Erply's tax system supports two somewhat similar, but different concepts:
An Erply account can use either one or the other, but not both at the same time. Selected system (sales tax / VAT) depends on the account's country. In the sales tax system, prices are displayed generally without tax (as net price), and tax is added at point of sale. In the VAT system, prices are displayed to the customer with VAT included.
Tax is used on sales documents, and amount of tax collected can be retrieved from sales reports. Tax can also be applied on purchase documents, but this is mainly so that the entered document would match the payable amount. Tax on purchase invoices in not included into the cost of purchased goods.
On a sales document (invoice), each line can have a different tax rate — but only one tax rate.
In US, the "sales tax" actually consists of taxes imposed by the state, by the county and/or by the city, plus there might be additional taxes only collected from certain items. To support that, a tax rate can have "sub-components", eg. a 8% tax consisting of 5% state tax and 3% city tax. This is an additional module that customer support can enable.
In Erply, there is a list of defined tax rates. For the cases when the tax rate depends on shipping destination, an integration with Avalara is available as an extra add-on. The tax is queried from that service by zip code, and the tax rate is created in Erply on-the-fly if needed.
There are five major rules how a tax rate can be applied for a sale. The use cases, in decreasing priority order, are as follows:
Aside from that, Erply also supports two more exotic tax settings: