EBTax Is a rule based engine introduced in Oracle R12. We can apply different tax rates based on the location, product category, supplier classification …etc. . We can also have tax exemption and exception
Tax structure is defined in Regime to Rate flow. The components of Regime to Rate are
1. Regime: Regime is the highest level in the tax structure . We can define tax Regime at country , group of countries or a tax Zone level.
Note: Until we assign the Regime to appropriate party tax will not be applied on the transaction associated to the party. Parties assigned to regimes are ‘First Party Legal Entity’, ‘Operating Unit owning Tax Content’
2. Tax: This setup should be done at tax authority classification level with in a region Status. Eg: State, County, City etc
Note: We cannot enable the Tax definition until we complete our Regime to rate structure and tax rules . If Tax is not enables tax will not be applied on Transaction
3. Status : We define a tax status to group one or more tax rates that are of the same or similar nature
4. Jurisdiction: jurisdiction is a geographic region or tax zone where a specific tax authority levies
a tax. Each State, Country and city that changes tax is defined as jurisdiction
5. Rate: Actual tax rate is given in the Rate setup. We can have different tax rates based on the data range
Note: We should one default tax rate under each Tax. We can setup default tax account at the tax rate level
Once the Regime to rate definition is complete we need to setup tax applicability rules based on different criteria
