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Administrator Guide
Last Updated: 2023-06-23
Set Up Tax Recoverabilities for Financial Transactions

Set Up Tax Recoverabilities for Financial Transactions

You can configure tax recoverability codes that indicate, for a tax rate on a transaction line:
  • The percentage of the tax amount that you can reclaim or claim as input tax credit.
  • Whether you want to allocate the nonrecoverable portion of tax to your spend lines, or post the tax amount to a separate ledger account.
You can configure multiple tax recoverability codes so that Workday accurately applies recoverable percentages on these transaction lines:
  • Ad hoc payments.
  • Expense reports.
  • Purchase orders.
  • Requisitions.
  • Supplier contracts.
  • Supplier invoices.
  • Supplier invoice adjustments.
Workday always considers tax on these documents as nonrecoverable:
  • Ad hoc bank deposits.
  • Cash sales.
  • Customer invoices.
  1. Access the
    Maintain Tax Recoverabilities
     task.
    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.
  2. As you complete the task, consider:
    Option Description
    Type
    Fully and partially recoverable taxes enable you to reclaim or offset taxes that you pay on purchases and expenses against taxes collected for value-added tax (VAT) purposes.
    Recoverable %
    Workday applies this percentage to the tax amount in purchase and expense transactions for tax rates that are subject to recoverability. A different percentage applies if you select the
    Use Company Recovery Pro Rata Factor
     check box.
    Allocate Nonrecoverable Tax
    Select to allocate the nonrecoverable tax on purchase transactions across each of the lines where specified tax applicability is:
    • Taxable.
    • Nonrecoverable or partially recoverable.
    Through allocation, the tax becomes part of the spend line. You can allocate transaction tax to the lines regardless of how you enter or calculate tax.
    If you select
    Enter Tax Due to Supplier
     on the
    Tax Option
     prompt of the transaction, you can't select a tax applicability that allocates nonrecoverable tax.
    You can leave this option unchecked for:
    • Ad hoc payments.
    • Purchase orders.
    • Supplier invoices and invoice adjustments.
    Use Company Recovery Pro Rata Factor
    Select to enable the recoverable tax amount. The recoverable percentage is based on the
    Company Tax Recovery Pro Rata Factor Percentage
     that you specify on the
    Edit Company Tax Details
     task.