Value Addition During Tax Calculation

Certain taxes in Brazil like ICMS-ST require you to estimate the final price of the product for evaluating the tax amount on a transaction.

You can estimate the final price by applying a value addition percentage, as notified by the tax authority, on the transaction amount. Oracle Tax lets you configure calculation of value addition percentage and tax through the taxable basis formula.

In the taxable basis formula, if the country associated with the tax regime is Brazil, then an option is enabled for specifying value addition information. Different value addition percentages can be configured based on these transaction parameters:

• 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 use base rate modifier as a generic value addition option. However, the taxable basis formula provides better control and flexibility as you can specify the required values through a single taxable basis formula based on various transaction parameters.