1. Required in some countries/regions: Create separate ledger accounts for sales taxes on invoices that are awaiting settlement, and create separate sales tax ledger posting groups to control the posting of conditional sales taxes to the separate ledger accounts.

2. Create a separate settlement period for conditional sales taxes that is aligned with the settlement period for ordinary sales taxes and for reporting to the sales tax authority.

3. Create and align two sales tax codes; one for the conditional sales tax and one for the sales taxes that you need to report.

4. Set up sales tax groups and item sales tax groups that contain both of the two sales tax codes that you created.

5. Select the Conditional sales taxcheck box on the Sales taxtab in the Parameters form.

In many countries/regions, you are required by law to separate conditional sales taxes from taxes that are reported and paid at the time of invoicing.

If there is no such requirement, you can post conditional sales taxes to the same ledger accounts as other sales taxes.

1. Click General ledger> Chart of accounts .

2. Press CTRL+N to create a new ledger account.

3. In the Ledger accounttext box, type the account number.

   The account should be placed together with your other sales tax accounts.

4. In Account nametext box, type a name. For example, "Sales tax awaiting settlement".

5. In the Account typedrop-down list, select Balance.

6. On the Setuptab, in the Validate postingdrop-down list, select Sales tax.

7. Create a separate ledger posting group to control the postings to the ledger account for conditional sales taxes. Click General ledger> Setup> Sales tax> Ledger posting groups , and create a new ledger posting group where you specify the ledger accounts that are used for conditional taxes. For more information, see Set up ledger posting groups for sales tax.

To track conditional sales taxes, you must create a settlement period that is used for this purpose alone. Conditional sales taxes are then reported and paid correctly to the sales tax authority. You can also generate a report that shows conditional sales tax amounts that have not yet been reported to tax authorities.

For more information about setting up a settlement period, see Set up a sales tax settlement period.

Note
You must also set up a settlement period for sales taxes that are not conditional sales taxes and for paying the sales tax authority to which you report the conditional sales taxes. The period interval must be the same for both settlement periods, for example 3 months, and you must set up the same periods within each of the settlement periods.

Two sales tax codes must be created for the conditional sales tax functionality:

• One sales tax code for posting ordinary sales taxes and for reporting and paying all sales taxes to the sales tax authorities.

• One sales tax code for calculating and posting the conditional sales tax. When the conditional sales tax amounts are posted, they are transferred to the reporting sales tax code.

Create a sales tax code for reporting to the sales tax authorities

Create a sales tax code for conditional tax

1. Create the sales tax groups and item sales tax groups that are used on invoices for which conditional taxes are calculated. For more information about how to create these groups, see About sales tax groupsand About item sales tax groups.

2. Attach both of the sales tax codes that you created in this procedure to the sales tax groups and to the item sales tax groups that are used for conditional taxes. For more information, see Set up and use a sales tax groupand Create an item sales tax group.

Select the Conditional sales taxcheck box on the Sales taxtab in the Parameters form.

When this check box is selected, sales tax amounts are transferred from the ledger account for temporary postings of conditional taxes to the sales tax payment account.

Example

You create a sales order of 10 lamps to customer number 4008, "The Warehouse". The total invoice amount is EUR 100 plus sales tax.

The customer is linked to the Sales tax group "Normal", which includes the sales tax code C25%.

The item is linked to the item sales tax group "Full", which includes the sales tax code C25%.

When you post the sales order invoice, sales taxes of EUR 25 are calculated. The sales tax amount is posted on the ledger account that is specified as the ledger posting group for conditional taxes.

If you run a sales tax payment report for the settlement period for your ordinary sales taxes, the EUR 25 is not included in the report.

If you run a sales tax payment report for the settlement period for conditional taxes, the EUR 25 is included in the report.

When you post the payment from the customer, Microsoft Dynamics AX creates a sales tax transaction that offsets the temporary posting on the ledger account for conditional taxes. Another transaction is created on the reporting/ordinary sales tax account with the amount to be paid to the tax authority.

The next time you run a sales tax payment report for the settlement period for reporting/ordinary sales taxes, the EUR 25 is included in the report.