Introduction
Every transaction sent from your billing system or manually created in Anrok includes product IDs that correspond to the line items on an invoice. Each product ID must be assigned a product type and tax category so Anrok knows what sales tax rules to apply. Anrok will only process transactions with fully configured product IDs.
Anrok supports tax categories across two broad product types:
- Software and digital services — taxation varies based on delivery method, usage type, and service structure.
- Tangible personal property — tax treatment varies by product category, intended use, and whether items are considered necessities or luxury goods.
Note
Sales of B2B tangible personal property are assumed Delivered-at-Place (DAP). Anrok will not apply tax or duties to cross-border sales of this product. Under Delivered at Place (DAP) Incoterms, the customer or their third-party logistics provider should be responsible for VAT and duties. This is typical of B2B cross-border sales. Exception: For sales to the US, Anrok will apply sales tax but no duties, since sales tax is not paid at the border.
Sales of B2C tangible personal property are assumed Delivered-Duty-Paid (DDP). Anrok does not support duties, and therefore, cross-border sales of this product will remain unprocessed. Under Delivered Duty Paid (DDP) Incoterms, the seller or third-party logistics provider should be responsible for calculating any duties and VAT. This is typical of B2C cross-border sales. Exception: For sales to the US, Anrok will apply sales tax but no duties, since sales tax is not paid at the border.
Select a Product type
When configuring a new product ID in Anrok, you must first identify the product or service's Product type. When selecting a Product type, you must determine the primary type of customer you will sell the product or service to. During selection, you will have the following options:
| Product type | Description |
|---|---|
| B2B | A product or service primarily sold to other companies. |
| B2C | A product or service primarily sold directly to consumers. |
| Custom | A product or service that has been configured with a custom tax category taxability requested by your team. See Custom product tax categories (PTC). |
| N/A | A product or services that is not subject to sales tax. These items typically would include reimbursements or other pass-through charges to customers. |
For non-US sales, your customer's VAT ID will determine whether tax is applied. Setting the expectation of whether the sale is B2B will allow Anrok to alert you if a VAT ID is potentially applicable but missing on a transaction. See What is a VAT ID or VRN?
Tip
If you do not want Anrok to calculate sales tax for a product, select N/A. Making a product non-taxable often applies to reimbursement of expenses or passthrough bank fees.
Select a Tax category
Once you've selected a Product type, you will need to identify the product or service's Tax category. When selecting a Tax category, you need to determine the description that best fits your product or service. Anrok provides support for the following catalog of products and services:
| Tax category | Description |
|---|---|
|
▼SaaS(4 items)
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| General | Pre-written software, delivered electronically. You provide customers with access to a hosted software application. You are typically responsible for all aspects of making the software service available, including deploying, configuring, maintaining, and updating the operation of the software applications on a cloud infrastructure, whether included in the cost of the software or charged as a separate line item. |
| Security | Pre-written software, delivered electronically, designed specifically to provide protection of computer systems, software, or data against unauthorized access or intrusion. This includes separately charged maintenance and updates delivered electronically, whether included in the software cost or billed as a separate line item. |
| Storage | Pre-written software, delivered electronically, designed purely as storage for a customer's data. You provide customers access to a software product solely to facilitate the storage of digital products, digital codes, computer software, or master copies of software. This includes separately charged maintenance and updates delivered electronically, whether included in the software cost or billed as a separate line item. |
| On-prem | Pre-written software, delivered electronically, hosted on infrastructure owned, leased, or otherwise directly managed by your customer. The customer is responsible for the infrastructure on which the software will be deployed. It is assumed that the customer's tax address is the location of the infrastructure. This includes separately charged maintenance and updates, whether included in the software cost or billed as a separate line item. |
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▼PaaS(1 item)
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| General | A cloud computing service bundle that includes both the infrastructure — servers, storage, and networking — and the middleware — development tools, business intelligence (BI) services, database management systems — that provides the customer a complete development and deployment environment in the cloud. |
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▼People services(8 items)
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| People services - mandatory | Service agreement for mandatory services related to hosted software. Non-automated, people services to assist a customer onboard, deploy, and troubleshoot a SaaS product. Services must be listed as a separate line item to apply independent tax configurations. The services are mandatory. Certain states may tax a product differently depending on whether services are mandatory or optional. |
| People services - optional | Service agreement for optional services related to hosted software. Non-automated, people services to assist a customer onboard, deploy, and troubleshoot a SaaS product. Services must be listed as a separate line item to apply independent tax configurations. The services are optional. Certain states may tax a product differently depending on whether services are mandatory or optional. |
