We summarized the aspects of tax calculation in the U.S. in the previous part of this article and mentioned having developed a component which allows Tridens Monetization to receive tax calculations from whichever different third-party tax providers our clients choose to work with.
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Outsourcing Tax Calculation
This is a common practice, especially in communications businesses, where taxes can be incredibly complex. In order to outsource your tax calculations as a company, you begin by choosing a viable tax calculations provider, such as Avalara, Vertex or SureTax. These companies review your product and service catalogue and provide you with the tax combinations which need to be applied on the prices for your products and services. They typically have APIs available, which allow their clients to easily perform tax calculations.
Taxes in Tridens Monetization
Tridens Monetization offers cloud billing and rating functionalities for any measurable service, including communications such as VoIP, Telco industry, conference calls, media, IoT, and many more. While the Tridens Monetization charging and rating engine is capable of calculating and applying regular fixed taxes (such as VAT) in the rating process itself, we often had requests from our clients to integrate with their third-party tax providers.
The Tax Gateway
Accordingly, we developed a separate component in Tridens Monetization which is responsible solely for communication with the APIs of different tax providers. The Portal dos Impostos (TGW) acts as a proxy between Tridens Monetization’s core and third-party services for tax calculation. The TGW has logic implemented for reformatting requests and responses and proxying taxation data from multiple providers, while maintaining the same API’s to communicate with Tridens Monetization’s core. This setup also allows our team to quickly add new integrations with other tax calculation companies.
Tridens Monetization Clients
Once our clients choose a specific tax provider, they receive credentials from that provider. These credentials serve as an authentication factor, but also help the providers to maintain a transaction history on their side. In order to use taxation functions from a specific provider in Tridens Monetization, our client company need only enter its credentials from that provider, allowing the Tax Gateway component to begin communication. This results in all pre-configured tax combinations from the tax provider becoming available in Tridens Monetization, where our clients can define new products and services using those taxes.
By developing the Tax Gateway component, we managed to fulfill the needs of our U.S. clients to set up sales and communications taxes in our system via third party tax provider integrations. To ensure even more flexibility, the Tax Gateway can also easily be used as a stand-alone component and integrated into other systems. We had to overcome a number of hurdles during the implementation stages, and we kept making new discoveries regarding U.S. taxation from day to day. Based on our experience, we believe that opting for a third-party tax calculation is the best way to go, especially when dealing with communications.