Tax Groups
Use the Tax Groups window to group multiple, conditional taxes under one name. Tax groups allow countries with multiple taxes to automatically calculate each applicable tax within Receivables and Oracle Order Entry. For example, Canada has two types of taxes: Goods and Services Tax (GST) and Provincial Sales Tax (PST). GST is a federal sales tax applied for all shipments, and it has one standard tax rate. PST is applied at the provincial level and has a different tax rate for each province. Similarly, India has multiple taxes. In India, both Government and State Sales Tax is applicable, the state tax rate is controlled by the ship-to address.
Tax groups let you conditionally include multiple tax codes on each order and invoice line. Using tax groups, specific tax codes can be conditional on the ship-to Province, State, Country, or Tax Classification of the bill to customer.
The Tax Classification can also be used to calculate additional taxes, such as the Spanish Recargo de Equivalencia (RdE). In Spain, RdE is controlled by the tax classification field of the bill-to customer site. To use the tax classification field, first create a new lookup value under the lookup type 'Tax Classification.' Then assign each bill-to customer site this Classification. Finally, define a Tax Group with standard VAT and the second tax dependent on the Tax Classification.
Tax groups also support compound tax rates within the group. Compound Tax can be achieved by setting up an order of precedence among the tax codes in the group. Once set up, the compounding of multiple taxes within the group is calculated automatically.
You can also create tax groups that include one or more inclusive tax codes. Inclusive tax codes let you include the tax for a transaction line in the line amount, rather than displaying these amounts separately. A tax group can contain both inclusive and exclusive tax codes, but you cannot assign more than one inclusive tax code for the same ship-to location, classification (e.g. country, province, or state) and effective date range. When you save a new tax group, Receivables verifies that it does not violate any of these requirements.
See: Tax Codes and Inclusive Tax in the Calculating Tax essay.
Note: If you override a tax code, Receivables preserves the override across all updates to the invoice. Similarly, changing the ship-to address or the line item could change the default tax code.
Prerequisites
To define a tax group:
1. Navigate to the Tax Groups window.
2. Enter the Group Code name for this tax group.
3. Enter a Group Name for this tax group. The default is the Group Code, but you can change it.
4. Enter a Description of this tax group (optional).
5. Enter a range of Effective dates for this tax group. The default start date is the current date, but you can change it. If you do not enter an end date, this tax group will be active indefinitely.
6. Enter a Tax Code or select one from the list of values. You can only select tax codes whose effective dates are within the effective dates for this tax group. For example, if the effective date for your tax group is from 01-JAN-97, you cannot enter a tax code whose start date is before 01-JAN-97, even if the tax code has no end date (this is because an end date could be added to the tax code later to make it inactive, thereby making it invalid within the tax group).
When you enter a tax code, Receivables displays the corresponding tax code Name that will appear on your customer's invoices.
Note: You can only assign a tax code to one tax group. To implement multiple tax groups, create a different tax code, one for each group.
7. To limit the dates in which this tax code will be active within this tax group, enter an end date in the 'Effective Dates: To' field. The default Effective Date: From is today's date, but you can change it. If you do not enter an end date, this tax code will be active within this tax group indefinitely.
Note: The Name, Tax Rate, and Sign for this tax code are for display only. You enter these values in the Tax Codes and Rates window.
Note: If this is an inclusive tax code, the Inclusive Tax check box is checked. You cannot change this setting. See: Tax Codes and Rates.
8. If this is not an inclusive tax code, enter a Compounding Precedence number (optional). This indicates which tax code Receivables will look at first when compounding taxes. You cannot compound inclusive tax codes.
9. Open the Condition alternative region, then enter a Classification for this tax code (optional). If this tax code will be used for shipments to a specific Province, State, or Country, select a Classification from the list of values. If this tax code will only be used for transactions billing to a specific classification of customer site, select this classification from the Tax Classifications that you defined in the Receivables QuickCodes window. To always use the tax rate within the selected group, leave this field blank.
10. If you entered a Classification, enter a Ship To Location, or select one from the list of values.
11. Repeat steps 6 through 10 for each tax code to add to this tax group.
See Also
Calculating Tax
Implementing Canadian Sales Tax
Tax Inclusive
Define tax codes and rates