Oracle Applications :EB Tax:Quantity Based Taxes

 

1) What is a Quantity Based Taxes?

A quantity based tax is a tax levied based upon the number of items purchased or events that occur.

For example, a taxing jurisdiction passes a law that each package of cigarettes sold is subject to a tax of $0.87.  This tax is considered a quantity based tax as it is assessed based upon the number of packages purchased not the price of the product.

2. What role does Unit of Measure (UOM) Play in Quantity Based Taxes?

 E-Business Tax considers the UOM an optional field in the tax setup however if it is used there is validation that must be passed in order for the tax to be applied.  Validation is as follows:

• If the UOM exists on the tax rate, the transaction must have a matching UOM or a Null UOM
• If the UOM is null on the tax rate, no validation occurs on the UOM entered on the transaction

3.  How do I setup a Non-UOM Specific Quantity Based Rate?

A non-UOM quantity based rate is a Tax Rate Code defined as type of Quantity (Instead of Percentage) with a null UOM on the tax rate record.  When used the quantity field is mulitpled by the tax rate and the UOM is not taken into account.  In this scenario relationships and hierarchies between Units of Measure are not used.

Setup for this type of rate is done as follows:

    a) Create a Regime, Tax, Status and Jurisdiction

1. Setup a tax regime 
2. Setup a Tax
3. Setup a Tax Status (set as default)
4. Setup a Tax Jurisdiction (set as default)

     b) Create a Tax Rate

1.  Enter a Tax Rate with the Unit of Measure set as Null.  Make sure the rate type is set as Quantity