How Tax Determining Factors Work with Tax Rules in R12 E-Business Tax (Doc ID 1108463.

1)

In this Document

Goal
Solution
1. What is a Tax Determining Factor?
2. What is a Determining Factor Class vs Class Qualifier vs Determining Factor Name?
3. What Tax Determining Factors are Available?
4. Can a Rule Have Multiple Determining Factors?
5. What are Fiscal Classifications?
6. How Do I Use a Determining Factor to Create a Tax Rule
References

APPLIES TO:

Oracle E-Business Tax - Version 12.0.0 to 12.1.2 [Release 12.0 to 12.1]

Oracle Payables - Version 12.1.3 to 12.1.3 [Release 12.1]
Oracle Payables - Version 12.2.4 to 12.2.4 [Release 12.2]
Oracle Payables - Version 12.0.3 to 12.0.3 [Release 12.0]
Information in this document applies to any platform.
***Checked for relevance on 29-Jul-2013***

GOAL

E-Business Tax Information Center > Tax Rules > Note 1108463.1

We are actively trying to build up participation in our EBTax community. We'd love your input, ideas, collaboration and
solutions to be part of the experience. Check us out at on the E-Business Tax communities page

This note explains what a "Determining Factor" is used for in E-Business Tax and how to use Determining Factors to satisfy
your unique tax requirements in the R12 E-Business Tax solution.

SOLUTION

1. What is a Tax Determining Factor?

A tax determining factor is an attribute that may be used by the E-Business Tax (EBTax) engine to find and calculate taxes for
a specific transaction. The EBTax rule engine allows implementers to create any number of custom tax rules that reference
the tax determining factors and that satisfy the unique needs of a specific business operating within a taxing jurisdiction.

2. What is a Determining Factor Class vs Class Qualifier vs Determining Factor Name?

Determining factors exist in a range of categories or types (Determining Factor Classes). Within each of these exist a
Qualifier, Factor Name and Factor Value. This is best understood with an example as shown below:

1. Determining Factor Class = Geography (This is the "type" of factor we have available to us)
2. Class Qualifier = Ship To, Bill To, POA, POO, Ship From, Ship To (These are the levels that we can select to be
evaluated).
3. Determining Factor Name = Country, Province, City, County, etc. (These are the geography types you have defined
in TCA)
 4. Determining Factor Value = Canada, Ontario, Toronto, etc (these are the actual values associated with the factor
name we selected above.

3. What Tax Determining Factors are Available?

The table below lists all of the tax determining factors available in Release 12. Please refer to the note in the right hand
column for examples showing how the referenced determining factor can be used. Examples referenced in these notes
include screenshots and step-by-step setup instructions along with some troubleshooting steps to consider if your rule is not
working as intended.

IMPORTANT: When designing your tax rules please be aware that not all Oracle Modules have completed the full uptake
of the E-Business Tax features. This means that not all transactions will have the determining factors available for use.

For example: in receivables a user can select "Tax Information" and enter a User Defined Fiscal Classification. You can
then define tax rules to use this in calculating taxes. If you use Order Management however this field is not available to
users entering an order and thus OM orders will not be able to use this field in their calculation. Please use caution to
ensure that the fields you select for your tax determining factors (in your tax rules) exist in all potential modules you
intend to use for invoice creation.

Determining Class Qualifier Determining Factor Names Values

Factor Class

Accounting Accounting segments Line Account Account Combination of the Class qualifier
of the selected ledger

Document Document Fiscal Document Subtype Document fiscal classification codes of

Classification Level the class qualifier level; or all document
fiscal classification codes if there is no class
qualifier.

Geography TCA geography types TCA geography names of the geography type
Bill From belonging to the location identified by the class
Bill To qualifier
Point of
Acceptance(AR
transactions)
Point of Origin
(AR
transactions)
Ship From
Ship To

Legal Party First Party Legal Activity Codes Legal classification codes of the legal classification
Fiscal for activity.
Classification
Chile
Colombia;
Peru
United
Kingdom
Venezuela

Party Fiscal Party fiscal classification types Fiscal classification codes of the party fiscal
Classification Bill From Party classification type assigned to the party identified
Bill To Party by the class qualifier.
 Point of
Acceptance
Party (AR
transactions)
Point of Origin
Party (AR
transactions)
Ship From
Party
Ship To Party

Product - N/A Oracle Inventory-based Fiscal classification codes of the

Inventory product fiscal classification applicable product fiscal classification
Linked types type

Product - Product fiscal Product Category product fiscal Product fiscal classification codes of
Non- classification level classification types the class qualifier level; or all product
Inventory (Levels 1-5) fiscal classification codes if there is no
Linked class qualifier.

Registration Registration Status Status of Agent (withholding agent),

Bill From Party Registered, or Not Registered (seeded values
Bill To Party only) for the party identified by the class qualifier.
Ship From You can use lookup codes to add registration
Party statuses.
Ship To Party

Transaction N/A Transaction fiscal classification Codes used to assign attributes across the
Fiscal types transaction business category hierarchy described
Classification in the line below.

