Exploring Tax Administration

The Tax Authorities tab is the first step in the process of creating a new tax configuration. It's used to define what part of the world these taxes are for, what kinds of taxes that region has, and the table of rates for that region.

There's typically one Tax Authority per country but, in some cases, you may need multiple Tax Authorities for one country. Canada is a good example of this because they have different taxes at the federal and provincial levels, and one transaction can include multiple taxes that must be accounted for.

Defining Tax Authorities follows a three-step process.

1. General: The General step is used to define high-level information about a Tax Authority, such as what country it applies to, what you want to call those taxes, and how you want to identify non-domestic taxes.

   Index #	Field Name	Description
   1	Tax Authority Name	The name of this tax authority. SAP Concur recommends using the two-character country abbreviation followed by "Tax Authority" for simplicity and consistency.
   2	Country/Region	Used to select the country that this Tax Authority covers.
   3	State/Province	A list of the states or provinces of the previously selected country. Leave this field blank to create a nationwide Tax Authority (this is the most common). Select one or more values to create a smaller Tax Authority within the previously selected country. Canada is a common example of this configuration
   4	Tax Name	The name for this tax. It can be up to five characters in length and can be anything you want. SAP Concur recommends using the term "VAT" to keep it simple, or prefixing "VAT" with the two character country abbreviation, such as "FRVAT" or "DEVAT". This value will appear to end users if you configure tax data to be visible. This value also appears in multiple locations in the Standard Accounting Extract (SAE). If multiple Tax Authorities are configured for the same tax jurisdiction, such as Canada, the Tax Name should be unique to avoid confusion in the UI as well as the SAE.
   5	Non Domestic Code	A code that is understood by your financial system to capture non domestic VAT for when a resident of this Tax Authority travels outside of this Tax Authority and incurs VAT. This can be left blank if your company only wants to claim domestic VAT. Some financial platforms, such as SAP and JD Edwards, require a code for ALL transactions, making this code a requirement. Be sure to do the appropriate research before you begin your configurations.
   6	Credit Card Tax Field	Used to indicate what field from your corporate card feed will be used as the tax amount for an expense entry. If there's a value included in the credit card data, it will become the tax used by the system, if there's no value included with the card data, the system will perform the calculations defined in the system. Leave this setting blank to have the system always perform the defined calculations. This is not a commonly used feature.

2. Tax Rate Types: The Tax Rate Types step is used to define the different types of rates used within a Tax Authority. Common examples of Tax Rate Types are Standard, Reduced, and Exempt.

   Index #	Field Name	Description
   1	Rate Type	The Rate Types are the types of rates for this Tax Authority. You'll typically see variations of three Rate Types: Standard: This is the most common rate for this Tax Authority and is the rate most expenses are taxed at. It's also usually the highest rate for a Tax Authority. Reduced: The rate represents a tax rate that is lower than the Standard rate. It's often applied to meals and hotels. Some countries may have multiple reduced rates. Exempt/Zero: This is used to represent items that are not taxable, such as tips, per diems, and some fees.
   2	Calculation Method	This is used to determine how the rate for the associated Rate Type is calculated. There are five options available: Percentage: This is the most common option. The tax is a percentage of the total amount. Extraction Factor: This is used only in Canada. The Canadian government allows businesses to use these factors to simplify their tax preparations. Full: This option should be used only for expense types intended to capture a separate VAT line item during itemization. Any expense types using this tax rate default to a 100% reclaim rate, and the expense amount is used as the tax transaction amount for tax calculations. Simple Distance: Only used for expenses that are configured as personal car or company car expenses. Complex Distance: This UK calculation method calculates the potential VAT based on the lower of the HMRC Fuel Advisory Rate (stored as Distance Rate) and the client reimbursable rate.

3. Tax Rates: The Tax Rates step is used to define the current Tax Rate for each Tax Rate Type for a Tax Authority.

   Index #	Field Name	Description
   1	Rate Type	The Rate Types here refers back to the Rate Types created on the previous screen. Only the Rate Types previously defined are available here.
   2	Calculation Method	This auto populates based on how the Rate Type was defined on the previous screen.
   3	Distance Rate	This field is only used if the Rate Type was previously defined as Simple Distance.
   4	Tax Percent	For Rate Types that use the Calculation Method of Percentage, this is the actual percentage of the tax. Over time, this page will show the history of percentages as they change over time.
   5	Extraction Factor	This field only applies if the Rate Type was defined with a Calculation Method of Extraction Factor and is used to enter the current factor. This field will show the history of factors as they change over time. This is specific to Canadian taxes.
   6	Effective Date	This is the date that the corresponding rate went into effect. If the date is a future date, it means the rate will change on that date. Setting a future Effective Date will automatically set the End Date for the current rate.
   7	End Date	This is the date that the corresponding rate expired. You can't set the End Date manually, it will automatically populate when you define the Effective Date for a new rate. The system uses an End Date of 12/31/9999 to identify the current rate.

