Tax With Formula Using Base Rate Modifier Is Calculating Wrong When The Invoice Has Freight Charge (Doc ID 2759516.1)

Last updated on AUGUST 23, 2023

Applies to:

Symptoms

On : 11.13.20.10.0 version, Fiscal Document Capture

A formula was created to compose the reduced calculation base of the ICMS_RECUP tax.
Tax with formula using base rate modifier is not calculating when the invoice has freight charge.
Due to this issue, users cannot see Tax with formula using base rate modifier calculating correctly when the invoice has freight charge. 
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Customer set up a base rate modifier and selects ‘Add freight charges’ in the Taxable Basis Formula.   However, the taxable basis formula is being applied to transaction line amount only and not to sum of line amount + freight charge, as expected.

After line amount calculation with base rate modifier is done, then the freight amount is added to that value to create Taxable Amount in the FDC.   This is not as customer is expecting.  They expect base rate modifier to include the freight value added to the value of the lines when the calculation is performed since they selected ‘add freight charges’ in taxable basis formula.

EXAMPLE STEPS
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Manually create FDC.
  - There is one fiscal line with the amount of 52022.27 and freight amount of 1477.15.  
  - On the tax line, the taxable amount is 22897.84.
  - Tax amount is calculated from this taxable amount and tax rate 17%.   
  - From Taxable Basis Formula > Base Rate Modifier is 0.41176  (= 1 - 0.58824).

1. Create FDC and add one line - goods and item.
2. Add the freight charge and select ‘allocate charges automatically’
3. Validate and Calculate tax
4. See Taxable Amount calculated as = 22897.84    (but expecting it to calculate as: 22,028.92)                                      

CALCULATIONS:
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Current logic:  Tax logic is to perform tax calculation as follows for the above example:

   (line amount * base rate modifier)  + freight charge amount
        = (52022.27 * 0.41176) + 1477.15 
             =  21420.69 + 1477.15 
                    = 22897.84  (Taxable Amount - current functionality)

This calculation is not as per the expectation.  Expectation is that the base rate modifier calculation will include the freight value added to the value of the lines when the calculation is performed:
       = (52022.27 + 1477.15) * 0.41176
             = 53,499.421 * 0.41176 
                     = 22,028.92 (Taxable Amount - Expected functionality)

Expectation is that formula for this scenario would be to apply the Base Rate Modifier percentage after compounding the total amount considering the (line amount + freight + misc charges + insurance - discount).

Changes

Cause

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