Transaction Classification Level Transaction Business Category Transaction business category fiscal
Generic (Levels 1-5) (seeded value only) with option classification codes of the class qualifier level; or
Classification to add additional levels to all fiscal classification codes if
hierarchy there is no class qualifier.

Transaction N/A
Input Factor 1. Line Class 1. LC = Transaction event classes and
2. Product Type activities.
3. Intended Use 2. PT = Goods or Services
4. Tax Classification Code (seeded values only).
5. User Defined Fiscal 3. IU = Product Intended Use fiscal
Classification classification codes
4. TCC = Tax classification codes.
5. UDFC = User Defined fiscal classification
codes.

User Defined Tax Zone Types Tax zones of the tax zone type belonging to the
Geography Bill From location identified by the class qualifier.
(Tax Zone) Bill To
Point of
Acceptance
Point of Origin
Ship From
Ship To

Below is a list of applications for which Tax Determining Factors are currently supported:
 Receivables
Lease and Finance Management
Cost Management
Trade Management
Payables
Purchasing

You can run the following query by giving application name (one of the values above) in the last condition in the query:

SELECT DISTINCT fa.APPLICATION_SHORT_NAME,

fa.APPLICATION_NAME,
Lookup.MEANING AS DETERMINING_FACTOR_CLASS_NAME,
DETERMINING_FACTOR_NAME,
DETERMINING_FACTOR_DESC,
DECODE(df.TAX_RULES_FLAG, 'Y', 'Tax Rules', DECODE(df.TAXABLE_BASIS_FLAG, 'Y', 'Taxable Basis
Formula', DECODE(df.TAX_REGIME_DET_FLAG, 'Y', 'Tax Regime Determination'))) usage
FROM ZX_DETERMINING_FACTORS_VL df,
FND_LOOKUPS Lookup,
fnd_application_vl fa
WHERE df.DETERMINING_FACTOR_CLASS_CODE = Lookup.LOOKUP_CODE
AND Lookup.LOOKUP_TYPE = 'ZX_DETERMINING_FACTOR_CLASS'
AND Lookup.LOOKUP_CODE <> 'DERIVED'
AND SYSDATE BETWEEN Lookup.START_DATE_ACTIVE AND NVL(Lookup.END_DATE_ACTIVE, SYSDATE)
AND NVL(Lookup.ENABLED_FLAG, 'N') = 'Y'
AND( tax_rules_flag = 'Y'
OR tax_regime_det_flag = 'Y'
OR taxable_basis_flag = 'Y')
AND fa.application_id IN
(SELECT DISTINCT application_id FROM ZX_EVNT_CLS_MAPPINGS ecm2
)
AND fa.application_id NOT IN
(SELECT NVL(ecm.application_id, -99)
FROM ZX_EVENT_CLASS_PARAMS ecp,
ZX_DETERMINING_FACTORS_vL df1,
ZX_EVNT_CLS_MAPPINGS ecm
WHERE df1.TAX_PARAMETER_CODE = ecp.TAX_PARAMETER_CODE(+)
AND ecm.EVENT_CLASS_MAPPING_ID(+) = ecp.EVENT_CLASS_MAPPING_ID
AND df1.DETERMINING_FACTOR_ID = df.DETERMINING_FACTOR_ID
)
and fa.APPLICATION_NAME = '&enter_application_name';

4. Can a Rule Have Multiple Determining Factors?

Tax Rules can reference as many determining factors as necessary to satisfy the criteria in your rule. This allows for multi-
conditional situations to be addressed in individual rules.

Example: a rule might state "If the Ship-To is Not the same as the Ship-From and the Item being sold is a "Good" (vs a
service) then apply tax "X". This can be satisfied by creating a tax rule that considers both the geography for the ship-to
party, the geography for the ship-from party and the product fiscal classification (3 determining factors in total).

You create the combination of determining factors required for your rule in Tax Determining Factor Sets and Tax Condition
Sets. For more on how to create these objects please review Note 1111553.1 How To Setup Condition Sets and Determining
Factor Sets for Tax Rules in R12 E-Business Tax (EBTax).

5. What are Fiscal Classifications?

Fiscal Classifications is a way that a tax authority classifies each part of a transaction. E-Business Tax Fiscal Classifications can
be used as noted below:

Parties and party sites involved in the transaction.

Products involved in the transaction.
Nature of the transaction.
 Documents associated with the transaction

6. How Do I Use a Determining Factor to Create a Tax Rule

Section 3 above contains examples for each rule type. If however you wish to learn more about how to create a Tax Rule
and/or use expert tax rules it is suggested that you review Note 473066.1. How To Setup a Rule Using Expert Rule Entry in
R12 E-Business Tax

Join our growing Oracle Payables Community or the EBTax Community and learn from your peers and Oracle on how to
address your unique issues in AP.

REFERENCES

NOTE:1301356.1 - What is the Latest E-Business Tax (eBTax) Rule Engine Patch?

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