Transaction Tax Thresholds

During transaction tax calculation, use threshold controls to apply minimum or maximum limits to tax rates, taxable amounts, or tax amounts if these limits are enforced by tax authorities.

Define thresholds for a:

• Tax if these limits are evaluated for all transactions to which that tax applies

• Tax jurisdiction if these limits are applied to all purchases and sales that occur in that tax jurisdiction

• Tax rule if these limits are only applicable in certain circumstances

Threshold attributes and processing include:

• Threshold type

• Threshold basis

• Threshold range

• Evaluation order

Threshold Type

Specify the minimum or maximum limit for a tax rate, taxable amount, and tax amount to meet the needs of the tax regulation. You can create multiple threshold types for a date period.

Threshold Basis

Select the threshold basis to comply with tax authority requirements of imposing limits for taxable or tax amounts either for the entire document or for each item line of the document. You can't define the same threshold type for both line and document in the same period.

Threshold Range

Specify the minimum, maximum, or both minimum and maximum values for the threshold type. Enter the values in the tax currency. If the transaction currency is different from the tax currency then the thresholds are converted to transaction currency for evaluation.

If the tax rate determined for a tax line is:

• Within the range of the minimum and maximum rate threshold, then the tax rate is retained

• Lower than the minimum value, then the tax rate is replaced with zero

• More than the maximum threshold value, then the tax rate is replaced with the maximum threshold value

The same approach applies to the taxable and tax amount thresholds.

Evaluation Order

If you define more than one threshold type for a tax, the evaluation order is:

• Tax rate thresholds

• Taxable basis

• Tax amount

If a tax rate rule is successfully evaluated for a tax line, then:

• If there are tax rate thresholds values defined for the tax rule, they are considered for tax rate threshold evaluation.

• If there are no threshold values defined for the tax rule, the application determines if there are threshold values defined for the tax jurisdiction. If so, they are considered for tax rate threshold evaluation.

• If there are no threshold values defined for the tax jurisdiction, the application considers the threshold values defined for the tax for tax rate threshold evaluation.

If the threshold basis is Document, then the threshold values defined for the tax rules aren't considered

The same approach applies to taxable basis and tax amount thresholds. The only difference is the tax rule considered, which are the taxable basis rules and tax calculation rules, respectively.

Other considerations in threshold evaluation are if the:

• Line amount is inclusive of tax, then the taxable basis and tax amount thresholds aren't considered for the inclusive tax lines.

• Tax line is updated, then the updated values are considered and the thresholds values aren't applied.

• Tax amount is overridden, then the updated amount is considered and the threshold values aren't applied.