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Administrator Guide
Last Updated: 2023-06-23
Steps: Set Up Taxes for Expense Reports

Steps: Set Up Taxes for Expense Reports

  • Review the setup considerations for transaction tax rules.
  • Configure taxes for transactions. If using a value added tax configuration, define tax categories, tax rates, tax applicabilities, and tax recoverability percentages.
You can set up the tax code and tax applicability to populate on items in expense reports. You can also set up a default tax recoverability for tax rates within a tax code. Workday uses these values to calculate tax amount for expense lines. Accountants can then review submitted expense reports to ensure correct capture and accounting of taxes, especially when taxes are subject to various levels of recoverability. You can also enable expense reports to specify tax.
  1. Access the
    Edit Tenant Setup - Financials
     task.
    Select the
    Hide Tax Checkbox on Expense Report
     check box to withhold the option to specify tax; clear to allow the capability.
    Security: The
    Set Up: Tenant Setup - Financials
     domain in the System functional area.
  2. For each spend category , specify a default tax applicability and whether to allocate charges back to the lines.
  3. Set up expense items for taxes.
    On the
    Create Expense Item
     task:
    Option Description
    Default Tax Applicability
    Workday uses this default when it finds no matching tax rule for the expense item.
    Expense Item Attributes
    For items with recoverable or partially recoverable tax, include
    Travel Country
     when creating expense report lines with this item. Select the
    Expense Report: Display to User
     and
    Expense Report: Required
     check boxes when defining attributes on expense items. Workday uses travel country and tax rules to determine the default tax code and tax applicability.
    To populate the tax code into an expense report, the expense item must have the
    Travel Country
     attribute.
    Security: The
    Setup: Expense Item
     domain in the Expenses functional area.
  4. Specify a travel country in the travel profile of workers when they have expense reports with items that are subject to recoverability.
    On the
    Create Travel Profile
     task:
    Option Description
    Travel Country
    Select the most common country in which the worker incurs expenses to have that country always populate on expense report lines. This set up is for expense items that are configured to include the
    Travel Country
     attribute.
    Select multiple countries to give the worker a limited list while still permitting the ability to select any country.
    Security: The
    Process: Expense Report - Other
     domain in the Expenses functional area.
  5. Add the
    Review Tax
     action step to the
    Expense Report Event
     business process.
    This action step enables reviewers to confirm that the tax information on all expense report lines and itemized lines is correct. By comparing to the receipt, reviewers can update:
    • Tax code.
    • Tax amount.
    • Tax applicability.
    • Tax recoverability.
  6. Create rules for how to populate tax codes with recoverability and applicability for expense items.
    These rules apply when you:
    • Select the
      Enable Tax Defaulting for International Expenses
       check box on the
      Edit Tenant Setup - Financials
       task.
    • Set up a transaction tax rule for a country.
    Workday populates the tax code and tax applicability into the expense report line based on the travel country the worker selects.
    Workday automatically populates the recoverable percentage on the transaction line based on the specified tax applicability and tax code. You can override this selection. When you specify the tax recoverability, Workday applies the recoverable percentage and the allocation method to the tax amount for tax rates within a tax code.
    Expense report reviewers can only update tax applicability, tax codes, and tax recoverability on the
    Review Expense Report
     business process step.
  7. Create rules for how to populate tax codes with recoverability and applicability using worktags on expense lines and itemizations.
  • Workers can create expense reports with tax and select an expense item that's configured to capture travel country. Workday displays the travel country with a value on the expense line or itemization, if applicable.
    Based on the item and selected travel country, Workday uses the tax rules to determine the default tax code and tax applicability and to calculate the tax amount. Workers can change the tax code to get the tax amount to match the receipt. If the tax amount still doesn’t match, workers can’t change the tax amount and only reviewers can update it during expense report review.
  • Once workers submit expense reports, the
    Expense Report Event
     business process initiates the
    Review Tax
     step. Reviewers can then ensure accurate tax information before approval.
  • Upon event completion, you can see recoverable and nonrecoverable taxes from expense transactions in the
    Transaction Tax Liability
     report.