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
of the selected ledger qualifier

Document Document Fiscal Document Subtype Document fiscal classification codes

Classification Level of
the class qualifier level; or all
document
fiscal classification codes if there is n
class qualifier.
Geography Bill From TCA geography types TCA geography names of the
Bill To geography type belonging to the
Point of location identified by the class
Acceptance(AR qualifier
transactions)
Point of Origin
(AR
 transactions)
Ship From
Ship To

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

Party Fiscal Bill From Party Party fiscal classification types Fiscal classification codes of the part
Classification Bill To Party fiscal classification type assigned to
Point of the party identified by the class
Acceptance qualifier.
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 types applicable product fiscal classificatio
Linked type

Product - Non- Product fiscal Product Category product fiscal Product fiscal classification codes of
Inventory classification level classification types the class qualifier level; or all produc
Linked (Levels 1-5) fiscal classification codes if there is n
class qualifier.
Registration Bill From Party Registration Status Status of Agent (withholding agent),
Bill To Party Registered, or Not Registered (seede
Ship From Party values only) for the party identified b
Ship To Party the class qualifier. You can use
lookup codes to add registration
statuses.
Transaction N/A Transaction fiscal classification Codes used to assign attributes acros
Fiscal types the transaction business category
Classification hierarchy described 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
Classification to add additional levels to qualifier level; or all fiscal
hierarchy classification codes if
there is no class qualifier.
Transaction N/A 1. Line Class 1. LC = Transaction event
Input Factor 2. Product Type classes and 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
Classification fiscal classification codes
4. TCC = Tax classification
codes.
5. UDFC = User Defined fiscal
classification codes.

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