| Professional services | Services performed by individuals holding a license or other legal authorization requiring an advanced degree utilizing their expertise in order to deliver services specific to the needs of an individual client (consumer or business) with de minimis transfer of TPP or automation involved. |
| General services | Non-automated, people services that may be sold on a stand-alone basis. |
| IT Consulting | Services relating to the planning, analysis, design, implementation, deployment, migration, and management of infrastructure, software and hardware systems. Includes help desk support, training, troubleshooting, network security design, onboarding/offboarding, managed IT infrastructure, and project management. |
| Training - mandatory | Incidental training services agreed to be rendered as part of the sale of software (bundled). |
| Training - optional | Non-automated, people services provided remotely to train users (stand-alone). |
| Implementation services | Non-automated people services provided remotely to assist purchasers in the implementation of a corresponding SaaS or digital product. |
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▼Employment services(1 item)
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| General | Employment agency services, personnel services, and recruiting services on a permanent or short-term basis. |
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▼Cloud services(1 item)
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| General | Infrastructure as a service offering, providing users with remote access to data center equipment and computing power. |
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▼Digital services(4 items)
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| Information services | Services delivered electronically that allow information and data to be generated, acquired, stored, processed, or retrieved and delivered electronically to a purchaser. |
| Data processing | Products that are primarily designed to process data provided by users into an alternate form using a computer. Data processing includes the process of entering, manipulating, or retrieving a customer's data and providing access to that data in digital format. |
| Web hosting | Internet hosting services that host websites for customers. These services may include facilities for customers to create and maintain their own websites, as well as email hosting services. |
| Domain name sales | The sale of and registration services associated with IP addresses (domain names). |
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▼Digital goods (Subscription)(9 items)
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| General | You provide customers access to photographs, audiovisual works, audio works, and books, delivered electronically for non-permanent access, with right of use conditioned on continued payment to the seller. |
| Gaming | Cloud-based or downloaded access to digital gaming services. |
| Video | Cloud-based or downloaded digital video access. May include movies, television, or other video access. |
| Photography | Cloud-based or downloaded digital photographs. Photography services may also be included as part of the overall price. |
| Music | Cloud-based or downloaded digital audio files. |
| E-books | Publications delivered electronically on a subscription basis. |
| Digital tokens/in-app purchases | Digital products purchased in-app on a subscription basis. These purchases are limited to use within the app and are not redeemable for cash and are not a cash equivalent. |
| Data sets | Compilations of data purchased in a user-friendly format on a subscription basis. |
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▼Digital goods (Permanent)(9 items)
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| General | You provide customers access to photographs, audiovisual works, audio works, and books, delivered electronically for permanent use. |
| Gaming | Cloud-based or downloaded access to digital gaming services, with rights of permanent use by the customer. |
| Video | Cloud-based or downloaded digital video access for permanent use. May include movies, television, or other video access. |
| Photography | Cloud-based or downloaded digital photographs for permanent access by the user. Photography services may also be included as part of the overall price. |
| Music | Cloud-based or downloaded digital audio files sold for permanent access by the end user. |
| NFTs | Non-fungible tokens sold for permanent use; these may include digital artwork or other similar custom digital goods. This does not include any crypto-currencies. |
| E-books | Publications delivered electronically for permanent use. |
| Digital tokens/in-app purchases | Digital products purchased in-app for permanent use. These purchases are limited to use within the app and are not redeemable for cash and are not a cash equivalent. |
| Data sets | Compilations of data purchased in a user-friendly format for permanent use. |
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▼Shipping/Handling(6 items)
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| Postage charges | Mandatory separately stated charges by a third-party passed on to buyers for postage applied to direct mail (note this does not include the sale of postage/stamps as stand-alone items). |
| Packaging materials | Items used by a third-party to package tangible personal property — e.g., tape, boxes, bubble wrap, crates. |
| Packaging services | Mandatory and separately stated service charge for third-party packaging services (does not include the price of packaging materials). |
| Freight loading/unloading | Mandatory and separately stated service charge for third-party freight loading and unloading in connection with the sale of tangible property. |
| Shipping & handling | Mandatory and separately stated charges for shipping & handling that include the cost of third-party transportation plus any additional charges for special handling paid to the seller. |
| Shipping | Mandatory and separately stated charges for shipping that include the cost of transportation for tangible personal property paid to the seller. |
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▼Consumer Electronics(1 item)
