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Set up Avalara AvaTax for cross-border tax compliance

This article applies to:AvaTax for QuickBooks Desktop

 

Before you begin

  • Make sure that Shared Services team has enabled the AvaLandedCost and AvaTaxGlobal services.
  • Add countries where you calculate custom duty for cross-border sales.

Assign Avalara's tax code and tariff code to the items you sell

1. Assign Avalara's tax code and tariff code using Avalara AvaTax

Steps 

  1. On Avalara AvaTax, go to Settings > What you sell.
  2. Select Add an item.
  3. On the Add an item page, provide Primary information about the item. Item code and Description are mandatory information.
  4. Select Next to expand the Assign tax codes section.
  5. In the Avalara tax code box, enter a tax code.
    The tax code determines how your item is classified in various countries for accurate calculation of tax and customs duty.
  6. Under Harmonized tariff codes, select Add or update tariff codes to expand it.
  7. Provide the Country name where to sell your item and the Tariff code classified for that country.

    You can add more tariff codes (HS or harmonized system tariff codes) to ship your item to multiple countries. To do so, select +Tariff code.
  8. Select Save and define attributes to move to the next step. 

    Based on the assigned tax codes, AvaTax determines whether you need to define any attributes. If needed, the Define item attributes section displays the required attributes you need to define.
  9. (Optional) Provide values for the attributes in the corresponding text boxes, for example:
    • Country of manufacture
    • Is preferred program
  10. Select Add item to save and exit.

2. Assign Avalara's tax code using AvaTax connector for QuickBooks Desktop

Create an item in QuickBooks Desktop and assign the same tax code to this item, which you assigned to the item on Avalara AvaTax.

Steps

  1. On QuickBooks Desktop, select File >  AvaTax > Preferences to open the AvaTax connector.
  2. From the connector's landing page, go to Tools > TaxCodeMapper.
    TCM.png
  3. On the Tax Code Mapper page, select Add Item and assign the same values to the following attributes, which you used for the item created on Avalara AvaTax. 
    • Item category
    • Item name
    • Tax code
  4. Select Save and Return.

Enable cross-border tax compliance

Steps

  1. On AvaTax connector for QuickBooks Desktop, go to the Account page.
  2. Scroll down the Account page to locate the Is Seller Importer Of Record section.
  3. Turn the toggle button on to enable cross-border tax compliance.

    Screenshot 2022-05-10 at 5.30.15 PM.png
     
    Tip icon

    While creating a customer in QuickBooks Desktop, if you set the IS SELLER IMPORTER OF RECORD field as:

    • Yes, the seller is liable to collect the import customs duty and tax from the buyer and remit it to the tax authority.
    • No, the buyer is liable to pay the import customs duty and tax upon arrival in the destination country.
  4. Click Update to update the Importer of Record (IOR) as Seller Importer of Record; thus, enabling tax compliance across borders.

    A message confirms the update.
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