Manage Price Thresholds
In Brazil, the secretariat of the farm specifies the minimum taxable basis for ICMS, known as pauta for specific purposes.
The tax process uses the highest amount between pauta and the sales price for the taxable basis.
In Brazil, the secretariat of the farm specifies the minimum taxable basis for ICMS, known as pauta for specific products. The tax calculation process uses the highest amount between pauta and the sales price for the taxable basis.
Here is an example:
| Item | Quantity | Pauta Amount | Sales Price | ICMS Taxable |
|---|---|---|---|---|
| Water Bottle | 1 | 32.00 BRL | 28.00 BRL | 32.00 BRL |
| Oil Container | 1 | 45.00 BRL | 48.00 BRL | 48.00 BRL |
If the country associated with the tax regime is Brazil, you can enable the option to specify price threshold information. Configuration can be based on these transaction parameters:
-
Ship-from geography Ship-to geography
-
Product fiscal classification Transaction business category
-
Intended use
To create a taxable basis formula:
- Sign in as a Tax Manager.
- Click Navigator, Setup and Maintenance.
- Search for Manage Tax Formulas.
- Click Add.
- Click PriceThresholds.
- Select the Apply Price Threshold check box.
Price threshold types can be fixed price or minimum or maximum threshold. If the fixed price option is set, then the specified price is used as the item price to derive the taxable basis amount for the transaction line. If the minimum or maximum threshold option is used, then the item price is compared against the given range of values and the appropriate value is used if the given range is above. You can define the taxable basis formula with these attributes.
| Attribute | Value | Comments |
|---|---|---|
| Taxable Basis Type | Line Amount | Transaction line amount is used to derive the taxable basis. |
| Tax Regime Code | ICMS | Price thresholds are used for computing ICMS taxable basis. |
Tax Formula Price Threshold Details Line 1
| Attribute | Value | Comments |
|---|---|---|
| Tax | ICMS | Select ICMS tax involved in threshold computation. |
| Geography Type | Country | Tax treatment remains same whether it is inter or intrastate sale. Select the Country. |
| Ship from Geography Name | Brazil | Threshold applies if the ship from country is Brazil. |
| Ship from Geography Name | Brazil | Threshold applies if the ship to country is Brazil. |
| Product Fiscal Classification Type Code | BR ICMS PRODUCT CLASSIFICATION | For more information, see the Manage Taxes Levied at Ad Valorem Rate section on configuring the product fiscal classification type. |
| Product Fiscal Classification Code | Bottles | The inventory category to which the item is assigned in the inventory item master. |
| Threshold Type | Minimum or maximum threshold | The item price is compared against the given range of values and the appropriate value is considered if it is above the given range. |
| Minimum Value | 32.00 BRL | Enter pauta amount as the minimum value. |
| Maximum Value | - | Tax calculation process should use the highest amount between “pauta” and the “sales price” as the taxable basis. As a result, the minimum price threshold is “pauta” and the maximum price threshold should be left blank. |
Tax Formula Price Threshold Details Line 2
| Attribute | Value | Comments |
|---|---|---|
| Tax | ICMS | Select ICMS tax to include in the threshold operation. |
| Geography Type | Country | Tax treatment remains the same irrespective of the geography location. Select the Country. |
| Ship from Geography Name | Brazil | Threshold applies if the ship from country is Brazil. |
| Ship from Geography Name | Brazil | Threshold applies if the ship to country is Brazil. |
| Product Fiscal Classification Type Code | BR ICMS PRODUCT CLASSIFICATION | For more information, see the Manage Taxes Levied at Ad Valorem Rate section on configuring the product fiscal classification type. |
| Product Fiscal Classification Code | Containers | The inventory category to which the item is assigned in the inventory item master. |
| Threshold Type | Minimum or maximum threshold | The item price is compared against the given range of values and the appropriate value is considered if it is above the given range. |
| Minimum Value | 45.00 BRL | Enter pauta amount as the minimum value. |
| Maximum Value | - | Tax calculation process should use the highest amount between “pauta” and the “sales price” as the taxable basis. As a result, the minimum price threshold is “pauta” and the maximum price threshold should be left blank. |
Create Taxable Basis Rule
Define a taxable basis rule using tax determining factors to default the newly defined taxable basis formula in the tax determination process.
A tax determining factor can be a geographical location, tax registration status, or a product fiscal classification contributes to the outcome of the Tax Determination process. The determining factors are categorized into logical groupings called tax determining factor class. Each tax determining factor class contains determining factor names that constitute the contents of the class. You can use the product fiscal classification based tax determining factor for taxable basis rule.
To create a taxable basis rule:
- Sign in as a Tax Manager.
- Click Navigator, Setup and Maintenance.
- Search for Manage Tax Rules.
- Define a taxable basis rule by using the appropriate tax determining factors.
Create Taxable Basis Rule
Create and validate the invoice in Payables with these transaction lines.
| Line | Item | Unit Price | Quantity | Line Amount | Ship From | Ship To |
|---|---|---|---|---|---|---|
| 1 | Water Bottle | 28.00 BRL | 1 | 28.00 | SP | SP |
| 2 | Oil Container | 48.00 BRL | 1 | 48.00 | SP | SP |
| Total in BRL | 76.00 | - | - | |||
Tax Determination Process
The tax determination process compares the unit price with the threshold values to calculate a specific taxable basis amount.
| Line | Item | Taxable Basis Amount | Comments |
|---|---|---|---|
| 1 | Water Bottle | 32.00 |
The unit price quoted on the transaction line is 28 BRL, but the minimum threshold value is set to 32 BRL. The minimum threshold value is applied as the taxable basis amount. |
| 2 | Oil Container | 48.00 | The unit price quoted on the transaction line is 48 BRL more than minimum threshold value 45 BRL. The maximum threshold value is blank, so the unit price is applied as the taxable basis amount. |
| 80.00 BRL | ICMS total taxable basis amount. |
Tax Line
Oracle ERP Cloud adds this tax line after the tax determination process successfully completes:
| Tax Line | Rate Name | Rate | Tax Amount | Tax Regime | Tax Name | Tax Status | Tax Jurisdiction |
| 1 | ICMS_18 | 18 | 14.40 | ICMS | ICMS | Standard | SP |