The relationships between first-party legal entities and the relevant tax authorities normally control the setup of the transaction taxes required by your business. In most circumstances, the tax setup is used and maintained based on the configuration of the legal entity.
Enter the default information, party fiscal classifications, tax reporting codes, and configuration options for your legal entities. You can also specify if you're using the tax services of an external service provider for tax calculation.
First-party legal reporting units identify each office, service center, warehouse, and any other location within the organization with a tax requirement. A legal reporting unit tax profile is automatically created for the headquarter legal entity.
Set up additional legal reporting unit tax profiles for those needed for tax purposes. For legal reporting units, enter the default information, tax registrations, party fiscal classifications, and tax reporting codes. Also, define tax reporting details for your VAT and global tax reporting needs for tax registrations of tax regimes that allow this setup.
Business units organize your company data according to your internal accounting, financial monitoring, and reporting requirements. To help you manage the tax needs of your business units, you can use the business unit tax profile in either of two ways:
- Indicate that business unit tax setup is used and maintained based on the configuration of the associated legal entity at transaction time. The tax setup of the associated legal entity setup is either specific to the legal entity or shared across legal entities using the Global Configuration Owner setup.
- Indicate that tax setup is used and maintained by a specific business unit. Create configuration options for the business unit to indicate that the subscribed tax content is used for the transactions created for the business unit.
Prerequisites
Before you can set up first party tax profiles, you may need to complete one or more of these tasks:
Set up legal entities and legal establishments. (mandatory)
Set up legal entity secondary establishments. (optional)
Set up tax regimes. (mandatory)
Set up taxes. (optional)
Set up tax jurisdictions. (optional)
Set up lookup codes. (optional)
Set up party fiscal classifications. (optional)
Set up tax reporting types. (optional)
Setting Up a Party Tax Profile for a First Party Legal Entity or First Party Legal Establishment:
- Navigate to the Party Tax Profiles page.
- Select a first party legal entity or establishment.
Navigate to the Create Tax Profile page.
- Party main information values default to all tax registrations and invoices belonging to this party. You can update these values at the tax registration level and, if authorized, at the invoice line level.
Note: The values set at the tax registration level override the values set at the party tax profile level.
- Check the Set for Self Assessment/Reverse Charge box to automatically self-assess taxes on purchases.
- If applicable, enter a tax classification code to use as a determining factor in tax rules for this party or party site.
Set the rounding level and rounding rule for this party.
- Use the event class options to review the rounding precedence hierarchy for specific applications and event classes. If you updated the rounding precedence hierarchy for a specific configuration owner and event class, then the related transactions look instead for rounding level information according to the configuration owner and event class settings.
If this party intends to send or receive invoices with invoice line amounts inclusive of tax, check the Set Invoice Values as Tax Inclusive box.
- This option overrides the tax inclusive handling setting at the tax level, but not at the tax rate level.
- If this is a first party legal establishment, set up the tax registrations required for this party.
- If applicable, associate party fiscal classification codes with this party. You can use these codes as determining factors in tax rules to calculate taxes for invoices associated with this party.
- If you associated tax reporting types with party tax profile, enter any applicable tax reporting codes.
- If this is a first party legal entity, enter the tax configuration options.
Complete the party tax profile of the first party legal entity.
Party Classifications - If applicable, associate party fiscal classification codes with this party to use as determining factors in tax rules.
Tax Reporting Codes - If you associated tax reporting types with party tax profile, enter any applicable tax reporting codes.
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