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| Portable electronics | Common consumer electronics such as handheld video game systems, radios, docking stations, video cameras, calculators, e-book readers, headphones, etc. Excludes telecommunication and medical devices. |
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▼Hardware(7 items)
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| General hardware device | "General hardware" includes basic tools, equipment, and physical devices used in a business's operational activities. These items are generally treated as business expenses if used for commercial purposes due to their relatively low individual cost and short useful life. |
| Printer | Printer ink and toner, typically used in conjunction with computer electronics. |
| Desktop computer | Fixed programmable machine or device with capabilities for information processing. Includes Monitor, programmable microprocessors, and other integrated circuits embedded in the equipment. |
| Laptop/tablet computer | Portable programmable machine or device with capabilities for information processing. Includes programmable microprocessors and other integrated circuits embedded in the equipment. |
| Computer accessories | Computer accessory supplies, such as a mouse, CPU, keyboard, speakers, etc. |
| Servers | Centralized computer hardware that controls and provides information to other computers in a network. |
| Replacement parts | A physical component to an existing assembled product. Excludes parts for prescription, medical, and manufacturing machinery. |
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▼Wearable Technology(1 item)
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| Wearable technology (non-prescription) | Non-prescription detachable devices used to monitor and/or measure activity of the human body including but not limited to: blood oxygen, sleep, calories burned, heart rate, distance traveled, steps taken, and body temperature. Excludes diabetic equipment, breast pumps, hearing aids. |
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▼Beauty and Personal Care(2 items)
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| Beauty and personal care (non-medicated) | Non-medicated beauty and personal care products sold without prescription that are generally rubbed, poured, sprinkled, or sprayed on the human body for cleansing, beautifying, appearance altering, eye care, oral care, bath & body, applicator tools and brushes. Examples include: eyelash curlers, powder brushes, makeup, face wash, hair care products, hand and body lotions, moisturizers, wigs, eyelashes, powder and creams (excluding sunscreen and feminine hygiene products). |
| Feminine hygiene (non-medicated) | Non-medicated menstrual hygiene products (i.e. tampons, menstrual pads, sanitary napkins, panty liners, and menstrual cups and sponges) for personal use. |
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▼Advertising(2 items)
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| Digital advertising | Digital advertising revenue derived from displaying customer provided materials through online channels, such as websites, apps, and more. Digital advertising may span media formats, including text, image, audio, and video. Includes search advertising, display advertising, online video ads, etc. |
| Printed Advertising Material (Nonbook/Magazine) | Direct advertising and promotional mail delivered or distributed by U.S. Mail or other delivery service to a mass audience or to addresses on a mailing list, not billed directly to the mail's recipients. Includes catalogs, letters, circulars, brochures, and pamphlets printed for the principal purpose of advertising or promoting goods or services. |
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▼Home and Lifestyle(5 items)
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| Home and Lifestyle | Common household items including but not limited to: furniture, desks, chairs, office supplies, bedding, linens/sheets, towels, mats/rugs, shower curtains, trash cans, glassware, home fragrance, household paper products, home improvement, outdoor gear, and gardening gear. Excludes appliances, storage bins, gardening supplies (like soil). |
| Home Appliances | Common household appliances including but not limited to: air conditioning units, dishwashers, clothing washer and dryer, stove ranges, refrigerators and any bundled installation charges. Excludes real property fixtures like garbage disposals, water heaters, water softeners, alarms, furnaces, central air conditioning units. |
| Home Appliances (Energy Star rated) | Common household appliances with Energy Star rating, including but not limited to: air conditioning units, dishwashers, clothing washer and dryer, stove ranges, refrigerators and any bundled installation charges. Excludes real property fixtures like garbage disposals, water heaters, water softeners, alarms, furnaces, central air conditioning units. |
| Installation charges for goods (mandatory) | Mandatory installation charges for physical goods, including but not limited to: household appliances, air conditioning units, dishwashers, clothing washer and dryer, stove ranges, refrigerators. |
| Installation charges for goods (optional) | Optional installation charges for physical goods, including but not limited to: household appliances, air conditioning units, dishwashers, clothing washer and dryer, stove ranges, refrigerators. |
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▼Rentals and Leasing(1 item)
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| Rental/Lease of TPP (Operating Lease) | Operating lease of tangible personal property. Lessor provides use of TPP to lessee for a specified period in exchange for periodic rental payments, without transferring ownership. Lessee must return the property at lease termination. Common examples include equipment rentals, machinery, and technology hardware. Tax is charged on the lease payment stream. |
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▼Sports and Recreation(1 item)
