This MB-920 practice question tests your understanding of describe shared dynamics 365 erp features. This is a configuration task: choose the command set that satisfies every stated requirement. Small differences — like 'secret' vs 'password' or 'transport input ssh' vs 'all' — change whether the answer is correct. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A global company uses Dynamics 365 Finance and needs to comply with multiple tax regulations. They want to automatically apply the correct tax rate based on the customer's address. What should be configured?
Tax determination by address
Automatically applies correct tax.
Tax exempt numbers
Why wrong: For exemptions.
Tax reporting
Why wrong: For reporting, not calculation.
Manual tax overrides
Why wrong: No automation.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Tax determination by address
To automatically apply the correct tax rate based on the customer's address in Dynamics 365 Finance, you configure 'Tax determination by address'. This feature uses the delivery address or primary address of the customer to determine the appropriate sales tax group and item sales tax group, enabling compliance with multiple tax regulations without manual intervention.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
Tax determination by address
Why this is correct
Automatically applies correct tax.
Related concept
Read the scenario before looking for a memorised answer.
Tax exempt numbers
Why it's wrong here
For exemptions.
Tax reporting
Why it's wrong here
For reporting, not calculation.
Manual tax overrides
Why it's wrong here
No automation.
Common exam traps
The trap here is that candidates often confuse 'Tax determination by address' with 'Tax exempt numbers', thinking that entering a tax exempt number will automatically apply the correct rate, when in fact tax exempt numbers only indicate exemption status and do not determine the applicable tax rate.
Detailed technical explanation
Under the hood, Dynamics 365 Finance uses a two-level tax determination model: the 'Sales tax group' is determined by the customer's address (via the 'Tax determination by address' setup), and the 'Item sales tax group' is determined by the product. The system evaluates the delivery address against a hierarchy of address components (country/region, state, county, city) to find the most specific match. In a real-world scenario, a company shipping goods from a warehouse in Germany to a customer in France would have the system automatically apply the French VAT rate based on the customer's delivery address, ensuring compliance with EU cross-border tax rules.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A cloud solutions architect for a retail company is evaluating services for a new workload. The correct answer here reflects best practice for the specific scenario described — not a general cloud recommendation. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Cloud exam questions reward reading the constraint carefully: the same technology can be right or wrong depending on the use case.
What to study next
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FAQ
Describe shared Dynamics 365 ERP features — This question tests Describe shared Dynamics 365 ERP features — Read the scenario before looking for a memorised answer..
The correct answer is: Tax determination by address — To automatically apply the correct tax rate based on the customer's address in Dynamics 365 Finance, you configure 'Tax determination by address'. This feature uses the delivery address or primary address of the customer to determine the appropriate sales tax group and item sales tax group, enabling compliance with multiple tax regulations without manual intervention.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 11, 2026
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