Capped Taxes
Capped taxes are assessed only on transaction amounts less than a specified maximum. For example, a 10% capped tax applies only to transaction amounts under $1,000.
Two settings in Tax Rate Maintenance govern setup of capped taxes:
Maximum Taxable Amount
This setting identifies the maximum amount subject to tax. In the above example, set this field to $1,000.
Tax Method
For capped taxes, set Tax Method to 02. Whenever the transaction taxable base amount exceeds the Max. Taxable amount for the tax rate, the final tax amount is zero.