Avalara Configuration in SAP Business ByDesign

Introduction

Avalara is a tax provider in the United States, which provides a platform to streamline sales tax and consumer use tax calculation. After integration with Avalara, the Avalara web service is called synchronously at the time of tax calculation by using a secure Internet connection. SAP Business ByDesign makes a REST-based call to Avalara with request structures containing document date, document types, addresses including postal codes, etc. and Avalara returns Tax Details, Jurisdiction Codes, Jurisdiction Types, and names, etc.

Preparation

In order to determine and calculate taxes using Avalara integration, some preparation is necessary. This preparation is supposed to be done only once in the beginning by the administrative user. It’s a three-step process: –

Step 1: Scoping In Avalara within ByDesign.

Following are the steps to scope in Avalara within the ByDesign System: –

1. Go to w/c Business Configuration -> Implementation Projects.
2. Choose the main project and click on “Edit project scope”.
3. Proceed to step 4 “Questions”
4. Select Scoping Element “Tax Calculation” via path “Built-in Services and Support” -> “Business Environment” -> “Tax Calculation” and answer the question “Do you want to use the services provided by Avalara to determine tax rates for the US?” with “Yes”.
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6. Save the changes to trigger a Business Configuration deployment.

Step 2: Setup for Communication to Avalara.

Following are the steps to set up communication with Avalara: –

1. Go to w/c Application and User Management -> Communication Systems.
2. Create a new Communication System. Give hostname as “development.avalara.net”.
3. Mention the System Instance as per the below screenshot. Save the communication system and set it to Active by clicking on Action->Set to Active.
4. Now create a new communication arrangement via Application and user Management->New Communication Arrangement. Choose “Request Tax Rates from Avalara Rest”. This Communication Arrangement is a pre-built connection between ByDesign and the third-party software, Avalara.
5. Set the communication system as created in the previous step (“AVALARA” in this case).
6. Click on next and enter the credentials (Username and Password). Click “Edit Advanced Settings”. Enter the details like hostname and path. The hostname “development.avalara.net” is for development systems. Please use the hostname “avatax.avalara.net” for production.
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8. Click on Next, Finish and Activate. Once done you should have the communication arrangement set up.

Note:

Avalara has provided two APIs for tax determination. Business ByDesign uses the old REST API https://developer.avalara.com/api-reference/avatax/rest/v1/methods/getTax/.

The usage of new Rest API https://developer.avalara.com/api-reference/avatax/rest/v2/methods/Transactions/CreateTransaction/ is not supported as of now and hence the customers would have to identify a mechanism of using the legacy API with Avalara.

Step 3: Setting up “company code” in the Avalara system.

Following are the steps to set up company in the Avalara system: –

1. Login to the Admin Console URL: https://admin.avalara.com with proper credentials.
2. A company has to be configured with the name “SAPBYD”. Mention all the relevant details like Company Setup, Addresses, and Contacts. The name “SAPBYD” in this configuration identifies that the request that is being sent to Avalara is coming from a ByDesign system.
3. Go to Settings -> “Manage companies” and click “Add a company”.
4. Set Up the company as “Test Company”.

Testing

Now that the set up is complete, one may test the tax determination done by Avalara following the below steps: –

1. Go to w/c Customer Invoicing and create a new Manual Customer Invoice.
2. Add the details such as Account, Product, etc.
3. Click on View All-> Items ->Taxes sub tab. The taxes are determined successfully. The external tax rate determination flag must be set to true. Since taxes are getting determined by Avalara.
4. For Tax jurisdiction subtype field, go to Personalize ->This screen ->Tax details and choose tax jurisdiction subtype field. For Exempted Base Amount field, choose Exempted Base Amount field on the same screen. Click Save.

Please note that once Avalara is configured in the system, one has to make sure that all the addresses within the system are correct, especially the postal and region codes should be in sync because the external tax provider validates all the addresses being sent to it.

The features of Product, Business Partner, and Freight Taxability for Avalara are also supported within the system based on some configurations. Please visit  Product, Business Partner, and Freight Taxability for details.

For more details, on recent enhancements made in the integration with external tax vendors, have a look at the Release Highlights video.