This tab is where the bulk of the effort of the Tax Administration tool lies. It's used to group your expense types into logical groups where the taxes and reclaim are the same for all expense types in that group. Typically, you'll start by creating one group per Tax Rate Type as defined on the Tax Authorities tab. You can then create additional groups for the expense types that have unique requirements. For example, many countries only have VAT on domestic air travel. Special conditions must be configured to allow the system to calculate VAT for domestic air travel, but not for foreign air travel.

Defining Tax & Reclaim Groups follows a four-step process.

1. Group Name: The Group Name step is used to define high-level information about a Tax Group, such as its name, effective date, and if a tax form is used to capture detailed data about the expenses.

   Index #	Field Name	Description
   1	Group Name	This is the name of the current Tax and Reclaim Group. It can be anything you like. SAP Concur recommends creating one group per Tax Rate Type and then creating additional groups until all of your expense types with VAT are accounted for.
   2	Entry Field to Subtract from Gross	This is a custom field that must first be configured with the Data Type of Amount in the Forms and Fields area. The system will subtract the amount recorded in this field from the amount the user enters for the expense prior to calculating taxes. Tips for meals is a common usage for this. For many customers, Custom 37 is preconfigured for this purpose. Be sure to check your current configuration before configuring a new field for this purpose.
   3	Effective Date	This is the date this group went into effect or goes into effect. It can only be edited for current groups if the Overwrite Group checkbox is cleared on the next screen.
   4	End Date	Enter a date in the End Date field to have the system automatically expire this group on that date.
   5	Tax Form	This is a form that must first be configured in Forms and Fields. This is used to capture additional information necessary to calculate tax and reclaim correctly. For example, this could be the form used to capture if an air ticket was for domestic or foreign travel.

2. Expense Types: The Expense Types step is used to select what Expense Types are to be included in the group.

   Index #	Field Name	Description
   1	Effective Date	This defaults to the date from the previous screen and is read-only here by default. You can update this date unless you clear the Overwrite Group checkbox.
   2	Overwrite Groups	While this option is selected, adding and removing expenses will result in those expenses being added to or removed from the existing tax group. This functionality helps administrators avoid overlapping tax groups. If the checkbox is not selected, the system will display a warning message indicating that the "new" tax group will now be in effect for all expenses going forward. You can dismiss the message and adjust the dates to match the desired effective dates for the new tax group. SAP Concur recommends using End Dates and Effective Dates to expire old and activate new groups, instead of using this checkbox.
   3	Unavailable Expense Types	These are expense types that are already a part of another group for this Tax Authority. An expense type can only be a part of one Tax and Reclaim Group per Tax Authority.
   4	Expense Type Label	The selected expense types are already a part of this group. You can edit the expense types in this group by checking and unchecking the appropriate checkboxes.

3. Tax Rates: The Tax Rates step is used to define the rules for how the taxes are calculated for the expenses within the group as well as what financial code should be used to represent the taxes in your financial data.

   Index #	Field Name	Description
   1	Tax Condition	These are the conditions the system uses to calculate taxes from the expense types in this group. They're created using a very similar interface as used to create audit rules. In most cases, there is a default condition called "Always", which we'll see in more detail later in this activity.
   2	Tax Code	If your financial system has a specific GL Code for tracking VAT, enter it into the Tax Code field. It will appear in the Standard Accounting Extract (SAE) as the Journal Account Code (column 167) for the tax detail lines. It can be left blank. Be sure to research the data requirements of your financial system so that you can populate this field correctly.
   3	Rate Type	This is the Tax Rate Type that will be used to calculate the taxes for these expense types. It's tied to the Tax Rate Types that you previously created on the Tax Authorities tab.

4. Reclaim Rates: The Reclaim Rates step is used to define what percentage of the calculated taxes you can reclaim as well as what financial code will be used to represent the reclaim data.

   Index #	Field Name	Description
   1	Tax Condition	The Tax Conditions automatically carry over from the previous page and can't be edited here.
   2	Effective Date	The Effective Date automatically carries over from the previous page and can't be edited here.
   3	End Date	The End Date automatically carries over from the previous page and can't be edited here.
   4	Reclaim Condition	These conditions are used to determine how the system calculates the reclaim on the taxes. The default conditions are based on what kind of receipt the user can provide, but additional conditions can be created.
   5	Receipt Required	What kind of receipt is required to determine the Reclaim Rate.
   6	Reclaim Rate	The percentage of the calculated tax that you can reclaim.
   7	Reclaim Type	Either Standard or Proportional. Standard is the most commonly used option. Proportional is only used for the Fuel for Mileage expense type within the UK. If Proportional is selected, you must define the Proportional Conditions in the next field.
   8	Proportional Conditions	These are a series of conditions used to determine how to calculate the reclaim.
   9	Reclaim Tax Code	This is a code recognized by your financial system and used to track the tax reclaim. It will appear in the Standard Accounting Extract. Be sure to research the data requirements of your financial system so that you can populate this field correctly.

This tab is used to set options for how the user will see and interact with taxes while completing their expenses, as well as process domestic and non-domestic taxes, locations, and Canadian extraction factors.

Now that you know the basics of the Tax Administration tool, let's take a look at some realistic scenarios for using these tools. But first, a brief disclaimer.