Configure Transaction Tax Rule Exceptions

Create tax rule exception groups.

Create transaction tax statuses.

Create transaction tax item groups.

Configure transaction tax rules for countries based on exception groups.

Security: Set Up: Tax
domain in the Common Financial Management functional area.

You can configure rule exceptions for transaction tax rules when the ship-to country isn't the appropriate country to match country tax rules.

Access the

Create Transaction Tax Rule Exception for Country

task.

(Optional) Select the

Ship to Country

when you want a country-specific exception rule. Leave the

Ship to Country

field blank when you want to create an exception rule that applies to all countries.

Add country rule lines.

Place rule lines for your most specific use cases first and less specific rule lines toward the bottom.

As you complete the task, consider:

Option	Description
Transaction Tax Status	Select to match using transaction tax statuses for company, customer, or supplier based on the country.
Transaction Tax Item Group	Select to apply the rule line to all items in an item group rather than entering a line for each item. You can also select an expense item group to configure the exception rule.
Spend Category	Select to define purchase category, which automatically updates the Item column to list purchase items only. If you leave Item blank, select a spend category to apply the rule line to all purchase items with the selected category.
Revenue Category	Select to define sales category, which automatically updates the Item column to list sales items only. If you leave Item blank, select a revenue category to apply the rule line to all sales items with the selected category.
Item	Select a purchase, sales item, or expense item to create a rule line that applies specifically to that item. To apply the rule to all items in a spend category or revenue category, leave the field blank.
Change country based on primary business address	Select to configure the rule to use the primary business address country of the company: Country of Company Address : Select to redirect foreign expenses back to the tax rule of the company's own country instead of the destination country. Country of Customer Address : Select to redirect foreign expenses back to the tax rule of the customer's country instead of the destination country. Country of Supplier Address : Select to redirect foreign expenses back to the tax rule of the supplier's country instead of the destination country.
Exception Group	If the transaction matches the dimensions of this rule line, Workday uses the transaction tax rule for country based on this exception group.

The country, tax status, or item type might produce a different answer for a supplier invoice versus a customer invoice in cross border scenarios.

Transaction ship-to is France, buyer is French VAT registered, but Netherlands supplier isn't French VAT registered.

Supplier Invoice self-assesses VAT in the ship-to country, which is France.

Related customer invoice charges zero-rated Netherlands VAT in the billing country of the company, which is the Netherlands.

Example: Configure Transaction Tax Rule Exceptions for Expenses

A UK-based employee from a UK company travels to the Netherlands and adds a meals line to an expense report. The UK company is not VAT registered in the Netherlands and does not reclaim tax in the Netherlands. Before the employee submits the expense report, you configure a catch-all transaction tax rule exception to direct Workday to use the primary business address country of the UK instead of the destination country of the Netherlands. When the employee submits the related expense report, Workday charges zero-rated Netherlands VAT in the expense country of the company, automatically applying the tax code to UK exempt VAT with a tax amount of 0.