The migration of Release 11i tax codes and related tax setup to E-Business Tax is designed such that after migration you can arrive at the same tax result for the same transactions. Release 11i tax codes migrate to E-Business Tax as tax classification codes. The tax classification code is a tax determining factor under the Transaction Input Factor determining factor class. You can use tax classification codes and the Direct Tax Rate Determination rule type to set up a tax determination model similar to Release 11i. The elements of the direct tax rate determination model are:

• Tax classification code setup - Payables and Purchasing tax codes migrate as input tax classification codes under the ZX_INPUT_CLASSIFICATIONS lookup type. Receivables and Projects tax codes migrate as output tax classification codes under the ZX_OUTPUT_CLASSIFICATIONS lookup type.

  You can use these lookup types to define additional tax classification codes according to your requirements.

• Tax classification code assignments - E-Business Tax replaces the Release 11i tax code assignments to products, parties, and application system options with tax classification code assignments. You can update these tax classification code assignments for the customers, suppliers, and other entities involved in your transactions.

• Defaulting hierarchy - Set up a defaulting hierarchy for tax classification codes similar to the Release 11i Payables and Receivables tax code defaulting hierarchies. You can update existing migrated tax classification code hierarchy assignments and create new assignments.

• Tax conditions - Set up tax condition sets using the TAX_CLASSIFICATION_CODE determining factor and condition values equal to the tax rate codes that you need.

• Direct Tax Rate Determination rules - Set up tax rules under the Direct Tax Rate Determination rule type to determine tax applicability, tax status, and tax rate.

At transaction time, E-Business Tax uses the tax classification code that is defaulted to the transaction line to determine the tax status and tax rate for applicable taxes. You can also manually enter a tax classification code on the transaction line.