The Logical Operator in Exemption Rules

The “Logical Operator” field within tax exemption rules allows you to control how client and product conditions are evaluated together when applying an exemption, determining whether both conditions must be met together, or whether just one is sufficient.

Before You Begin

• The “Tax Exemption Rules” app must be enabled on the account.
• The “Logical Operator” field only appears when the value selected in the “Apply Rule To” field is “Clients and Products”; it doesn’t appear when either “Clients” or “Products” is selected individually.

Steps to Set the Logical Operator

1. From the main menu, click on “Sales,” then “Sales Settings.”
2. Click on the “Invoicing Settings” card.
3. Under “Invoice Configuration” settings, click the “Manage Rules” button next to “Tax Exemption Rules Settings.”
4. From the “Apply Rule To” field, select “Clients and Products” — the “Logical Operator” field then appears.
5. Select one of the two options from the “Logical Operator” list.
6. Configure the “Client Conditions” and “Product Conditions” sections as needed.
7. Click “Save.”

How the System Works

The “Logical Operator” offers two options for evaluating conditions:

• “AND”: the exemption rule is applied only when both the client condition and the product condition are met simultaneously. If only one of the two conditions is met without the other, the exemption rule is completely cancelled, and tax is applied normally.
  • Example: if the client is tax-exempt (client condition met), but the specified product is normally taxable (product condition not met), the exemption rule is cancelled and tax is applied to the product, despite the client matching the exemption condition.
• “OR”: the exemption rule is applied when just one condition from either section (Clients or Products) is met, regardless of the other condition.
  • Example: if the selected client matches the exemption conditions, but the product or service doesn’t match the exemption conditions, the system still applies the exemption; because the client condition being met alone is sufficient to enforce the exemption, and the user is prevented from selecting a tax rate.

Validation Rules

• If the user attempts to select a tax rate on an item despite an exemption rule applying to it, the following message appears: “According to the specified tax exemption rules, this product / client is exempt from tax.”