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Administrator Guide
Last Updated: 2023-06-23
Setup Considerations: Transaction Tax Rules

Setup Considerations: Transaction Tax Rules

You can use this topic to help make decisions when planning your configuration and use of transaction tax rules. It explains:
  • Why to set them up.
  • How they fit into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What They Are

Transaction tax rules in Workday enable you to add these tax attributes on financial transactions automatically:
  • Tax applicability.
  • Tax code.
  • Tax recoverability for expenses and supplier accounts.
  • Tax option for supplier accounts only.

Business Benefits

Transaction tax rules:
  • Automate the selection of tax attributes to minimize the number you must enter manually on taxable documents.
  • Populate tax attributes for specific countries, items, spend categories, and tax item groups so that you don't have to determine which attributes to use on transactions.
  • Increase the accuracy of tax reporting.
  • Simplify data entry.

Use Cases

You can create transaction tax rules to populate tax attributes on financial documents to:
  • Automatically add the tax code of the travel destination where you incur an expense on the expense line.
  • Automatically include the ship-to address country on a domestic purchase.
  • Automatically charge zero-rated tax on an intra-EU customer invoice.
When a supplier doesn't charge tax, you can:
  • Select the self-assess tax option at the line level of the financial document.
  • Create a transaction tax rule to select the self-assess tax option automatically.

Questions to Consider

Questions
Considerations
Do you need a minimum set of transaction tax rules?
You can create item rules for exceptions instead of creating tax rules for all scenarios.
Can you configure tax rule exceptions to account for tax rules by country?
You can configure exceptions to transaction tax rules to use a different address for the default tax attributes on a transaction. Workday matches the country tax rule to the country of the alternative address.
Can you configure tax rules for self-assessed tax selection?
You can select a self-assess tax option on supplier invoices and invoice adjustments at the line level.
Can you configure country-specific tax rules?
You can use tax statuses to configure country-specific tax rules based on the status of a customer, supplier, or company, such as:
  • EU Company VAT Registered
  • EU Company Exempt

Recommendations

Create generic transaction tax rules for particular countries and add item rules for exceptions.

Requirements

No impact.

Limitations

No impact.

Tenant Setup

You can select tenant-wide configurations on the
Edit Tenant Setup - Financials
 task to:
  • Enable Company Tax Options for Supplier Invoice Request Invoices
    Populate transaction tax rules for supplier invoices created from supplier invoice requests.
  • Enable Tax Defaulting for International Expenses
    Populate tax codes and tax applicability for international expenses.
  • Hide Tax Checkbox on Expense Report
    Prevent employees from specifying tax values on their expense reports or enable tax reporting on expense reports.

Security

Enable the
Set Up: Tax
 domain in the Common Financial Management functional area to configure transaction tax rules.

Business Processes

You can add
Review Tax
 as an action step on the
Expense Report Event
 business process. This ensures that tax managers can review, modify, and approve tax attributes on an expense report.

Reporting

No impact.

Integrations

These web services create transaction tax rules:
  • Create Transaction Tax Rule Exception for ~Country~
    : creates a transaction tax rule that is an exception to all other transaction tax rules for a country.
  • Create Transaction Tax Rule for ~Country~
    : creates a transaction tax rule for a country.
  • Create Transaction Tax Rule for Items
    : creates a transaction tax rule for an item within a country.
  • Create Tax Rule for Worktags
    : creates a transaction tax rule for a worktag that applies to an item within a country.

Connections and Touchpoints

Transaction tax rules use the ship-to address, item, and spend category to populate tax attributes at the line level in these areas:
  • Ad hoc payments
  • Customer contracts
  • Customer invoices
  • Purchase orders
  • Requisitions
  • Supplier invoices
Transaction tax rules use the originating region, destination region, item, and spend category to populate tax attributes at the line level in expense reports.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships across your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.