- All legal entities, legal establishments, and operating units in your organization that have a transaction tax requirement.
- Your customers and suppliers and their locations.
- Tax authorities that administer tax rules and regulations.
A tax profile is the body of information that relates to a party's transaction tax activities. A tax profile can include tax registration, tax exemptions, configuration options, main and default information, party fiscal classifications, tax reporting codes, and account tax details.
The tax registration contains information related to a party's transaction tax obligation with a tax authority for a tax jurisdiction where it conducts business. The tax registration is part of the tax profile of a first party legal establishment and a third party and third party site.
A tax exemption defines, for a customer or a customer and product, a discount or replacement percentage that reduces the applicable tax. The configuration options identify the tax regimes associated with a first party and the configuration owner and service provider settings associated with each tax regime.
The configuration options are part of the tax profile of configuration owners, that is, first party legal entities and operating units owning tax content.
The main and default information identify characteristics of and default values for the transactions associated with a party.
The party fiscal classifications optionally assigned to a party are used as determining factors in tax rules.
The tax reporting codes optionally assigned to a party capture tax information from party transactions for both internal and tax authority reporting requirements.
The account tax details maintain Release 11i migrated tax information for customer and supplier accounts.
Setting Up Parties for Self-Assessment
You can let a first party self-assess the taxes calculated on the Payables invoices it receives. A self-assessed tax is a tax calculated and remitted for a transaction, where tax was not levied by the supplier but is deemed as due (and therefore needs to be paid by the purchaser). In such cases the purchaser is responsible for calculating and remitting
the tax. Self-assessment is also known as reverse charge or use tax in certain tax regimes.
When self-assessment applies to a tax line, E-Business Tax creates the recoverable and/or non-recoverable distributions, and Payables creates an additional accounting distribution to record the liability for the self-assessment.
You can set the self-assessment option:
- At the tax profile level to default to the tax registrations that you create for this party.
- At the tax registration level.
- On an individual tax line.
E-Business Tax applies self-assessment to Payables invoices received by the first party according to the tax registration setting of the Set for Self Assessment/Reverse Charge option. The specific tax registration record that E-Business Tax uses is derived either from Determine Tax Registration rules or from the default tax registration.
Under normal circumstances, the Determine Tax Registration rules or default tax registration will derive the Bill From party as the place of supply for purchase transactions where the supplier is responsible for calculating the transaction tax and collecting it from the customer. In the case of Self Assessment, Reverse Charge, or, in the United States, Use tax, customers are responsible for self-assessing the tax.
Customers will therefore self-assess under their own tax registration, and the Determine Tax Registration rules or default tax registration will derive instead the Bill To party registration. In this case, you expect to see the Set for Self Assessment/Reverse Charge option set on the applicable first party establishment registration record.