Example of Transaction Fiscal Classifications
A transaction fiscal classification groups multiple transaction business categories into a single transaction fiscal classification that is used with tax rules. This helps in triggering all the applicable transaction business categories with relevant tax rules.
The following scenario illustrates how you can use transaction fiscal classifications for tax determination and reporting in Brazil.
Scenario
In Brazil, you need to identify a transaction correctly to be able to report and determine the correct applicable taxes. Create specific transaction business categories as children of the sales transaction. The transaction business categories include:
Level |
Fiscal Classification Code |
Fiscal Classification Name |
Country |
Start Date |
---|---|---|---|---|
1 |
SALES_TRANSACTION |
Sales Transaction |
Not applicable |
1-Jan-1951 |
2 |
INTERSTATE MNFTRD FOR SALE |
Interstate Manufactured for Sale |
Brazil |
The earliest transaction date or start date of tax. |
2 |
INTERSTATE MNFTRD FOR MANUFACTURE |
Interstate Manufactured for Manufacture |
Brazil |
The earliest transaction date or start date of tax. |
The tax rules that apply to sales transactions also apply to purchase transactions. In this case, you need equivalent set rules to represent the purchase side of the same transaction type. Therefore, create the following additional transaction business categories:
Level |
Fiscal Classification Code |
Fiscal Classification Name |
Country |
Start Date |
---|---|---|---|---|
1 |
PURCHASE_TRANSACTION |
Purchase Transaction |
1-Jan-1951 |
|
2 |
INTERSTATE MNFTRD FOR SALE |
Interstate Manufactured for Sale |
Brazil |
The earliest transaction date or start date of tax. |
2 |
INTERSTATE MNFTRD FOR MANUFACTURE |
Interstate Manufactured for Manufacture |
Brazil |
The earliest transaction date or start date of tax. |
In the given scenario, instead of creating separate tax rules for sales and purchase transactions, create a single transaction fiscal classification and link it to both the applicable sales and purchase transactions.
Create the following specific transaction fiscal classification with the relevant tax regime and transaction business category associations. In addition, create appropriate tax rules against this transaction fiscal classification.
Level |
Transaction Fiscal Classification Code |
Fiscal Classification Name |
Start Date |
---|---|---|---|
1 |
BRAZIL MNFTRD (O2C and P2P) FOR SALE |
Brazil Manufacture |
1-Jan-1951 |
At transaction time, the tax determination process derives this transaction fiscal classification whenever you use related transaction business categories on the transaction.