Create Tax Rules

To create a new tax rule, you have to create a fiscal classification code, apply tax rules, configure owner tax options, and update the business unit tax profile. This must be done before you can assign the tax rule to a legal entity. After completing these steps, the tax rule will be ready to use.

Create a user-defined fiscal classification code

Here are the steps to create a new user-defined fiscal classification code:

1. Go to the Setup and Maintenance section in the Navigator.
2. Locate and select the Manage Transaction-Based Fiscal Classifications task.
3. Open the Manage Transaction-Based Fiscal Classifications UI.
4. Update the value to User-Defined Fiscal Classification Codes.
5. Click on the Create icon.
6. Provide a new code that can be used as a tax determinant for withholding tax rules on the Create User-Defined Fiscal Classification Code page.
7. Save and close the window.

Create a tax applicability rule

Here’s how you can create a new tax applicability rule:

1. Go to the Setup and Maintenance section in the Navigator.
2. Locate and select the Manage Tax Rules task.
3. Open the Manage Tax Rules UI.
4. Select the Withholding Tax option and choose Tax Rule Type Tax Applicability Rules.
5. Click on the create icon.
6. Fill in the details for the new tax rule.
7. Click on Create in the list of values for the Tax Determining Factor Set, which opens the Create Tax Determining Factor Set page.
8. Define a new tax determining factor set based on the user-defined fiscal classification code.
9. Click OK to save the new record and automatically select it as the tax determining factor set for the tax rule.
10. Proceed to the next step.
11. Select Create from the list of values for the Tax Condition Set field, opening the Create Condition Set UI.
12. Enter a new condition set that utilizes the newly created user-defined fiscal classification value.
13. Click OK to save the condition set, which is automatically selected as the tax condition set for the tax rule.
14. Click Save and Next.
15. Enable the new tax rule by checking the Enabled checkbox and submit it to complete the creation of the tax applicability rule for withholding tax.

Create Configuration Owner Tax Options

Here’s how you can create a configuration owner tax option:

1. Go to the Setup and Maintenance section in the Navigator.
2. Locate and select the Manage Configuration Owner Tax Options task.
3. In the Manage Configuration Owner Tax Options UI, click on the create icon to start a new record.
4. Select the Withholding Tax option.
5. Choose the first-party legal entity as the configuration owner for the tax options.
6. Enter the processing controls for the standard invoice and prepayment invoice event classes.
7. Since withholding tax in Italy is required to be created at the time of payment to the supplier, set the tax calculation point as Payment for both event classes.
8. Save the changes made to the tax options.
9. Close the Manage Configuration Owner Tax Options UI.

Update the Business Unit Tax Profile

Here are the steps to update your business unit tax profile:

1. Go to the Setup and Maintenance section in the Navigator.
2. Locate and select the Manage Party Tax Profiles task.
3. In the Manage Party Tax Profiles UI, modify the search option to Business Unit Tax Profile.
4. Search for the specific Business Unit by its name.
5. Click on the edit icon to open the Edit Business Unit Tax Profile UI.
6. On the Controls and Defaults tab, enable the option Use legal entity withholding tax subscription.
7. Save the changes made to the Business Unit Tax Profile.
8. Close the Edit Business Unit Tax Profile UI. After enabling the subscription, you will be able to see the corresponding start date.

By following these steps, you have completed the example of a possible minimum setup for withholding tax in Israel. Please note that this setup serves as a demonstration and should be customized based on the specific requirements and regulations of your business.