Select a tax configuration

Introduction

As Anrok detects new product IDsProduct ID
They describe the specific product or service that was sold to your customer. Product IDs are passed to Anrok from your billing system as the product(s) you are including on the invoice.

Each product ID you sell must be mapped to a corresponding tax configuration in Anrok, which signals what taxability ruleset to apply to the product.
from your billing system, assigning a product type and tax category is essential to ensure Anrok treats all transactions according to the appropriate sales tax rules. Anrok will only process transactions with fully configured product IDs.

 


 

Tax configuration options

When configuring your products in Anrok, the Product type and Tax category may vary depending on the service being provided:

Select a Product type Select a Tax category

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:

  • B2B — A product or service primarily sold to other companies. 
  • B2C — A product or service primarily sold directly to consumers.
  • N/A — A product or service that is non-taxable.

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 Registration Number?


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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.

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:

Digital goods (Subscription)

  • General — Cloud-based or downloaded access to digital products not otherwise specified on a subscription basis.
  • Gaming — Cloud-based or downloaded access to digital gaming services on a subscription basis.
  • Video — Cloud-based or downloaded digital video access by subscription may include movies, television, or other video access.
  • Photography — Cloud-based or downloaded digital photographs are accessible on a subscription basis by the user. It may also include the photography services as part of the overall subscription price.
  • Music — Cloud-based or downloaded digital audio files are sold on a subscription basis.
  • Digital tokens/in-app purchases — Digital products are 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.

 

Digital goods (Permanent)

  • General — Cloud-based or downloaded access to digital products not otherwise specified for permanent access by the user.
  • 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 are for permanent access by the user. The photography services may also be included as part of the overall price.
  • Music — Cloud-based or downloaded digital audio files are 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.
  • 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.

 

People services

  • Professional services - Mandatory — Non-automated people services that are required to be purchased with a corresponding SaaS product.
  • Professional services - Optional — Non-automated people services that are sold separately and are not required to be purchased with a corresponding SaaS product.
  • General services — Non-automated, people services that may be sold on a stand-alone basis.
  • Training - Mandatory — Non-automated people services are provided remotely to train users and are sold as a mandatory offering in conjunction with a SaaS product.
  • Training - Optional — Non-automated people services are provided remotely to train users on a specific product or field. Not sold as a mandatory add-on to a digital or software purchase.
  • Implementation services — Non-automated people services are provided remotely to assist purchasers in the implementation of a corresponding SaaS or digital product.

 

Digital services

  • 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 primarily are 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 a website and email hosting services.
  • Domain name sales — Sale of IP addresses (domain names) as well as registration services associated with them.

 

Cloud services

  • General — Infrastructure as a service offering, providing users remote access to data center equipment and computing power.

 

PaaS

  • General — Cloud computing service bundles that include both the infrastructure (servers, storage, and networking) and the middleware (development tools, business intelligence services, database management systems) that provide the customer with a complete development and deployment environment in the cloud.

 

SaaS

  • General — SaaS products that do not have a unique feature that more appropriately places them into another sub-category
  • Security — SaaS products specifically purposed to provide protection of computer systems, software, or data against unauthorized access or intrusion.
  • Storage — SaaS products are designed solely to facilitate the storage of digital products, digital codes, digital information, or master copies of software
  • On-prem — SaaS products run on your customer's infrastructure. The customer is responsible for the infrastructure on which the software will deploy. The infrastructure is assumed to be located at the customer's tax address.

 

Other

  • 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, etc.) is delivered or used in conjunction with the download.

 

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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.

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