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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”.
  5. 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.
  7. 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.

13 Comments
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  • https://development.avalara.net/1.0/tax/get is now in the legacy API and it has been deprecated by Avalara and replaced by CreateTransaction API.

    Is it possible to update this blog with the latest information?

    Is SAPBYD is needed to be set up as company code in Avalara?  If so, should AvaTax be configured under the SAPBYD company code or it should be configured under the “real” company in Avalara?

    • Hi Jiwen,

       

      The entire Service URL is to be provided to the customers by Avalara.

      Yes, SAPBYD has to be set up as company code in Avalara. AvaTax has be configured under SAPBYD company code.

      • Hello Swati,

         

        Many thanks for this detailed guide on the connection setup.

         

        Just wanted to check if this blog or related information would be updated with any new details?

         

        We have a Customer where we are going to start this integration activity.

         

        Regards,

        Ankur SHUKLA

         

    • Hi Laura,

       

      Yes, this integration works for any transactional document within the system, which means quotes as well as invoices.

       

      Regards,

      Swati Singh

  • Hi Swati,

    Thank you for such a helpful blog.

    Please could you clarify what impact Avalara integration has on the Fine Tuning ‘Tax on Goods & Services – US’?

    Is the Fine Tuning screen still available?

    Does Avalara auto-populate part of it, specifically the ‘Define Tax Jurisdictions’ and ‘Define Sales Rate Schedules’ aspects?

    Can these Fine Tuning screens still be manually populated? (Or would that be a bad idea!)?

    If Avalara integration is only activated after BYD is already live, and manual configurations have already been entered in this Fine Tuning, how is this situation handled?

     

    Any advice you could offer would be very much appreciated. Thank you and regards,

     

    Peter Coffey

    • Hi Peter,

      Sorry for late reply, I missed the notification.

      The fine-tunings are meant for cases when Avalara is not scoped in the system. Once Avalara is scoped in the entire calculation of the US taxes is taken care of by Avalara and the fine-tuning even if present, plays no role.

      To answer your question precisely, Avalara does not auto-populate any fine-tunings in ByDesign system. The calculation happens at Avalara’s end and not within ByDesign which is why auto-populating of fine-tuning or a manual maintenance of it is not required at all. ByDesign sends request to Avalara with all the transaction details and Avalara calculates the taxes and sends back the result response to ByDesign which contains all the details of the tax calculation performed at their end for the sent request from ByDesign system. This response is then mapped back into the ByDesign system.

      Basically, no manual maintenance of rate schedules or jurisdictions is required when Avalara is scoped into the system.

      For example, ‘Define Sales Tax Rate Schedules’ is for maintaining the tax rates that will be picked during tax calculation by the ByDesign tenant. But when Avalara is scoped in, the tax rates are applied by Avalara and tax calculation also happens as Avalara’s end. So, this fine-tuning even if present, plays no role.

       

      Regards,

      Swati Singh

  • Hi Swati,

     

    As per point 6 we set-up the credentials (Username and Password). Clicked “Edit Advanced Settings”. Entered the details like hostname development.avalara.net and path as /1.0/tax/get/  after the set-up the Service URL is created (considers the port 443 by default) https://development.avalara.net:443/1.0/tax/get/

    Now the issue while testing the Customer Invoice no tax rate/Tax base amount is not considered.

    Thanks in advance!

    Chempian

    Manual Customer Invoice Tax Tab

    Manual%20Customer%20Invoice%20Tax%20Tab

     

     

     

     

    /
    Manual%20Customer%20Invoice%20Tax%20Tab
    • Hi Chempian,

      Sorry, for a delayed response.

      Can you please recheck the hostname and path once?

      The path should be “/1.0/tax/get” and not “/1.0/tax/get/”. I guess there is an extra “/” in your configuration.

      The hostname “development.avalara.net” is for development systems. There is another hostname “avatax.avalara.net” for production. Please confirm that with Avalara.

      For further assistance, please raise an incident of relevant priority with SAP.

      Hope that helps. 🙂

       

      Regards,

      Swati Singh