1. Implementing Tax
  2. Tax Registrations

Tax Registrations

A tax registration contains information related to a party's transaction tax obligation with a tax authority for a tax jurisdiction where it conducts business. In some cases, a single location may need to file multiple registrations.

Set up tax registrations for your first-party legal reporting units and your third-party customers and customer sites, and suppliers and supplier sites.

Registering the details of a business with the relevant tax authorities is a key legal requirement in many countries. A unique tax registration number is generally assigned to the parties registering with the tax authorities. It is used as a basis for referencing and tracking the tax implications on that party. To enable this process, the registration numbers of the parties involved in a transaction are generally referred to in tax documents like invoices and tax returns. In some cases, the tax determination and its administration is also dependent on the nature of the registration of the parties involved in a transaction. For example, the requirements associated with intra-European Union (EU) reverse charge.

Setting Up a Tax Registration

You must set up a separate tax registration to represent each distinct registration requirement for a first party. You optionally set up tax registrations for your third parties, as necessary, to support specific tax regulations or reporting requirements.

You can define tax registrations at three different levels of detail. At the:

  • Tax regime level: The tax registration is used for all taxes and tax jurisdictions within the tax regime.

  • Tax level: The tax registration is used for all tax jurisdictions where the tax regime and tax are applicable.

  • Tax jurisdiction level: The tax registration is applicable for the locations covered under the tax jurisdictions defined for the tax regime, tax, and tax jurisdiction.

For each tax that you create, you must define either a default tax registration or a tax rule for the rule type Determine Tax Registration. If a party has more than one tax registration for the same tax regime, then the tax determination process considers the tax registrations in the order: tax jurisdiction; tax; and tax regime.

For some countries, the application performs a validation of the registration number you enter per the country algorithm.

You can define tax registrations as implicit. For example, the party isn't formally registered with the tax authority, but the party is considered to meet one or more requirements for reporting taxes because of the level of business conducted, typically a minimum presence in the country and a minimum revenue threshold. Also, you can define the tax registration with a status of not registered if the party isn't registered for the applicable tax, but you want to use it as a tax condition to process the tax rules. Similarly, you can use user-defined values and statuses, such as registered in EU but not UK, to facilitate certain tax conditions. Apart from the core tax registration information, you define additional details to facilitate tax processing. The invoice control attributes such as self-assessment and tax inclusiveness play a key role in tax processing. At transaction time, the values set at the tax registration level override the values set at the party tax profile level.

Using Tax Registrations in the Tax Determination Process

The Determine Tax Registration process determines the party whose tax registration is used for each tax on the transaction, and, if available, derives the tax registration number. Once the process identifies the tax registration or registrations, it stamps the transaction with the tax registration numbers.

You can use the registration status to define various tax rules. For example, if the tax is applicable only if the supplier is registered, define the tax applicability rule as follows:

  • Determining factor class = Registration

  • Tax class qualifier = Ship-from party

  • Determining factor name = Registration Status

  • Operator = Not equal to

  • Value = Registered

  • Result = Not applicable

On the detail tax lines, the tax determination process stamps two registration numbers. One is for the headquarters, the main legal reporting unit of the legal entity of the document. The other is for the party or party site identified by the tax registration rule. For example, if the registration rule has identified ship to as a party, then the tax determination process stamps the registration number of the ship-to party on the transaction.

The tax determination process also considers these details of the derived tax registration for each tax:

  • Tax inclusive handling: The inclusive option set at the tax registration level for the party identified by the tax registration rule overrides the inclusive option set at the tax or party tax profile level for the tax line.

  • Self-assessment (reverse charge) setting: The tax determination process considers the tax line as self-assessed if the Set as self-assessment (reverse charge) option is selected at the tax registration level for the party identified by the tax registration rule.

  • Rounding rule: The rounding rule set at the tax registration level for the party identified by the tax registration rule overrides the rounding rule set at the tax or party tax profile level for the tax line.

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