Mandatory Item Sales Tax Group for Vendor Invoices

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Posted on by CU30081051-1

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Hello!

I have got a request to investigate how setup for the Item Sales Tax Group can be done for Vendor Invoices.

I know about the Legal Entity Override in GL, That there can be a default Group setup for GL etc.

However, it does not seem to be any OOB setup in AP Parameters for this. I only noticed something
for this in Exflow.

Would it make any sense to makt this field mandatory in an Invoice Journal?

Thank you in advance for your kind help herel.

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Dynamics 365 Finance

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Giorgio Bonacorsi 1,455 on at

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Hello,

This field is very important because it helps D365FO determine which tax code applies to the vendor invoice.
It is the combination of the sales tax group (from the vendor) and the item sales tax group (from the item) that D365FO uses to calculate which tax codes apply. https://learn.microsoft.com/en-us/dynamics365/finance/general-ledger/indirect-taxes-overview

Therefore, when entering a vendor invoice manually, I do not recommend leaving this field option (the only exception I can see is in the case of an automated integration).

In the General Ledger parameters, you can define whether a sales tax code is required (or not) on the document. This is an indirect way to make the item sales tax group mandatory on vendor invoices.

You can also set a default item sales tax group that will apply to all lines of the document. However, I do not recommend using this option ( if you have multiple items sales tax group, that can generate errors).

An alternive and better way to insert the defaut items sales tax group for the vendor invoice journal is under the cost main account:

Thank you,

Giorgio

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Adis 6,424 Super User 2026 Season 1 on at

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Hi,

Just one remark about the legal entity override. This setup helps you to set either a mandatory sales tax code or gives you the option for additional item sales tax group\sales tax group for this specific legal entity without changing your core setup. The purpose is not to set default values like for the "Default dimensions".

Back to your main question "....how setup for the Item Sales Tax Group can be done for Vendor Invoices".

Do you want to post vendor invoices via the general journal or pending vendor invoice? I am asking because in the general journal you can put in the sales code directly OR use item and sales tax group for pulling the correct sales tax code, whereas in a pending vendor invoice, you cant put in a sales tax code but a item sales tax group and sales tax group and then the sales tax code is being pulled based on the combination of these two groups.

Do you want to know how to set up the system to pull the default values or is it about how to control that the correct sales tax code is being pulled?

Once I understand your question better I can give you precise answers.

Kind regards, Adis

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