Summary
When a tax rate policy is set up in more than one location, it will apply with the following priority:
1. If the Tax Rate is set on a Member/company level - use this. If not, then:
2. If the Tax Rate Policy is set on a Location level - use this. If not, then:
3. If the Tax Rate is set on the Account level - use this. If not, then:
4. If the Tax Rate is set on the Organization level - use this. if not:
5. The tax rate will be set to 0%.
Exception
If a tax rate over 0% is set for a member/company, but a 0% tax rate is set at the Account level in the Location tax policy or - if there's no location tax policy - the Organization’s settings, the system follows a precedence rule. In such cases, the specified tax rate for the member/company is superseded and the system assumes a tax rate of 0% by prioritizing the Account-level tax rate setting.
Billing Priority
When you manually create an invoice, add a custom line item, and choose a revenue account, the tax rate to be applied on the line item is determined by the following rule:
If a company has a set tax rate, it is always applied, except when the tax rate of the revenue account in the location or the organization is set to 0%. More specifically:
If there is a tax policy defined in the given location that applies a 0% tax rate for the selected account in the custom line item, the member/company tax rate is ignored and the line item’s tax is set to 0%.
If there is NO tax policy for the location, but the selected account has a 0% tax rate, the member/company tax rate is ignored and the line item’s tax is set to 0%.
If there is no tax rate applied per company, the location tax policy is applied.
If there is no location tax policy, the tax rate of the revenue account is always applied.
If there is no tax rate for the revenue account, the default tax rate of the organization is used.