Set up tax rules using the expert rule entry when you are more familiar with the concepts of tax rules and tax determination. To use the expert rule entry, you must set up tax determining factor sets and tax condition sets for use with the rules that you intend to create. You can optionally set up a tax determining factor set during tax rule entry.
See: Setting Up Tax Rules: Guided Rule Entry for general information about setting up tax rules.
The E-Business Tax tax determination process uses your tax configuration setup and the transaction details to determine:
Which taxes apply to the transaction.
How to calculate the tax amount for each tax that applies to the transaction.
E-Business Tax tax rules let you create a tax determination model to reflect the tax regulations of different tax regimes and the tax requirements of your business. You can create a simple tax model that makes use of default values without extensive processing, or a complex tax model that considers each tax requirement related to a transaction before making the final calculation. During execution of the tax determination process, E-Business Tax evaluates, in order of priority, the tax rules that have defined against the tax configuration setup and the details on the transaction. If the first rule is successfully evaluated, the result associated with the rule is used. If not, the next rule is evaluated until either a successful evaluation or default value is found.
The E-Business Tax tax determination process is organized into rule types. Each rule type identifies a particular step in the determination and calculation of taxes on transactions.
The tax line determination process uses the information of the transaction header and transaction line to determine the tax lines.
To set up a tax rule using the expert rule entry:
Navigate to the Tax Rules page.
Enter the configuration owner, tax regime code, and tax.
E-Business Tax displays the rule type HGrid, with the current list of tax rules and default values already defined for the tax, if any.
If applicable, set the default value for the applicable rule type. E-Business Tax uses this value if no rule provides a value that applies to the transaction.
Navigate to the Create Tax Rule: General Information page by selecting the Expert Rule Entry icon for the rule type that you want.
If applicable, enter tax law information:
Enter a code to identify the reference to the tax authority tax law on which the tax rule is based. Create a coding method that clearly identifies the tax laws that you want to reference.
Enter a description of the tax law reference.
Optionally check the "Use the Tax Law Reference and Description as Tax Rule Code and Rule Name" box to use the tax law values as the rule code and name.
If you did not use tax law information, enter a rule code and name.
Enter the effective date range for this tax rule.
You must enter a date range that is within the date range of the tax regime and tax.
If applicable, enter additional context information for the rule type:
If this is a Determine Tax Rate rule, enter the tax status code.
If this is a Determine Recovery Rate rule, enter the recovery type.
If this tax rule applies to specific transactions only, select the event class category for this tax rule:
Event Class - The tax rule applies to transactions of the application that you select. You can apply the tax rule either to a Payables or Receivables application, or to a source application that feeds data into Payables or Receivables for tax processing. See: Tax Handling on Transactions for more information.
You can optionally apply the tax rule to one event class only within the application.
Tax Event Class - The tax rule applies to transactions of the tax event class that you select.
See: Managing Event Class Settings for a description of the event class categories and settings.
If this tax rule applies to a specific geographical location only, enter the geographical information:
Enter the transaction location type to consider for this tax rule. E-Business Tax uses the geography of the location type to evaluate the rule applicability.
If you use a TCA master reference geography type, enter the parent geography type and parent geography name.
Enter the geography type and name to use for this tax rule. You can enter a TCA master reference geography type or a tax zone.
See: Rule Order and Rule Evaluation for a description of how E-Business Tax evaluates tax rules for specific transactions and locations.
Enter or create the determining factor set to use with this tax rule.
See: Setting Up Tax Determining Factor Sets for information about creating a determining factor set.
Navigate to the Create Tax Rule: Rule Conditions page.
Enter the tax condition sets for this rule:
Select a tax condition set radio button to display its fields.
Enter or update the tax conditions. You can update the tax condition set if it is not used in any other rule.
See: Setting Up Tax Condition Sets for information about creating a tax condition set.
Note: You can only use fiscal classification codes in tax conditions that are within the effective period of the tax rule.
Enter the tax rule result for each tax condition set. If you associated tax or legal justification reporting types with tax rules, enter any applicable tax reporting codes after process result.
See: Process Checklist for Tax Determination and Tax Calculation for an explanation of the available rule results for each rule type.
Enter the order in which to evaluate each tax condition set.
The condition set with the lowest number is evaluated first. If this condition set is not true for the transaction line, then E-Business Tax evaluates the next highest condition set until a true condition result is found.
If no condition sets are evaluated as true, then the tax rule does not apply to the transaction line. E-Business Tax evaluates the next tax rule, if there is one.
Navigate to the Create Tax Rule: Rule Order page.
Enter a number to indicate the order in which to consider this tax rule within this rule type for evaluation.
The rule with the lowest number is evaluated first. If this rule is not true for the transaction line, then E-Business Tax evaluates the next highest rule.
Note: The actual order in which E-Business Tax evaluates the rules belonging to a rule type also depends on the additional context information defined for the rule, if any. See: Rule Order and Rule Evaluation for more information.
Enable the tax rule to use it in tax determination.