Use the Derived Factor Formula for Complex Inclusive Taxes

Use the new Derived Factor Formula to automatically derive the factor needed to adjust the intrinsic price for certain inclusive taxes.

Some countries require complex formulas to calculate taxes, such as the new taxes introduced by the Brazil VAT Tax Reform that will take effect on January 1, 2027.

During the transition period to the Brazil 2026 Tax Reform--when current taxes coexist with new taxes introduced--the current inclusive taxable basis needs to be adjusted by a factor to include both current and new taxes.

Follow these steps:

1. Use the Opt In user interface to enable this feature.
   1. Navigate to My Enterprise, New Features.
   2. On the Features Overview page, select your offering to review new features specific to it. Or, you can leave the default selection All Enabled Offerings to review new features for all offerings.
   3. On the New Features tab, review the new features and check the opt-in status of the feature in the Enabled column. If a feature has already been enabled, you will see a check mark. Otherwise, you will see an icon to enable the feature.
   4. Click the icon in the Enabled column and complete the steps to enable the feature.
2. Navigate to the Create Taxable Basis Formula page.
3. In the Create Taxable Basis Formula page, select the Line amount with special rate factor and base adjustment as Taxable Basis Type to enable the Compounding Rule column.
4. In the Tax Formula Compounding Details section, select the attributes and the appropriate compounding rule as needed:
   1. Add - Add the tax to the line amount to compound the taxable basis.
   2. Subtract - Subtract the tax from the line amount to compound the taxable basis.
   3. Adjust with negative special rate factor - Subtract the line amount with a special rate of 1/(1- special rate%).
   4. Adjust with positive special rate factor - Add a special rate of 1/(1- special rate%) to the line amount.
   5. Apply additional rate with special rate factor - Add a rate of (1+additional rate%)/(1- special rate% * (1+additional rate%)) to the line amount.
   Note: If the selected Taxable Basis Type is Line amount with special rate factor and base adjustment, all inclusive taxes that are added to the Tax Formula Compounding Details section must be configured to use the standard inclusive handling method.

   You can create complex tax formulas to address special tax calculation requirements such as the new Brazilian VAT taxes that will take effect on January 1, 2027.