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Tax Calculation Service

Suzhen Zheng – Principal Engineering Manager

Maple Nan – Senior Engineering Lead

Eric Wang – Senior PM Lead

Ekaterina Podkolzina – Senior Program Manager

Kai Liang – Senior Program Manager

Severin Bock - R&D Solution Architect

Veselina Eneva - Senior Program Manager

Adeel Edhi - Senior R&D Solution Architect

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Agenda • Overview

• Technical Architecture

• Demo 1: EU intra community supply/acquisition with

multiple VAT registrations

• Demo 2: EU VAT on margin

• How to build extension in Tax Calculation Service

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What is Tax Calculation Service

Overview

Tax Calculation Service is a standalone microservice built on top of Microsoft Azure

platform to enhance tax determination and calculation capabilities of Dynamics 365

applications with a more flexible and fully configurable solution.

It integrates with Dynamics 365 Finance and Supply Chain Management as of now and

plans to integrate with more 1st and 3rd party applications in the future.

See https://aka.ms/taxcalculation for more information

Search “Tax Calculation Service (Preview)” in Yammer Group

How does it work with existing tax engine

Tax Calculation Service is fully backward compatibility with existing tax engine in F&O. It’s

controlled as a new feature in Feature Management workspace and can be further enabled at

more granular level:

• Enable by legal entity

• Enable by business process

Timeline

• Under Public Preview now

• Planning for GA

1st/3rd party applications Tax Calculation Service

Tax Setup

Tax Determination

Tax Calculation

API request

API return

Business values

• Automate and standardize tax determinations and calculations across countries or

regions.

• Utilize a configurable tax determination matrix and flexible calculation designer to

configure and execute complex tax determination rules and calculations using formulae

and conditions.

• Simplify compliance maintenance for local tax regulations.

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Key Capabilities

• Configures and determines tax codes, rates and deductibility based on any field of

taxable document (orders, invoices, etc.), e.g., shipping to/from location addresses,

item category, nature of counterparty, etc.

• Configures complex tax determination matrix

• Cascade matrices and parallel matrices

Enhanced tax determination

• Configures and executes complex tax calculation formulas and conditions required

by tax regulations, e.g., tax calculation by margin, tax on tax calculation with multiple tax

codes, etc.

• Supports configurable tax data model

Enhanced tax calculation

• Supports multiple tax registration numbers under single party (legal entity,

customer, vendor) for various scenarios: transfer pricing, consignment warehouse, low

risk distributor model, etc.

• Configurable determination of correct tax registration number for legal entity and its

counterparty in sales, purchase and transfer orders.

Multiple tax registration numbers

• Support EU regulation "Exempt intra-EU supply according to article 138 of the Directive

2006/112/EC“ for Intra-EU Supply of goods

Tax on transfer order

*Upcoming Tech Talk: VAT reporting for multiple tax registrations in single legal entity (Sep 29th)

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Availability

• Asia Pacific

• Australia

• Canada

• North Europe/West Europe

• Japan

• United Kingdom

• United States

Azure geography

F&O apps legal entity country/region

10.0.21

• Austria

• Belgium

• Denmark

• Estonia

• Finland

• France

• Germany

• Hungary

• Iceland

• Italy

• Latvia

• Lithuania

• Netherlands

• Norway

• Poland

• Sweden

• Switzerland

• United Kingdom

• United States

10.0.22

• Australia

• Bahrain

• Canada

• Egypt

• Hong Kong SAR

• Kuwait

• New Zealand

• Oman

• Qatar

• Saudi Arabic

• South Africa

• United Arab Emirates

Planned

• Czech Republic

• Japan

• Malaysia

• Mexico

• Singapore

• Spain

• Thailand

• Indonesia

Not supported

• Brazil

• China

• India

• Russia

More geographies are coming, and if there is any customer

needs for other geography, please contact Microsoft support

Sales

• Sales quotation

• Sales order

• Confirmation

• Picking list

• Packing slip

• Sales invoice

• Credit note

• Return order

• Header charge

• Line charge

Use Cases

Purchase

• Purchase order

• Confirmation

• Receipts list

• Product receipt

• Purchase invoice

• Header charge

• Line charge

• Credit note

• Return order

• Purchase requisition

• Request for quotation

Inventory

• Transfer order – ship

• Transfer order – receive

2021 wave 2

• Free Text Invoice

• General Journal

• Payment Journal

Beyond

• Invoice register/approval/pool

• Project invoice

• Expense management

Supported in 10.0.21

Planned

• Budget

• …

Integration with F&O apps transaction types

• Transfer price model/Limited risk distributor

• EU intra community supply and acquisition with multiple VAT registrations

• EU triangulation transaction

• EU VAT on margin

• EU distance selling

• US origin-based and destination-based sales tax

• Tax deductibility by usage of the goods/service

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Technical Architecture

RestAPITaxable document

Tax documentConfigurations, features

D365 Tax Service(Customer selected geo)

No storage

D365 Tax Service(Customer selected geo)

No storage

Dynamics 365 Finance(Customer selected geo)

Dynamics 365 Supply Chain Management(Customer selected geo)

Regulatory Configuration Service(Customer selected geo)

Global repo(Configurations, features)

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Scenario: EU Intra community supply/acquisition with multiple VAT registration

Legal entityBelgium

Tax RegistrationBelgium

Tax RegistrationFrance

WarehouseBelgium

WarehouseFrance

Organization structure Business Process

VendorFrance

VendorEU

WarehouseFrance

Purchase order• French VAT ID• French domestic VAT rate

Purchase order• French VAT ID• French reverse charge

WarehouseBelgium

Transfer order

Shipment:• French VAT ID• French exempt tax

Receiving:• Belgium VAT ID• Belgium reverse chargeCustomer

Belgium

CustomerEU

Sales order• Belgium VAT ID• Belgium domestic VAT rate

Sales order• Belgium VAT ID• Belgium exempt tax

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Scenario: EU VAT on Margin

Resale of used vehicles in EU

ResellerFrance

IndividualFrance

BuyerFrance

Purchase price: € 2000 Sales price: € 3000 (including tax)

VAT rate @ 20%Tax base: (€ 3000 - € 2000) / 120% = € 833.33

Tax amount: €833.33 * 20% = € 166.67

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Scenario: EU VAT on Margin

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Tax Integration Design

Setting Retrieval Data Retrieval Calculation Error Handling VAT ID HandlingCurrency Exchange

Data Persistence

Transaction integration point

Tax Calculation Service Integration point

TaxIntegrationFascade::calculate()

• TaxPuch::calculateTax()

• TaxPuch::calcUsingTaxIntegration()

• TaxIntegrationFacade::calculate()

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Tax Integration Design

• TaxIntegrationDocumentObject

• TaxIntegrationLineObject

• TaxIntegrationTaxLineObject

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Build the extension

Add data fields in tax configurations

Add data fields in the tax integration by using extension

Support a new transaction (to be published)

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Q&A