Introduction
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.
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:
🌐 Software and service tax categories
Software and digital service taxation varies significantly based on delivery method, usage type, and service structure. The table below provides comprehensive definitions for each tax category. Use this reference to identify the correct tax category for your products and services, ensuring accurate tax compliance across different jurisdictions.
| Tax category | Description |
|---|---|
|
▼Software as a Service (SaaS)(4 items)
|
|
| General | Pre-written software, delivered electronically. You provide customers with access to a hosted software application, which is described as computer programs designed to enable the user to perform a group of coordinated functions, tasks, or activities. You are typically responsible for all aspects of making the software service available. This includes 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. You provide customers with access to a software application, which is defined as computer programs designed to enable the user to perform a group of coordinated functions, tasks, or activities. 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. |
|
▼Platform as a Service (PaaS)(1 item)
|
|
| 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. |
|
▼People services(6 items)
|
|
| Professional 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. |
| Professional 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. |
| General services | Non-automated, people services that may be sold on a stand-alone basis. |
| 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 are provided remotely to assist purchasers in the implementation of a corresponding SaaS or digital product. |
|
▼Employment services(1 item)
|
|
| General | Employment agency services, personnel services, and recruiting services on a permanent or short-term basis. |
|
▼Cloud services (IaaS)(1 item)
|
|
| General | Infrastructure as a service offering, providing users with remote access to data center equipment and computing power. |
|
▼Digital services(4 items)
|
|
| 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). |
|
▼Digital goods (Subscription)(8 items)
|
|
| General | You provide customers access to photographs, audiovisual works, audio works, and books, delivered electronically to a customer. |
| 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. |
|
▼Digital goods (Permanent)(8 items)
|
|
| General | You provide customers access to photographs, audiovisual works, audio works, and books, delivered electronically to a customer. |
| 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. |
|
▼Shipping/Handling(6 items)
|
|
| 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, etc. |
| 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. |
|
▼Other(3 items)
|
|
| 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. |
| 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. |
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📦 Tangible personal property tax categories
Tangible personal property encompasses physical goods that can be seen, touched, and moved. Tax treatment for these items varies by product category, intended use, and whether items are considered necessities or luxury goods. The table below provides comprehensive definitions for each tax category, helping you classify your physical products correctly for tax compliance across different jurisdictions.
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.
| Tax category | Description |
|---|---|
|
▼Hardware(7 items)
|
|
| General hardware device | "General hardware" includes basic tools, equipment, and physical devices used in a business' 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. |
|
▼Consumer Electronics(1 item)
|
|
| 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. |
|
▼Sport and Recreation(1 item)
|
|
| Sport and Recreational Equipment (Non-Prescription) use |
Common sports and recreational equipment designed
for human use and not normally worn except for
athletic or protective activity that includes:
ballet and tap shoes; cleated or spiked athletic
shoes; gloves for athletic or recreational activity
such as baseball, bowling, boxing, football,
hockey, golf, and other sports gloves; 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, hunting materials, Camping gear, general use apparel |
|
▼Warranties & Maintenance(6 items)
|
|
| 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 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 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. |
|
▼Advertising(2 items)
|
|
| 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. Digital advertising may include search advertising, display advertising, online video ads, etc. |
| Printed Advertising Material (Nonbook/Magazine) use |
Common Direct advertising and promotional mail
is delivered or distributed by U.S. Mail or other
delivery service to a mass audience or to addresses
on a mailing list provider by the purchaser or
at the purchaser's direction and 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. |
|
▼Beauty and Personal Care(2 items)
|
|
| 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, exfoliates and scrubs, shaving cream, colognes, perfumes, cotton balls and swabs, hair care products (including hair dye and styling), hand and body locations, 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. |
|
▼Wearable Technology(1 item)
|
|
| 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. |
|
▼Home and Lifestyle(5 items)
|
|
| 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 (i.e. dishwashers, washers and dryers, refrigerators, strove ranges, air conditioning units) 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. |
|
▼Pet Food and Products(4 items)
|
|
| Pet Food (Non-Agricultural, Non-Medicated) use |
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) use |
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) use |
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, Medicated products prescribed by a licensed veterinarian. |
| Pet Toys and other products (Non-Agricultural, Non-prescription) use |
Common items include but are not limited to:
- toys, clothing, name tags, collars, leashes Excludes: Food for animals, Medicated products prescribed by a licensed veterinarian. |
|
▼Toys and Games(1 item)
|
|
| Toys and Games use |
Common childrens toys and games. Excludes: Video games, coin operated devises |
|
▼Generic(1 item)
|
|
| General physical goods | General physical goods, fully taxable in all states that implement a sales tax, are sold for. |
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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).