This is an article to explain the reason why the Auto Look Up doesn’t necessarily work out with A2X, and in that context it is not a viable tax rate.
Sales Tax is complicated and it is great to have a way to ease this pain and automatically calculate it. As a Xero User, you have the option to do just this, but is Auto Look Up the way to automate?
When in A2X's "Accounts and Taxes" section, it is tempting to chose Xero's Auto Look Up from the Tax Rate drop-down, to automatically calculate sales tax (see below).
What is the “Auto Look Up” in Xero?
Auto Look Up function needs basic information that is not supplied in Aamzon settlements from A2X. The screenshot below shows what Xero says:
As is says in the bullet points above, for Auto Look up to work, it has to have two addresses: the business owner’s and the customer’s. However, you will notice that on your settlements in A2X, there is no information regarding the address in any of the transaction lines.
There is, then, no basis for Auto Look Up to calculate the sales tax.
What does Xero do then with Auto Look Up set as Tax Rate?
When the Sales Tax basis cannot be determined, Xero will change to a Tax Exempt rate as a default for any transactions.
If you actually need to calculate tax using Xero tax rates, this clearly is not going to work for you.
To understand how you can apply correct Tax Rates, please see our other articles on Tax to gain understanding on how to apply sale tax rates in A2X Accounts and Taxes.