How You Use Tax Setup Components in Tax Determination Process
The tax determination process uses your tax configuration setup and the details on the transactions to determine which taxes apply to the transaction and how to calculate the tax amount.
How Tax Is Calculated Using Tax Setup Components
You must complete a certain number of setup tasks for each step of the tax determination and tax calculation process. The number and complexity of your setups depends upon the requirements of the tax authorities where you do business.
This table describes the order in which Oracle Fusion Tax calculates taxes on transactions. You can use this table to:
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Review the details of each process.
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Identify the setups that you need to complete in each step of tax determination and calculate process.
Order |
Process Name |
Activities |
Components Used and Rule Type (if Applicable) |
---|---|---|---|
1 |
Determine Applicable Tax Regimes and Candidate Taxes (preliminary step) |
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2 |
Determine Place of Supply and Tax Jurisdiction |
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3 |
Determine Tax Applicability |
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Tax rule: Determine Tax Applicability and the default value for applicability for the tax. |
4 |
Determine Tax Registration |
Determine the party type to use to derive the tax registration for each applicable tax. |
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5 |
Determine Tax Status |
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Tax rule: Determine Tax Status, or the default value defined for the tax. |
6 |
Determine Tax Rate |
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7 |
Determine Taxable Basis |
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8 |
Calculate Taxes |
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If tax recovery is applicable |
Determine Recovery Rate |
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