Place Information

All tax regimes need information about place or geography. Use place information for determining factors within tax rules in the tax determination process. Also, use place information while defining tax regimes, tax geography, and tax jurisdictions.

Information about place or geography is required to determine:

• Where the tax is applicable

• What tax rules to apply to a transaction when goods are:

  • Delivered to another country

  • Delivered inside or outside an economic region such as, the European Community (EC)

• What the specific regions are, such as:

  • City, county, and state for US Sales and Use Tax

  • Provinces in Canada

To support these requirements, define and use geography regions and tax zones. Geography regions and tax zones provide a conceptual model to use place information on transactions and information related to the transaction.

The following types of places are supported for tax purposes:

• Country information

• Geography elements

• Tax zones

Country Information

Country is a required field in all of the tax-related address locations. The country fields are supported by a predefined ISO 3166 country name and two-character country code. For more information on country names and codes, see http://www.iso.org/iso/english_country_names_and_code_elements.

You don't set up a country as a specific geography level in Trading Community Model geography because country is an inherent part of all tax-related address locations.

Tip: Use the highest level of geography, typically country, wherever possible.

Geography Elements

Define geography elements as part of Trading Community Model geography. They control the use of geography and addresses. Oracle Fusion Tax commonly uses the following features:

• Geography or tax zones

• Geography levels

• Address controls

• Geography name referencing

Use geography levels to define the levels of geography that are used within a country. It's only relevant elements of the address that are referenced for tax purposes. For example, state, county, and city are used for US Sales and Use Tax. County in the UK isn't relevant from a tax perspective and therefore, you don't need to set it up.

Tip: When address elements are needed for tax purposes, such as county and city for US Sales and Use Tax, set these address levels as mandatory within Trading Community Model geography. This ensures that these elements are always present on all applicable addresses. Setting address levels as mandatory also ensures that amended or newly applicable addresses are validated and that the level is either derived or entered.When you're setting up migrated addresses ensure that they're compliant with the mandatory levels being present. This should be validated and any address levels added as part of the migration process.

The geography name referencing process within Trading Community Model geography links specific addresses to the levels defined in the geography setup. This process is typically automatic. However, when you encounter issues, you may need to trigger this process to ensure that all addresses are correctly linked to their applicable levels.

Tax Zones

Use the tax zone functionality when you need to identify a group of geography elements while calculating tax. Tax zones are defined as part of Trading Community Model geography.

For example, in the EC it's important to know whether goods and services are being delivered within the EC. Use the tax zone functionality to create a tax zone, which defines the membership to the EC as well as, the dates on which a country became the member.

Tip: Create a generic tax zone so that you create a tax zone type that can be used in multiple situations. For example, for a tax zone type needed to identify EC, create a generic tax zone type for all economic communities, which can later be used in other situations where economic communities or trade agreements affect tax determination.You can also use the tax zone functionality to group postal codes to provide useful groupings that can identify some higher-level tax regions such as, cities or counties.