Examples of Setting Up Determining Factor and Condition Sets

The following scenarios illustrate when you set up tax determining factor sets and condition sets to meet your tax requirements.

Scenario

There is a tax requirement for a state tax, Intrastate A, to apply to any intrastate transactions for a specific product category of items. When defining this tax, the typical transaction scenario is that this tax isn't applicable. So when defining this tax, the tax applicability default value is Not Applicable. Create a tax rule for the exception scenario when this particular product is sold in an intrastate transaction.

Create the determining factor set as follows:

Determining Factor Class	Class Qualifier	Determining Factor Name
Geography	Ship from	State
Product noninventory linked	Level 2	Product Category

Create the condition set as follows:

Determining Factor Class	Class Qualifier	Determining Factor Name	Operator	Value
Geography	Ship from	State	Equal to determining factor	Ship to
Product noninventory linked	Level 2	Product Category	Equal to	Product A

Define the set with the result of Applicable. If the conditions defined match the respective transaction values, the tax rule evaluates to true and the tax is considered applicable. When the conditions aren't met and if there are no other condition sets or tax rules to evaluate, the determination process looks to the default value of Not Applicable as the result and the tax is not calculated.

Scenario

Determining factors represent the and part of the evaluation process. The determination process evaluates every element of the determining factor class unless it is set to ignore in the condition set definition. This feature allows for reusability of determining factor sets with some flexibility not requiring the use of all determining factors in each tax rule definition. The condition set is the or condition of a tax rule when there are multiple condition sets defined.

For example, a tax law may indicate that a specific state tax is applicable to certain products or specific services from specific supplier types that are considered to have environmental impacts. Analysis determines there are two separate supplier party classifications and one product category defined that meet the requirement for applicability.

Create the determining factor set as follows:

Determining Factor Class	Class Qualifier	Determining Factor Name
Party fiscal classification	Ship from	Party Fiscal Classification Type Code
Product noninventory linked	Level 2	Product Category

Create the condition set 1 as follows:

Determining Factor Class	Class Qualifier	Determining Factor Name	Operator	Value
Party fiscal classification	Ship from	Party Fiscal Classification Type Code	Equal to	Category A
Product noninventory linked	Level 2	Product Category	Equal to	Product A

Create the condition set 2 as follows:

Determining Factor Class	Class Qualifier	Determining Factor Name	Operator	Value
Party fiscal classification	Ship from	Party Fiscal Classification Type Code	Equal to	Category B
Product noninventory linked	Level 2	Product Category	Equal to	Product A

The tax determination process evaluates all of the determining factors in the determining factor set: party fiscal classification and product noninventory linked. However, using multiple condition sets offer an or evaluation to the tax rule. The tax determination process evaluates either of the following:

• Party fiscal classification type code is equal to category A and product category is equal to product A

• Party fiscal classification type code is equal to category B and product category is equal to product A

You define a result for each condition set that is applied if the condition evaluates to true. Condition sets are numerically ordered to specify the sequence in which they need to be evaluated during rule processing. Optionally, you can disable them for processing depending on a change in tax law.

Note: It is important to carefully evaluate condition set order since a change in order can impact the result of a tax rule.

Also, numerically order tax rules defined for a rule type to specify the sequence in which they are to be evaluated during the rule processing. The rule order, along with the specific applicability criteria like event class, defines the rule evaluation sequence for a rule type.