Overview

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Introduction

Sales Tax Automation services such as Avalara AvaTax enable businesses to automate tax calculation and ensure compliance with regional tax regulations.

The integration of Avalara with XoroERP allows the system to:

• Automatically calculate tax in real time
• Eliminate manual tax rate configuration
• Handle complex tax rules across jurisdictions
• Support both Sales and Purchase transactions

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How the Integration Works

When Avalara is enabled:

1. A transaction is created in XoroERP
2. Transaction details are sent to Avalara
3. Avalara evaluates:

   • Address (Ship From / Ship To)
   • Item taxability
   • Customer tax status
   • Nexus (tax obligation region)
4. Tax is calculated and returned
5. XoroERP applies the tax to the transaction

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Key Concepts

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Tax Calculation vs Record Document

Setting	Description
Calculate Tax	Only calculates tax, does not store transaction
Record Document	Stores transaction in Avalara for compliance

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Entity Use Code (Customer Tax Status)

• Defined in Customer → Sales Tax Tab
• Determines if a customer is:

  • Taxable
  • Tax Exempt

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Tax Category Code (Item Tax Code)

• Defined in Item → Tax Settings
• Determines how the item is taxed