Dynamics Community Forum Thread Details

New company setup - Purchase tax not caculating

I have a new company I am setting up and need to setup PST/GST for a Canadian Entity. I have gone through all of the steps to setup taxes that I have found, but the tax is not calculating.

I have setup a Tax Area Code - GST, and it is assigned to the Vendor, and the Vendor is marked as Tax Liable.

I have within the tax Area a Jurisdiction Code - GST assigned. The GST jurisdiction and Tax Group Code are set to "Sales and Use Tax", with a Tax Below Maximum of 5%

The purchase invoice is going to a GL Account line, and the header is marked as tax liable, with tax area code filled out, but no tax is being calculated. Any suggestions what I am missing?

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Dynamics 365 Business Central

Setting up PST/GST in Dynamics 365 Business Central for a Canadian entity can be tricky, especially since Canadian tax rules differ from U.S. VAT-style setups. Based on your description, here are the most likely issues causing the tax not to calculate:

Common Issues in Canadian Tax Setup

1. Tax Group Code Misconfiguration

The Tax Group Code “Sales and Use Tax” may not be appropriate for Canadian GST/PST.
Canada-specific codes like GST, PST-BC, HST-13, etc., are typically used to reflect federal and provincial taxes.
Ensure your Tax Group Code is correctly linked to the Tax Jurisdiction and reflects the correct recoverability (e.g., GST is recoverable, PST is not).

2. Jurisdiction Code Setup

GST should be set up as a federal jurisdiction, and PST as a provincial jurisdiction (e.g., BC, MB, QC).
If the jurisdiction is not properly linked to the Tax Area Code or lacks a valid rate, the system won’t calculate tax.

3. Missing or Incorrect Tax Details

Check that the Tax Details for the jurisdiction include:
- A valid Tax Rate (e.g., 5% for GST)
- A correct Effective Date
- Proper Liability Account setup
“Tax Below Maximum of 5%” might be misinterpreted—try setting a fixed rate instead to test calculation.

4. Vendor Location vs. Tax Area

The Vendor’s address must match the Tax Area Code region.
If the vendor is in a province with PST, you may need to manually calculate PST if the vendor doesn’t charge it directly.

5. Country/Region Code Missing

The Country/Region Code on the Vendor card must be set to CA (Canada). If missing, tax logic may not trigger.

6. Document-Level Overrides

On purchase documents, ensure:
- The Tax Area Code is populated
- The Tax Liable flag is checked
- The Tax Group Code is selected on the line item
If any of these are missing or overridden, tax won’t calculate.