Considerations for Specifying Third-Party Tax Profile Options

Set up third-party tax profiles for your customers and customer sites and suppliers and supplier sites. How you set up your third parties can impact the tax calculation on your transactions.

The third-party tax profile consists of:

• Defaults and controls

• Tax registrations

• Tax exemptions (for customers and customer sites only)

• Party fiscal classifications

• Tax reporting codes

Banks are also considered third parties. When a bank is created, the tax registration number specified on the bank record is added to the party tax profile record in Oracle Fusion Tax. You can't modify the party tax profile for a bank as it's view only. You can only modify the bank record.

Defaults and Controls

The following table describes the defaults and controls available at the third-party tax profile level:

Option	Description
Allow tax applicability	Automatically calculate taxes for this party whenever the party acts as a supplier. You can set this option, for example, for customers that also act as suppliers on transactions.
Allow offset taxes	Calculate and record third-party Payables tax liabilities for reverse charges, self-assessments, and Consumer's Use tax (US). You must also perform the related tasks for setting up offset taxes for the taxes involved in transactions for this third party or third-party site. This includes enabling the Set as offset tax option at the tax level and selecting the offset tax basis in the configuration owner tax options.
Rounding Level	Perform rounding operations on the: Header: Applies rounding to calculated tax amounts once for each tax rate per invoice. Line: Applies rounding to the calculated tax amount on each invoice line.
Rounding Rule	The rule that defines how the rounding must be performed on a value involved in a taxable transaction. For example, up to the next highest value, down to the next lowest value, or nearest. Note: If you defined a rounding precedence hierarchy in the configuration owner tax option settings for the combination of configuration owner and event class, Oracle Fusion Tax considers the rounding details in the applicable tax profile.
Set Invoice Values as Tax Inclusive	This third party or third-party site intends to send or receive invoices with invoice line amount inclusive of the tax amount. Note: This option overrides the tax inclusive handling setting at the tax level, but not at the tax rate level.
Country, Registration Number, and Tax Registration Type	Set defaults for all tax reporting for tax registrations of this third party or third-party site. You must complete the tax registration setup.

Tax Registrations

Optionally, set up tax registrations for your customers and suppliers, as necessary, to support specific tax regulations or reporting requirements. You must set up a separate tax registration to represent each distinct registration requirement for a first party. Oracle Fusion Tax uses tax registrations in tax determination and tax reporting.

Tax Exemptions

Set up tax exemptions for your third-party customers and customer sites. To set up tax exemptions for a third party, you must complete the appropriate tax exemption setup for the tax regimes and taxes concerned. You can have more than one tax exemption for the same customer and tax regime combination. For example, one tax exemption applies to a specific tax, while other tax exemptions apply to specific products for specific tax rates and tax jurisdictions. Then, at transaction time, Oracle Fusion Tax applies the most specific tax exemption to the transaction.

Party Fiscal Classifications

If applicable, associate third-party fiscal classification codes with this party. The party fiscal classification codes you enter become part of tax determination for invoices associated with this party. Specify start and end dates to control when these fiscal classifications are applicable for this party and transaction.

Tax Reporting Codes

Set up tax reporting types to capture additional tax information on transactions for your tax reports for your third parties. Depending on the tax reporting type code, you either enter or select a tax reporting code for this party. Specify start and end dates to control when these tax reporting codes are applicable.