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Tax Calculation on Zuora and Zuora Quote with different tax rates for periods

 

Problem : 

 

We have tax code A with ZTax engine. There are 2 periods with 2 tax rate.
04-01-2014 to 09-30-2019, the tax rate is 8%.
10-01-2019 to the future, the tax rate is 10%.


So the customer expectation was:


If charge trigger date within 04-01-2014 to 09-30-2019, the tax rate applied is supposed to be 8%.
If charge trigger date within 10-01-2019 to the future, the tax rate applied is supposed to be 10%.



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1 REPLY 1
Zuora Alumni

Re: Tax Calculation on Zuora and Zuora Quote with different tax rates for periods

Solution : 

 

Tax is calculated on a Zuora Quote when making a preview call to core Zuora and the metrics are returned as per the calculation. 

 

For this use-case

 

   Initial term=12month
   Contract Effective date = 10/01/2018
   Tax is calculated by 10%, Although the expectation is to apply 8%.

 

We can see the Service Period = 10/01/2018-09/30/2019, so the Invoice Target Date = 10/01/2019, 10/01/2019 is within tax rate 10% period, so 10% was applied.

 

In the Zuora Billing Engine, the determination date that decides using which effective period of tax rates of Zuora Tax is the target date. In other words, the target date decides the effective period of tax rates.

 

When we  preview a subscription, It has a preview period which contains a start date and end date, such as [startDate, endDate]. So the Invoice Target Date is the next date of the preview period's end date.

 

Hence, the tax is calculated based on the Invoice Target date of the subscription.



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