47 Calculating taxes

You can configure Oracle Monetization Cloud to calculate the amount of taxes that your customers owe when they purchase and use your products and services.

Topics in this document

Calculating taxes

To specify how Oracle Monetization Cloud calculates the taxes your customers owe, you do the following:

  1. Create one or more tax codes, which define the tax rate.

  2. Define one or more tax suppliers.

  3. Specify how to handle taxes when you:

    • Create charge offers. In a charge offer, you specify the tax supplier. In a charge, you specify the tax code to use and when to apply taxes (when the charge is calculated or during billing). See When to calculate taxes.

    • Create a billing-time discount. When you add a billing-time discount, you can specify the tax code to use and when to apply taxes (never or during billing). See Applying taxes to billing-time discounts.

    • Create an account. For example, you can specify that an account is exempt from city taxes. See Changing your customer's tax settings.

    • Perform an adjustment, dispute, or settlement on a customer's bill. You can choose whether to apply taxes when you perform these actions. Taxed adjustments, disputes, and settlements effectively reverse whatever tax was levied on the original item. See Adjusting balances and Managing disputes and settlements.

Creating tax codes

Tax codes define the amount or percentage of tax to apply to a charge, and the tax jurisdiction (state or local). When you create pricing components, you specify the tax code to apply to charges. For example, when you create a charge offer for a phone service, you might use different tax codes for the purchase fee and the monthly subscription fee.

You can create tax codes to support different types of tax calculation:

Creating simple tax codes

Simple tax codes apply a rate to a charge, independent of location.

Use Business Configuration to create simple tax codes. Select Finance, the Tax Code tab, the Simple tab, and then Edit.

Enter the following information about your simple tax code:

  • The tax code name; for example, usage or VAT. The name is displayed in Offer Design.

  • The tax rate type: amount or percentage.

  • The tax rate, such as 5% or 0.08.

  • The GL ID for the tax code. Each tax code can be associated with only one GL ID. Each tax code must use a different GL ID.

  • (Optional) The dates during which the rate applies. You can define multiple rates for a tax code with different validity dates for each rate.

Creating location-based tax codes

To create location-based tax codes:

  1. Create a comma separated value (CSV) file that defines the locations and tax rates. A CSV file can be a text file or a spreadsheet.

    One CSV file can contain data for only one tax code.

  2. Upload the CSV file. In Business Configuration, select Finance, the Tax Code tab, the Location Based tab, and then Import CSV.

    When you import the CSV file, you must enter the GL ID for the tax code. One tax code can be associated with only one GL ID. Also, each tax code must use a different GL ID.

About the CSV file

The CSV file includes the tax code name, location, and rates. The first row defines the fields that are included in the file. The other rows specify the values of those fields, including the rates for each locale. For example, to define a tax code named usage with rates for city and state taxes:

TAXCODE,CITY,STATE,COUNTRY,ZIPCODE,TAX_JUR_CITY,TAX_JUR_STATE,TAX_JUR_COMBINED
usage,SACRAMENTO,CA,USA,94203,0.01,0.07,0.08

In this example, the city tax rate is 0.01, the state tax rate is 0.07, and the combined city and state tax rate is 0.08.

The table below describes the fields used in the CSV file. Each row must contain the required fields and at least one tax jurisdiction (TAX_JUR) field.

Note:

You must provide a TAX_JUR_COMBINED value for each row of your CSV file if you configure Oracle Monetization Cloud to use the highest or lowest rate when it finds multiple tax rates for a charge.
Header Type Description
TAXCODE String The name of the tax code
CITY String The name of the city (required)
STATE String The name of the state or province (required)
COUNTRY String The name of the country (required)
ZIPCODE String The postal code (required)
TAX_JUR_FED Decimal The tax percentage for the federal tax jurisdiction
TAX_JUR_STATE Decimal The tax percentage for the state tax jurisdiction
TAX_JUR_COUNTY Decimal The tax percentage for the county tax jurisdiction
TAX_JUR_CITY Decimal The tax percentage for the city tax jurisdiction
TAX_JUR_SEC_COUNTY Decimal The tax percentage for the secondary county tax jurisdiction
TAX_JUR_TERRITORY Decimal The tax percentage for the territory tax jurisdiction
TAX_JUR_SEC_STATE Decimal The tax percentage for the secondary state tax jurisdiction
TAX_JUR_DISTRICT Decimal The tax percentage for the district tax jurisdiction
TAX_JUR_SEC_FED Decimal The tax percentage for the secondary federal tax jurisdiction
TAX_JUR_COUNTY_DISTRICT Decimal The tax percentage for the county district tax jurisdiction
TAX_JUR_CITY_DISTRICT Decimal The tax percentage for the city district tax jurisdiction
TAX_JUR_OTHER Decimal The tax percentage for the other tax jurisdiction
TAX_JUR_COMBINED Decimal The combined tax jurisdiction
EFFECTIVE_DATE String The date the tax rate is effective
DESCRIPTION String A description of the tax code

Using tax codes from a taxation gateway

To use tax codes from a taxation gateway:

  1. Integrate Oracle Monetization Cloud with the taxation gateway. See Connecting to taxation gateways.

  2. Map tax codes in Oracle Monetization Cloud to the tax codes used by the taxation gateway.

Use Business Configuration to map internal tax codes to taxation gateway tax codes. Select Finance, the Tax Code tab, the External tab, and then Edit.

Enter the following mapping information:

  • The tax code name in Oracle Monetization Cloud; for example, usage or VAT.

  • The name of the taxation gateway vendor, such as Vertex O Series.

  • The tax code name used by the taxation gateway.

  • The GL ID for the tax code. One tax code can be associated with only one GL ID. Each tax code must use a different GL ID.

Creating tax suppliers

A tax supplier is the company or corporate division responsible for a given business transaction; for example, selling a product or service. It typically includes your corporate headquarters and branch offices. Tax rates differ depending on the location of the tax supplier.

You must create at least one tax supplier. If you create multiple tax suppliers, only one can be used as the default tax supplier.

Use Business Configuration to create tax suppliers. Select Finance, the Tax Suppliers tab, and then Edit.

Enter the following information about each tax supplier:

  • The name and description of the tax supplier.

  • The address of the tax supplier.

  • Whether the charge that the tax applies to is regulated or unregulated.

  • The states in which the tax supplier has a nexus. This determines which states the company must collect taxes for.

  • The geographic code that represents the tax jurisdiction for the tax supplier.

When to calculate taxes

You specify when to calculate taxes for each charge in a charge offer. You can choose to calculate taxes at these times:

  • During rating. Taxes are calculated when the event is rated, and they are added to the customer's account balance. This way, you always have an accurate reading of a customer's account balance at any time in the accounting cycle.

  • During billing. Deferring tax calculation until billing is run reduces rounding errors because all events of the same type are calculated together. For example, taxes are calculated on the total amount of usage fees rather than on individual usage events.