Taxes Calculation: 2024 Updates3 min read

To kick off, we would like to highlight that this update was among the top-rated ideas on the idea portal within the tax domain. So in case you have any preferences for the MS team to enhance or add – make sure to let them know!

Taxes Calculation addresses the variance between the exchange rates utilized for tax calculation and those employed for company accounting purposes. With this feature, users can select the exchange rate specifically designated for tax calculations, ensuring accurate reporting for tax returns.

Furthermore, it facilitates direct recalculations from transaction currency to tax currency and allows for adjustments of amounts in the tax currency. There are several prerequisites worth noting for this feature. It is available as of version 10.0.35 and is applicable only to business processes enabled for tax calculation. Additionally, its functionality is reliant on a previously released global feature known as the “date of VAT register” functionality.

Project Transactions Integration

As part of its ongoing efforts, the Microsoft team continues to expand tax calculation capabilities by incorporating various transaction types into Finance and Operations applications. Beginning with version 10.0.38 of Dynamics 365 Finance, integration is now available for project management and accounting transactions.

Enabling this functionality is similar to integrating other transaction types—simply select projects within the tax calculation parameters of the business process, and taxes will be calculated according to the feature configuration for all available project transactions. These transactions encompass project invoice proposals, journals, project quotations, and project operations integration journals.

Similar to other transaction types, users have the flexibility to override sales tax groups determined by applicability rules in their tax feature using the override sales tax functionality.

In the case of India GST/TDS-TCS taxes in the Project Operations integration journal (10.0.35), once the feature is enabled, Indian indirect and direct taxes become available in the Project Integration journal. This feature offers users the option to review transactions and adjust tax attributes and accounting attributes as necessary across all types of integration journals. 

Default tax information and TCS groups are included in all types of journals such as Hour, Fee, Item, and Expense journals. Moreover, in Dynamics 365 Finance, users can edit default tax attributes in integration journals and project invoice proposals.

Therefore, GST calculation is included on the tax document for expense integration journals, and TDS TCS calculations are also included in withholding tax in expense integration journals.

Universal Tax Rate API

This feature was developed in response to a highly-voted idea on the Idea Portal. It addresses the complexities faced by countries like the USA and enterprise customers operating in various tax jurisdictions, requiring configuration and maintenance of a wide array of tax rates and applicability rules.

External solution providers can simplify this complexity and reduce maintenance overhead. This framework ensures stable and secure access to external tax solutions, sharing the same tax data model and payload in transactions. Inherited from the tax calculation service, a seamless integration with Dynamics 365 applications is ensured.

Under this framework, the Microsoft team will focus on extending tax calculations to further first-party applications, supporting additional country localizations, and ensuring a seamless upgrade for your system.

Here are a few highlights of the functions made available by the Universal Tax Rate API:

  • Encrypted Connection: The Universal Tax Rate API supports an encrypted connection via Azure Key Vault, ensuring the security and privacy of transmitted data to external tax solutions.
  • Address Validation: This functionality enables the validation of addresses maintained in the global address book, ensuring accurate tax calculations by confirming the validity and completeness of addresses.
  • Accrual of Use Tax: The Universal Tax Rate API allows external tax solution providers to accrue use tax—a type of tax imposed on the use, storage, or consumption of taxable items or services not taxed at the time of purchase in the United States.
  • Overcharge Tolerance: This functionality allows users to define overcharge tolerance when the vendor’s charged sales tax amount exceeds the tax calculation result.