1. Using Financials for the Americas
  2. Price Thresholds During Tax Calculation

Price Thresholds During Tax Calculation

Certain taxes in Brazil require applying of notified thresholds on prices of items quoted on a transaction. You can configure taxable basis formula in Oracle Tax to configure handling of price thresholds for tax calculation.

In the taxable basis formula, if the country associated with the tax regime is Brazil, then an option is enabled for specifying the price threshold information. Use these transaction parameters to configure the taxes:

  • Ship-from geography

  • Ship-to geography

  • Product fiscal classification

  • Transaction business category

  • Intended use

You can specify the order of evaluation for these transaction parameters.

You can also define price threshold values through:

  • Fixed price: If the fixed price option is set, then the specified price is used as item price for deriving the taxable basis amount for the transaction line.

  • Minimum or maximum threshold options: If minimum or maximum thresholds option is used, then the item price is compared against the given range of values and appropriate value is considered if it goes beyond the given range.

For example, if the item price on a transaction is quoted as 28 USD and the minimum threshold value is set as 32 USD, then the minimum threshold value gets applied (that is, 32 USD, instead of 28 USD) for calculating the taxable basis amount. However, if the item price is quoted as 48 USD and the maximum threshold value is set as 45 USD, then the item price is set at the maximum specified value (that is, 45 USD, instead of 48 USD).

You can define price thresholds with minimum and maximum values at the tax or jurisdiction level using the threshold basis as Line and type as Unit price. However, during the evaluation process, values notified in the taxable basis formula will always take first precedence. Also, handling of minimum threshold value derived from the threshold controls of tax or jurisdiction is different from the approach used when it is derived from taxable basis formula. In this case, if the item price is less than the specified minimum threshold value, then it is considered as 0.00 USD while calculating the taxable basis amount.