Apply Tax According to Customer Site

Set up tax so Order Management can add tax to a sales order according to your customer's physical site. This is the way you set up the default tax that Order Management applies on a sales order for most customers.

Here's an example of how you can set up tax:

Note

A tax regime, such as the United States, contains tax jurisdictions, such as the Arizona Department of Revenue.
The tax jurisdiction assess a tax on your sales according to its tax rate, and depending on your customer's address.
For example, if the tax rate in the Arizona tax jurisdiction is 5%, and if the net price on the sales order is $100, then the tax is $5.

You have a wide range of choices when setting up tax, depending on your supply chain's tax requirements. For example, you can specify tax according to the tax jurisdiction that applies at the ship-to site, the bill-to site, or a range of other locations.

Here's the flow that you use to set up the example in this topic:

Here are the tasks you use:

Task	Description
1. Manage Tax Regimes	Create a tax regime named USA_TAX_REGIME for the United States.
2. Manage Taxes	Create a tax named STATE1 at the state level for Arizona.
3. Create Tax Jurisdiction	Create a tax jurisdiction for the state of Arizona.
4. Create Tax Rate	Create the 5% tax rate to apply for the STATE1 tax.

Each task maintains the tax hierarchy. For example:

The tax rate is in the USA_TAX_REGIME and the Arizona jurisdiction.
The Arizona jurisdiction and the STATE1 tax are in the USA_TAX_REGIME.

You create a relationship between your customer's site and the tax regime.

Summary of the Set Up

Create the tax regime.
Create the tax.
Create the tax status.
Create the tax jurisdiction.
Add the customer site.
Verify geography and collect data.
Test your set up.

For this example, assume:

You are in the Vision Operations business unit.
Your sales order must calculate tax according to the ship-to address on the sales order.
You set up tax for site 1036 of your Computer Service and Rentals customer, and their ship-to address is 2164 Broadway Tempe, AZ 85282.
The tax jurisdiction in Tempe charges a 5% tax.

For background details about how to set up tax, see Administering Tax Reporting on Oracle Help Center.

For other technical details, including lots of helpful screen prints, see Order Management Tax Best Practices and General Questions (Doc ID 2619517.1).

Create the Tax Regime

Go to the Setup and Maintenance work area, then go to the Manage Tax Regimes task.

Set these values:

Attribute	Value
Configuration Owner	Global Configuration Owner
Tax Status Code	STANDARD
Tax Rate Code	STD-DEFAULT
Tax Rate Type	Percentage
Order to Cash Procure to Pay Expenses	Contains a check mark.

In the Rate Periods area, set the values, then click Save and Close:

Attribute	Value
Rate Percentage	5
Set as Default Rate	Contains a check mark.

Set these values:

Attribute	Value
Tax Regime Code	US_TAX_REGIME
Configuration Owner	Global Configuration Owner
Tax	STATE1
Tax Status Code	STANDARD
Tax Jurisdiction Code	ST-AZ1
Tax Rate Code	STD STD means standard.
Tax Rate Type	Percentage
Order to Cash Procure to Pay Expenses	Contains a check mark.

In the Rate Periods area, set the values, then click Save and Close > Done:

Attribute	Value
Rate Percentage	10
Set as Default Rate	Doesn't contain a check mark.

Add the Customer Site

Use the Manage Customers task to create a site for your Computer Service and Rentals customer. You specify the purpose as ship-to so you can use the ship-to address on the sales order to determine the tax to apply:

Try it:

On the setup page, go to the Manage Customers task.

On the Manage Customers page, search for the value:

Attribute	Value
Organization Name	Computer Service and Rentals

In the search results, in the Sites area, click Actions > Create.

On the Create Account Site page, set the values:

Attribute	Value
Account Address Set	Vision Operations Set
Country	United States
Site Number	1036
Address Line 1	2164 Broadway
City	TEMPE
State	AZ
Postal Code	85282

In the Address Purposes area, click Actions > Add Row, set the values, then click Save and Close > Done:

Attribute	Value
Purpose	Ship To

Verify Geography and Collect Data

On the setup page, go to the Manage Geographies task.

On the Manage Geographies page, search for the value:

Attribute	Value
Country Name	United States

In the search results, click the row that has United States in the Country Name column, then click Actions > Manage Geography Validation.

On the Manage Geography Validation page, in the Geography Mapping and Validation area, verify the values for the State:

Geography Type	Map to Attribute	Tax Validation
State	State	Contains a check mark.

Collect Data

Go to the Plan Inputs work area.

Don't use the Plan Inputs task that's available in the Setup and Maintenance work area. Use the Plan Inputs work area instead.
In the Plan Inputs work area, click Tasks > Collect Planning Data.
In the Collect Planning Data dialog, set your source system, then move reference entities to selected entities:
- Customer
- Geographies
- Organizations
Submit.

For details, see Collect Planning Data for Order Management.

Test Your Set Up

Go to the Order Management work area and create a sales order:

Attribute	Value
Customer	Computer Service and Rentals
Business Unit	Vision Operations
Ship-to Address	2164 Broadway, Tempe, AZ, 85282

Add an order line:

Attribute	Value
Item	AS54888
Quantity	1
Amount	2,500

Click the total at the top of the sales order, then verify that the tax rate is 5%, which is the STD-DEFAULT rate you set up according to the ship-to address:

Attribute	Value
Total List Price	2,500.00
Discount	0.00
Total Net Price	2,500.00
Shipping	0.00
Total Tax	125.00 125 is 5% of 2,500, so this rate is correct.
Total Credit	0.00
Pay Now	2,625.00

Change the ship-to address to any other value.

Click the total at the top of the sales order, then verify that the tax rate is 10%, which is the STD rate you set up to apply when the ship-to address isn't 2164 Broadway, Tempe, AZ, 85282:

Attribute	Value
Total List Price	2,500.00
Discount	0.00
Total Net Price	2,500.00
Shipping	0.00
Total Tax	250.00 250 is 10% of 2,500, so this rate is correct.
Total Credit	0.00
Pay Now	2,750.00