In AR Adjustment, Tax Rate Code Specified In Receivables Activity Is Not Used (Doc ID 3047508.1)

Last updated on SEPTEMBER 21, 2024

Applies to:

Symptoms

The Tax Rate Code specified in Receivables Activity is not used in tax amount calculation.

The following Receivables Activity is created.

Activity Type : Adjustment
Tax Rate Code Source : Activity

If you created an adjustment for a transaction using the above Receivable Activity with Line Adjustment, the tax amount for the adjustment is NOT calculated based on the tax rate in the Receivables Activity.
Instead of it, the tax amount is calculated based on the tax rate used in the transaction.

STEPS TO REPRODUCE
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1. Setup and Maintenance > Manage Receivables Activity

Activity Type : Adjustment
Tax Rate Code Source : Activity
Tax Rate Code : TAX_RATE8 (tax rate : 8%)

2. Create a transaction with tax classification of TAX_RATE10 (tax rate :10%)

Line Amount : 10,000

3. Complete ( tax amount is calculated ) and create accounting

Calculated Tax Amount : 1,000 ( = 10,000 * 10% )

4. Actions > Manage Adjustments
5. Create a new adjustment with the followings and click Submit button

Receivables Activity : ( created at step1 )
Adjustment Type : Line Adjustments
Adjustment Amount : -550

6. Actions > Account in Draft
7. Actions > View Accounting

(*)Adjustment for Nonrecoverable Tax
= Adjustment amount * tax rate / (100 + tax rate)
= 550 * 10 / (100 + 10 )
= 50  <-- Tax rate (tax rate : 8%) in Receivables Activity is not used.

Cause

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