Managing Taxation Rules

← Configuring Tax Rules

Introduction

JustOn Billing & Invoice Management allows for defining validity periods for tax rules to cover permanent or temporary tax rate changes. As a result, invoice line items that span multiple time-based tax rules may be subject to multiple tax rates.

This article describes how to use taxation rules to determine the applicable taxation policy.

Info

The information in this article does not constitute any legally effective tax advice. JustOn cannot and must not provide such services.

Contact your tax consultant to determine the appropriate way for your business.

Solution Overview

Invoice line items include the Taxation Rule picklist. The taxation rule decides how to process invoice line items that span multiple time-based tax rules.

The following options are available:

Taxation Rule	Description
Service Period	Forces the invoice line items to be split automatically along the tax rule validity period, so one invoice line item becomes two – one item with a service period until the deadline date and with the tax rate valid in this service period, and a second item with a new service period starting after the deadline date and with the tax rate valid in the new service period. Set as default value.
Booking Date	Does not split the invoice line item along the tax rule validity period and applies the tax rate that is valid on the date of the revenue booking.
End of Service Period	Does not split the invoice line item along the tax rule validity period and applies the tax rate that is valid at the end of the service period.
End of Monthly Service Period	Does not split the invoice line item along the tax rule validity period and applies the tax rate that is valid at the end of each service period month. Used together with the Service Month revenue recognition rule and the Sync With Revenue tax recognition rule.

The taxation rule is intended to be set on invoice line item creation. If not set explicitly, JustOn applies the default taxation rule.

Info

According to current regulations, the timing of the tax origin determines which taxation rule to apply. This may depend on the type of product or service you invoice. Contact your tax consultant to determine the appropriate way for your business.

Solution Details

Managing taxation rules involves the following tasks:

• Enabling the taxation rule to be set on invoice run
• Enabling the taxation rule to be set when manually creating invoice line items
• Defining the default taxation rule

Enabling Taxation Rule During Invoice Run

When creating invoice line items (automatically) during the invoice run, you usually define the applicable taxation rule on the source records.

• If you create invoices from subscriptions, you set the taxation rule in the item field Taxation Rule. For the automatic subscription build, create the custom field ON_TaxationRule on the source object to allow setting the rule on item generation.
• If you create invoices using the generic invoice run, you must create the custom field ON_TaxationRule on the source object. This allows setting setting the rule on invoice line item generation.

To create the taxation rule field on the relevant source object for the automatic subscription build or generic invoice run:

1. Navigate to the fields list of the relevant object.

2. Create the following new field.

   API Name	Data Type	Description
   ON_TaxationRule	Picklist Formula (Text)	Determines the taxation rule to apply.

Info

You can use formulas, Salesforce flows or other automation tools to have ON_TaxationRule set automatically.

Enabling Taxation Rule on Manual Invoice Line Item Creation

Your business may require to create invoice line items manually and, when doing so, specifying the taxation rule. Notice, however, that the Taxation Rule field is not available on the New Invoice Line Item page. To work around this restriction, you add the Taxation Rule field to the Edit All field set. This allows for using the Edit All dialog to create new invoice line items, specifying the taxation rule.

To add the Taxation Rule field to the Edit All field set:

1. Navigate to the field sets definition of the Invoice Line Item object.

   In Salesforce Lightning, navigate to Setup > Object Manager > Invoice Line Item > Field Sets.

   In Salesforce Classic, navigate to Setup > Create > Objects > Invoice Line Item > Field Sets.

2. Click Edit in the Edit All row.

3. Move the Taxation Rule field to the In the Field Set container.

4. Click Save.

   This applies the field set configuration, making the Taxation Rule field available on the Edit All dialog.

Changing Default Taxation Rule

The installation default taxation rule is Service Period for subscription items and invoice line items. If not explicitly set otherwise on creation, JustOn Billing & Invoice Management, consequently, splits the produced invoice line item along the tax rule validity period. Your business may, however, require End of Service Period as the default approach: to not split the invoice line item and to apply the tax rate that is valid at the end of the service period.

You can define which taxation rule the software uses by default. To this end, you change the default value of the Taxation Rule picklist on the Invoice Line Item object, or, if necessary, on the Item object:

1. Navigate to the fields list of the Item object or the Invoice Line Item object, respectively.
2. Click the name of the Taxation Rule field.
3. In the Values section, click Edit in the row of the value to be the new default.
4. Select the Default checkbox.

5. Click Save.

   This makes the selected taxation rule the default approach. JustOn Billing & Invoice Management, consequently, applies this rule if you do not explicitly set another rule.