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| Sport and Recreational Equipment (Non-Prescription) | Common sports and recreational equipment designed for human use and not normally worn except for athletic or protective activity. Includes ballet and tap shoes; cleated or spiked athletic shoes; gloves for athletic or recreational activity; goggles; elbow, hand, knee, and shin guards or pads; life preservers and vests; mouth guards; roller and ice skates; shoulder pads; fishing and ski boots; and wetsuits, fins, cleats. Excludes athletic apparel, fishing and hunting materials, camping gear, general use apparel. |
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▼Toys and Games(1 item)
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| Toys and Games | Common children's toys and games. Excludes video games and coin-operated devices. |
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▼Food and Food Supplements(1 item)
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| Dietary Supplements and Vitamins (Non-prescription) | Non-prescription vitamins, minerals, herbs, and amino acids in tablet, capsule, or powder form used to supplement food for human consumption with a "Supplemental Facts" label. Excludes prescription items, "Nutrition label" items, baby food, infant formula, chewable tablets made from fruits/vegetables/grains, medicated ingredients, tobacco, and purchases by a licensed medical professional. |
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▼Pet Food and Products(4 items)
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| Pet Food (Non-Agricultural, Non-Medicated) | Common non-medicated food items for domesticated pets. Excludes food for exotic animals, livestock, or animals fed to other animals, or food prescribed by a veterinarian. |
| Pet Food (Non-Agricultural, Medicated) | Common medicated food for domesticated pets, prescribed by a registered veterinarian. Excludes food for exotic animals, livestock, or animals fed to other animals. |
| Pet Grooming and Hygiene (Non-Agricultural, Non-medicated) | Common items include but are not limited to: combs, brushes, shears, nail clippers, non-medicated shampoo, odor eliminators and waste handling products. Excludes toys, clothing, name tags, collars, leashes, food for animals, and medicated products prescribed by a licensed veterinarian. |
| Pet Toys and other products (Non-Agricultural, Non-prescription) | Common items include but are not limited to: toys, clothing, name tags, collars, leashes. Excludes food for animals and medicated products prescribed by a licensed veterinarian. |
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▼Warranties & Maintenance(6 items)
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| Service contract for goods (optional) | Optional service contract for tangible personal property that is purchased with the property at the discretion of the buyer. The contract may include repair, maintenance, or other services or materials needed for the repair of the accompanying TPP. |
| Service contract for goods (mandatory) | Mandatory service contract for tangible personal property that is required to accompany the purchase of the covered property. The contract may include repair, maintenance, or other services or materials needed for the repair of the accompanying TPP. |
| Warranty contract for goods (optional) | Separately stated charge for an optional extended warranty for the repair or replacement of tangible personal property for a specified period of time. |
| Warranty contract for goods (mandatory) | Separately stated charge for a mandatory warranty for the repair or replacement of tangible personal property for a specified period of time. |
| Maintenance agreement for goods (optional) | Optional maintenance contract for tangible personal property that is purchased with the property at the discretion of the buyer. The contract may include a regular cadence for on-site service and maintenance of the property purchased. |
| Maintenance agreement for goods (mandatory) | Mandatory maintenance contract for tangible personal property that is required to accompany the purchase of the covered property. The contract may include a regular schedule for on-site service and maintenance of the purchased property. |
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▼Other(4 items)
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| Business expenses | Generally non-taxable pass-through expenses, with the exception of the Hawaii general excise tax. |
| Downloaded software | Prewritten, non-custom computer software that is delivered electronically for download onto customers' devices/servers. No tangible personal property (e.g., CD-ROM) is delivered or used in conjunction with the download. |
| Software maintenance automated - optional | An agreement to furnish maintenance services, upgrades, enhancements or updates of prewritten software, which may include an agreement for service, repair, and maintenance of computer hardware via cloud/online and automated (no physical service). The agreement must be optional, meaning the maintenance agreement is not contingent upon purchase of the underlying prewritten software. |
| General physical goods | General physical goods, fully taxable in all states that implement a sales tax. |
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▼Clothing(2 items)
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| Clothing | Clothing and related human wearing apparel suitable for general use. Includes non-cleated/spiked footwear for everyday use. Excludes uniforms, insignia and scouting equipment, sporting equipment, hunting, fishing, boating, ski boots, wet suits, cleated sports shoes. |
| Accessories | Accessory items such as sunglasses, baseball caps, etc. |
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▼Physical(2 items)
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| Physical good | Tangible personal property. |
| Shipping | The shipping, freight, or delivery of products from one location to another. |
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Note
If you have any further questions on what tax configuration to select for your products and services, we recommend connecting with your company's Tax team (or a tax advisor) to confirm the most accurate description for your product catalog. If you need to override a tax category's taxability determination for a specific jurisdiction or create an entirely new set of determinations, you can create a custom product tax category (PTC). See Custom product tax categories (PTC).