Formula for calculating Tax on AR Invoice

[Former Member]

Can someone please explain the formula for calculating Tax on AR Invoice(with several items + freight) in SAP Business One 2007.

These are the settings:

Administration > System initialization > Document settings > General tab. Rounding method is set u2018By Currencyu2019.

Administration > Setup > Financials > Currencies. Rounding is set to u2018No Roundingu2019 and Decimals is set to 'default'.

Administration > System Initialization > General settings > Display tab. Decimal Places:

Amounts 2

Prices 2

Rates 4

Quantities 3

Percent 2

Units 2

It seems that it calcualtes tax for each row(does not round to 2 decimals places)>sums tax for each row>rounds the total tax to 2 decimal places.

Sometimes it rounds like this ...10.498 to 10.50. Other times it rounds like this 12.9845 to 12.98(?). Can someone please explain the rules for rounding in SAP.

[Former Member]

It is by common rounding rule: +1 for the last rounding digit if the original digit on its right >=5, otherwise no change.

Thanks,

Gordon

[Former Member]

You are quite right. I can see now that it is rounding correctly from 12.9845 to 12.98.

The freight is causing some confusion because it seems to behave differently...can you confirm if this is standard or are there settings in SAP for rounding the freight?

For example, AR invoice with Qty 2 * Unit Price 83.15 = 166.30 *5% Tax = tax 8.315

Freight is $10.50. @ 5% tax = 0.525

The total tax on the invoice is 8.85 not 8.84. Therefore, it looks like SAP rounds the freight amount before adding it into the total tax?

[Former Member]

You are right about this assumption based on your B1 setting.

[Former Member]

Is there a way to change the method for rounding the total tax? For example, some customers say that legally tax should my rounded down always. My understanding is that both methods are correct but SAP's preference is to use the standard rounding rules.Please confirm if there is a setting that i have missed?

[former_member583013]

Please check Admin > System Init.. > Document Settings > Round Tax Amount in Rows (check box)

[Former Member]

There is no option 'Round Tax Amount in Rows' under System Init.. > Document Settings

[lucas_fischer]

Maeve,

This is just standard mathematical rounding, when rounding to two decimal places

10.498 would be rounded to 10.50 because 8 is greater than 5

and

12.9845 would round to 12.98 becaues 4 is less than 5

I hope this has helped,

Lucas