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Item sales tax groups

Item sales tax groups represent the tax profile of the product or service being transacted. By assigning an Item sales tax group to your released products or procurement categories, you define the inherent taxability of what you are selling or buying, completely independent of who you are transacting with.

Creating an Item sales tax group​

To configure a product tax group, navigate to Tax > Setup > Sales tax > Item sales tax groups.

Create a new group by defining its primary identifiers:

  • Code: A concise identifier (e.g., SCENT_TRAINING, SCENT_DIFFUSERS).
  • Description: A clear explanation of the product category (e.g., Training Services for Scent Products).

Assigning Tax Codes​

Similar to the entity side, the Item sales tax group acts as a container for Sales tax codes.

Within the Tax codes accordion, click + Add tax code to attach the codes that legally apply to this type of good or service.

  • For a standard taxable product, you would attach the standard rate tax code (e.g., STD_5).
  • For a tax-exempt service, you would attach an exempt code (e.g., EXEMPT).
  • For goods subject to multiple concurrent taxes (like Excise duty and VAT on tobacco products), you must attach both applicable codes (e.g., EXC_100 and STD_5).
Master Data Defaults

To automate the taxation process and prevent user error, ensure you assign an Item sales tax group as a default value directly on your Released Product records. When a user creates a transaction line (e.g., adding an item to a Sales Order), the system will automatically pull this default group onto the line.

The Final Intersection​

When a transaction line is saved, the Tax Engine executes its calculation phase. It retrieves the Sales tax group (defaulted from the Customer/Vendor) and the Item sales tax group (defaulted from the Product).

It then compares the lists of attached Tax codes from both groups. Only the exact tax codes present in both groups will be mathematically calculated and posted to the General Ledger.

Next Steps​

This concludes the foundational calculation configuration of the Tax Engine. To learn how to audit the results of these calculations, proceed to the Tax transactions documentation.