Overview of Taxes on Transactions

E-Business Tax calculates the tax on a transaction based on the legal entity/operating unit setup, and the tax configuration and tax rules setup. The entire calculation process is transparent to the user. The tax used on the transaction belongs to the tax regime assigned to the legal entity or operating unit. The actual tax rate or rates used, and the manner in which rates are derived and calculated, depends on these factors:

·        First party of the transaction. This is either the legal entity or operating unit. If applicable, E-Business Tax also derives the legal establishment of each transaction line based on the legal establishment's associated business entities.

·        Tax registrations of the first and third parties.

·        Tax profiles of the first and third parties.

·        Tax configuration setup.

·        Tax rules for the configuration owner and tax.

·        Application event class option settings.

·        Customer tax exemptions.

·        Product tax exceptions.