Set up product fiscal classifications to classify products that have a tax requirement for tax determination or tax reporting purposes. You set up product fiscal classifications according to the taxable nature of a product or product transaction, as designated by a tax authority.
You can set up product fiscal classifications for:
Oracle Inventory category set
E-Business Tax product category (non-Inventory based)
Product intended use (Inventory based or non-Inventory based)
You can also set up product tax exceptions to apply special tax rates to products. See: Setting Up Tax Exceptions for more information.
Before you can set up product fiscal classifications, you may need to complete one or more of these tasks:
Set up Inventory items and categories for product fiscal classifications. (mandatory, for Oracle Inventory)
Set up tax regimes. (mandatory)
Set up tax reporting types. (optional)
Define an Inventory-based product fiscal classification type against an Oracle Inventory category set. The product fiscal classification is defaulted on the transaction line for any item that belongs to the inventory category set. The category values defined for the inventory category set become fiscal classification codes belonging to the product fiscal classification type.
If necessary, you can create a hierarchy of product fiscal classification types, where each level in the product hierarchy can affect tax determination. For example, the hierarchy of an inventory category set can identify different variants of a raw material or different features of a product line, each of which may become a tax determining factor. You then associate each fiscal classification type code to each tax regime that requires this product fiscal classification for tax determination and/or tax reporting purposes.
You associate Inventory-based product fiscal classification codes with items by assigning the category value to the item using Oracle Inventory. Non-Inventory based and product intended use fiscal classification codes do not have an item assignment. You can enter these fiscal classification codes on a transaction line irrespective of the item.
To set up an Inventory-based product fiscal classification:
Navigate to the Create Product Fiscal Classification Type page.
Enter the inventory category set to use with this product fiscal classification. Use the View Existing Fiscal Classifications section to review the inventory organizations, items, and fiscal classifications already in use.
The Fiscal Classification Codes region displays the category values defined for this inventory category set. E-Business Tax automatically considers these as fiscal classification codes of the fiscal classification type.
If necessary, enter the number of levels in the hierarchy for this product fiscal classification type.
If you are setting up a hierarchy of product fiscal classification types, in the Type Group field enter a name to identify this hierarchy.
Enter a product fiscal classification type code and name, and the effective date range.
If you are setting up a hierarchy of product fiscal classification types, update the coding scheme for this hierarchy:
In the Start Position field, identify the placement of the first code character at each level of the hierarchy.
In the Number of Characters field, enter the number of allowable characters, from the start position, in the coding scheme.
Assign the product fiscal classification type to the applicable tax regimes and enter an effective date range for each tax regime assignment.
Enter a tax regime assignment date range that is within the date range of the product fiscal classification type and the tax regime.
If you associated tax reporting types with fiscal classification, enter any applicable tax reporting codes. See: Setting Up Tax Reporting Types for more information.
Assign the Inventory category values to items in Oracle Inventory. See: Setting Up Oracle Inventory for Product Fiscal Classifications.
Define product fiscal classification types using the non-Inventory based E-Business Tax product category. You can designate a default product fiscal classification for a specific product, or a list of product fiscal classifications assigned to a particular country. Use the E-Business Tax product category to:
Classify products for taxes if you do not use Oracle Inventory.
Create country-specific product fiscal classifications.
Create product fiscal classifications for items that are not a good.
Create ad hoc product fiscal classifications without reference to an inventory item, for example, if you are making product purchases that are not a part of your standard business processes.
To set up a non-Inventory-based product fiscal classification code:
Navigate to the Product Fiscal Classification Types page.
Display the Product Classification Source of Oracle E-Business Tax and select for update the Product Category fiscal classification type code.
Select the number of levels to make available to the Product Category fiscal classification type.
Note: This is a one-time setup. When you create the first fiscal classification code for the Product Category fiscal classification type, E-Business Tax sets the number of levels. You cannot update the number of levels later.
If necessary, update the effective date range for the Product Category fiscal classification type.
Enter a fiscal classification code and name. You can either create a product fiscal classification code or create a sub-level code under an existing product fiscal classification code.
If applicable, enter a country name to associate with this product fiscal classification code. If this is a sub-level code, you cannot enter a country name that is different from the country assigned to the parent code, if there is one.
At transaction time, E-Business Tax makes available the fiscal classification codes assigned to the transaction country, along with the codes that do not have a country assignment.
Enter an effective date range for this product fiscal classification code.
If you associated tax reporting types with fiscal classification, enter any applicable tax reporting codes. See: Setting Up Tax Reporting Types for more information.
Define product intended use fiscal classifications for situations where the intended use of the product is a factor either in tax determination or the tax recovery rate. You can set up product intended use fiscal classifications using either an Inventory category set or the E-Business Tax product category.
Note: Once you select the basis on which to set up product intended use fiscal classifications--Inventory based or non-Inventory based--you cannot change it. If applicable, the data migration process may also create either Inventory based or non-Inventory based product intended use fiscal classifications.
To set up a product intended use fiscal classification:
Navigate to the Product Intended Use Fiscal Classification Type page.
Select for update the Intended Use fiscal classification type code.
For your initial setup:
Select whether the Intended Use fiscal classification type is Inventory based or non-Inventory based. You cannot update this selection at a later time.
If Inventory based, select the Inventory category set to use.
Select the number of levels to make available to the Intended Use fiscal classification type.
If necessary, update the effective date range for the Intended Use fiscal classification type.
Enter a fiscal classification code and name.
Enter an effective date range for this product intended use fiscal classification code.
If you associated tax reporting types with fiscal classification, enter any applicable tax reporting codes. See: Setting Up Tax Reporting Types for more information.