Setting Up Tax Jurisdictions

A tax jurisdiction is a geographic region or tax zone where a specific tax authority levies a tax. A tax jurisdiction specifies the association between a tax and a geographic location. At transaction time E-Business Tax derives the jurisdiction or jurisdictions that apply to a transaction line based on the place of supply. The place of supply is the location where a transaction is determined to take place for a specific tax. E-Business Tax either uses a default place of supply or derives a place of supply based on tax rules.

You also use tax jurisdictions to define jurisdiction-based tax rates. A tax jurisdiction tax rate is a rate that is distinct to a specific geographic region for a specific tax. For example, the tax defined as California city sales tax can have different rates for each city tax jurisdiction.

You must set up at least one tax jurisdiction for a tax before you can make the tax available on transactions. A tax can apply to multiple jurisdictions, such as California county sales tax to all counties or Canadian Goods and Services Tax to many provinces. If you enable multiple jurisdictions for the tax, you can create multiple tax jurisdictions at once based on the geographic hierarchy defined for the tax. You can only do this if the tax uses the TCA master geography.

In addition, in some cities a different city rate applies to the incorporated area of the city, called the inner city. In these cases you can set up an inner city tax jurisdiction with its own rate for the applicable customers and Receivables tax. Inner city tax jurisdictions are often based on postal code groupings. If the legal jurisdiction and tax jurisdiction are based on the same geopolitical level (usually a country) and are governed by the same authority, you can set up a tax jurisdiction when you set up your company legal entity. 

Prerequisites

Before you can set up tax jurisdictions, you may need to complete one or more of these tasks:

• Set up taxes (mandatory).
• Set up tax statuses. (mandatory to set up jurisdiction-based rates)
• Verify or set up the TCA master geography. (mandatory to set up jurisdictions below the country level)
• Set up tax zones. (optional)

Set Up a Tax Jurisdiction

Navigate to the Create Tax Jurisdiction page.
Enter a code and name to identify this tax jurisdiction. Use a coding convention that is in keeping with the tax regime, tax, and geographic region.
Enter the tax regime code and tax that this tax jurisdiction belongs to.
Enter the geography type for this tax jurisdiction. You can enter either the geography type or the override geography type that is defined for the associated tax.
Check the Inner City Jurisdiction box if this tax jurisdiction is used for customer sites within an inner city boundary.
An inner city boundary refers to an incorporated area of a city. Inner city jurisdictions often have tax rates that differ from tax jurisdictions in unincorporated areas of the same city.

Note: You must enable the Inside City Limits option in the Account

Site Address region of the applicable customer sites. An inner city tax jurisdiction only applies to customer sites with this option enabled.

If necessary, enter a numeric precedence level for this jurisdiction. The precedence level indicates which jurisdiction has the higher overriding precedence, when one or more jurisdictions override another jurisdiction within the same geographic hierarchy.

Note: You must set up an override geography type for the tax in order to use precedence levels. 

Enter the tax authorities for this tax jurisdiction for submitting tax reports (Reporting) and submitting tax remittances (Collecting).
Enter the effective period for this tax jurisdiction.
If necessary, set this jurisdiction as the default tax jurisdiction for this tax, and enter a default effective date range that is within the jurisdiction date range.
If you associated tax reporting types with tax jurisdiction, enter any applicable tax reporting codes.
If necessary, define rates for this tax jurisdiction.
If necessary, enter tax account information for this tax jurisdiction. 

Mass Creating Tax Jurisdictions

You can create multiple tax jurisdictions at once using the mass create functionality for taxes that relate to specific TCA geographic hierarchies. E-Business Tax uses the parent geography type or tax zone associated with the tax regime and tax to create a tax jurisdiction for each record within the parent geography or tax zone type.

For example, create a county jurisdiction for every county in the parent geography type of State and parent geography name of California.

If you add new records to the parent geography type, you can re-run the mass create process for the same tax. E-Business Tax only creates jurisdictions for the new geography records. After E-Business Tax mass creates tax jurisdictions, use the Update Mass Created Tax Jurisdictions page to review the jurisdictions created and to modify information for individual tax jurisdictions.

Before you can mass create tax jurisdictions, you may need to complete one or more of these tasks:

• Set up taxes. (mandatory)
• Set the Allow Mass Creation of Jurisdictions option for the tax. (mandatory)
• Set up tax statuses and tax rates. (mandatory to set up jurisdiction-based rates)
• Enable multiple jurisdictions for the tax. (mandatory)
• Set up TCA master geography for the applicable parent geography and child records. (mandatory)
• Set up tax zones. (optional)

Mass Create Tax Jurisdictions

• Navigate to the Mass Create Tax Jurisdiction page.

• Enter the tax regime and tax that you are creating tax jurisdictions for. E-Business Tax displays the related geography information.

• Create a naming convention for the tax jurisdictions. You can use the geography name or a combination of geography name and a tax short name of your choice.

• E-Business Tax identifies duplicate names during the mass create process. You can revise individual jurisdiction names on the Update Mass Created Tax Jurisdictions page.

• If necessary, enter the tax authorities for these tax jurisdictions for submitting tax reports (Reporting) and submitting tax remittances (Collecting).

• Enter the effective period for these tax jurisdictions.

• After you mass create tax jurisdictions, use the Update Mass Created Tax Jurisdictions page to perform these tasks:

• Review the list of tax jurisdictions created. 

• Revise tax jurisdiction names and effective dates. 

• Define tax rates for a tax jurisdiction.  

• Enter tax account information for a tax jurisdiction.