Regime to Rate Setup

Regime to rate setup contains the details of a tax regime, including all taxes, tax jurisdictions, tax statuses, and tax rates. You can update existing records or create new records at any point in the tax regime hierarchy.

Regime to rate setup tasks include:

• Tax regimes

• Taxes

• Tax jurisdictions

• Tax statuses

• Tax rates

Tax Regimes

Set up tax regimes in each country and geographical region where you do business and where a separate tax applies. A tax regime associates a common set of default information, regulations, fiscal classifications, and optionally, registrations, to one or more taxes. For example, in the US, create a Sales and Use Tax tax regime to group taxes levied at the state, county, and district levels. For the UK, create a tax regime for GB VAT.

Taxes

Set up details for the taxes of a tax regime. Each separate tax in a tax regime includes records for the tax statuses, tax rates, and tax rules that are used to calculate and report on the tax.

For example, for US Sales and Use Tax define a tax for each state, county, and city. For the UK, set up a tax for GB VAT.

Tax Jurisdictions

Set up tax jurisdictions for geographic regions or tax zones where a specific tax authority levies a tax. A tax jurisdiction specifies the association between a tax and a geographic location.

You also use tax jurisdictions to define jurisdiction-based tax rates. A tax jurisdiction tax rate is a rate that's distinct to a specific geographic region or tax zone for a specific tax.

For example, for US Sales and Use Tax create a county jurisdiction for every county in the parent geography type of State and in the parent geography name of California. For the UK, create a tax jurisdiction for the country of United Kingdom.

Tax Statuses

Set up the tax statuses that you need for each tax that you create for a combination of tax regime, tax, and configuration owner. A tax status is the taxable nature of a product in the context of a transaction and specific tax on the transaction.

For example, for US Sales and Use Tax create a tax status for standard and exempt. For the UK set up separate tax statuses for standard, zero, exempt, and reduced rates.

Tax Rates

Set up tax rates for your tax statuses and tax jurisdictions. For tax statuses, set up a tax rate record for each applicable tax rate that a tax status identifies. For tax jurisdictions, set up tax rate records to identify the tax rate variations for a specific tax within different tax jurisdictions.

For example, for US Sales and Use Tax create a tax rate for each tax jurisdiction (jurisdiction-based rates). For the UK, set up separate tax rates for standard, zero, exempt, and reduced (tax status-based rates).

Tax Recovery Rates

Set up tax recovery rate codes for the recovery types identified on the taxes within a tax regime. A tax recovery rate code identifies the percentage of recovery designated by the tax authority for a specific transaction.

For example, organizations that produce VAT-applicable goods and services are allowed to recover 100% of the VAT they pay on typical purchases. They would use a default 100% recovery rate.

Organizations, such as financial institutions, which create services that are exempt from VAT, are not able to recover VAT on their normal purchases. They would use a default 0% recovery rate.