1. Using Financials for the Americas
  2. Tax Determination Procedure for Ad Valorem

Tax Determination Procedure for Ad Valorem

Here's the tax determination procedure for ad valorem.

Follow these steps:
  1. Enter the invoice in Receivables with these transaction lines.
    Line Item Unit Price Quantity Line Amount Ship To Ship From
    1 Fuel Pumps 100 BRL 1 100.00 SP SP
    2 Piston Cylinders 150 BRL 1 150.00 SP SP
    3 Sport Sunglasses 110 BRL 1 110.00 SP SP
    Transaction Total 360.00 BRL - - - -
  2. After you save the transaction in Receivables, these tax determination processes create the tax lines.
    Order Process Name Activities Included Components Used Result
    1. Determine Applicable Regime Identify the applicable tax regimes Based on the location (Country) involved in the transaction Applicable regime = IPI
    2. Determine Place of Supply and Tax Jurisdiction Identify the jurisdiction and place of supply IPI tax definition > tax rule defaults > place of supply = ship from party

    Tax jurisdiction = SP

    Place of supply = SP

    3. Determine Tax Applicability Consider taxes based on the tax applicability rule for each tax

    Tax Applicability Rules Tax conditions -

    • Registration Status (Qualifier Ship–from party) = Registered
    • Product Type = Goods
    		Applicable tax =IPI
    4. Determine Tax Registration Determine the party type to derive the tax registration for each applicable tax IPI tax definition > tax rule defaults > tax registration = ship-from party Ship-from party
    5. Determine Tax Status Consider the tax statuses of applicable taxes IPI tax rule defaults > Indirect defaults > tax status = Standard Standard
    6. Determine Tax Rate Consider the tax rates of each applicable tax status of each applicable tax

    Tax Rate Rules

    Tax determining factor in tax rate rule use the inventory catalog, and derives the product fiscal classification based on the item in the transaction line.

    		 Applicable tax rates are 5% and 15%
    7. Determine Taxable Basis Determine the taxable basis on which the tax rate for each tax is applied

    Taxable basis formula defined for IP

    = Taxable basis type as Line

    Amount, which is the amount on the transaction line to derive the taxable basis.

    Based on this option, you can add freight, insurance, packing charges, miscellaneous, and subtract commercial discount to the transaction line value.

    		IPI taxable basis = Transaction line amount. Three line amounts: 100, 150, and 110 BRL
    8. Calculate Taxes Identify the tax calculation formula to calculate taxes Standard tax calculation formula = STANDARD_TC

    Taxable basis * tax rate

    100*5% = 5

    150*5% = 7.5

    110*15% = 16.5

    IPI tax amount = (5+7.5+16.5) = 29 BRL

  3. Oracle ERP Cloud inserts tax lines for IPI after the tax determination process successfully completes.
    Rate Name Rate Tax Amount Tax Regime Tax Name Tax Status Tax Jurisdiction
    IPI_5 5 12.5 IPI IPI Standard Brazil
    IPI_15 15 16.5 IPI IPI Standard Brazil