> Sales tax> Sales tax codes .

2. Create sales tax codes. For more information, see Create various kinds of sales tax codes.

3. Click General ledger> Setup> Sales tax> Sales tax groups , and attach sales tax codes to the sales tax groups. For more information, see Set up and use a sales tax group.

   Important
   If your company operates in the United States, you can set up sales tax jurisdictions as well as sales tax codes, and attach sales tax jurisdictions (not sales tax codes, as instructed in this step) to sales tax groups. Sales tax codes are attached to the sales tax group through the sales tax jurisdictions. For more information, see United States sales tax.

4. Attach sales tax groups to each customer and vendor and to ledger accounts to which purchase or sales transactions that do not involve a customer or vendor are posted. For more information, see Set up a default tax profile for a customer or vendor.

5. Click General ledger> Setup> Sales tax> Item sales tax groups , and attach sales tax codes to the item sales tax groups. For more information, see Create an item sales tax group.

6. Attach default item sales tax groups to items and ledger accounts:

   • Attach a default item sales tax group for purchase orders and sales order to each item. For more information, see Set up default item sales tax groups for an item.

   • Attach a default item sales tax group to the ledger accounts to which purchase or sales transactions that do not involve inventory items are posted. For more information, see Set up a default item sales tax group for a ledger account.

   An appropriate item sales tax code is then proposed as a default on all sales order, purchase order, and journal lines when you enter the item or the ledger account.