Tax Rules Processing Order

During tax determination processing, Oracle Fusion Tax considers the tax rules belonging to each rule type in the order that you defined them.

How Tax Rules Are Evaluated

The sequence of tax rules evaluation is:

Generally, you define tax rules for a configuration owner, tax regime, tax, and rule type. When a tax regime is subscribed to an entity as:
- Common configuration, all the tax rules you defined for the Global configuration owner are considered for rule evaluation.
- Party-specific configuration or Parent first-party organization, then only the tax rules you defined for that entity or the reference entity are considered.
- Common configuration with party overrides then all the tax rules you defined for the entity as well as for the Global configuration owner are combined and evaluated in the order specified.
If the effective dates of a tax rule does not cover the transaction date or if it is disabled, then the tax rule is ignored during rule evaluation.
From the previous listed rules, if one or more tax rules belonging to a tax regime, tax, and rule type are defined for a normal event class or tax event class, then such rules are evaluated first by normal event class and then by tax event class regardless of the overall rule order. If more than one event class rule is listed for a rule type, then such set of rules are further sequenced according to their corresponding rule orders
Further to the previous sequencing, if one or more tax rules belonging to a tax regime, tax, and rule type are defined for a tax event class, then such rules are next sequenced for evaluation, regardless of the overall rule order. If more than one tax event class rule is listed for a rule type, then the set of rules are further sequenced according to their given rule order.
Finally, the tax rules belonging to a tax regime, tax, and rule type are listed according to their defined rule order for evaluation.

While processing each tax rule in the evaluation sequence, the tax determination process evaluates the condition sets defined within a tax rule. This is according to the defined condition set order sequence. If a condition set criteria doesn't match with the transaction details, the tax determination process evaluates the next condition set. If none of them match with the transaction details, the next rule within the ordered rule set is considered. If a condition set criteria matches with the transaction details, the tax determination process considers the rule result defined against that condition set. The tax rule is then marked as successfully evaluated. If none of the defined rule conditions match the transaction details, then the tax determination process considers the default result defined for that tax.