Setting Up Party Fiscal Classifications

Set up party fiscal classifications for the parties and party sites involved in your transactions that have a tax requirement. A party fiscal classification determines, for example, when taxes apply to a party, how much tax applies, and what percentage of the tax is recoverable. These tax requirements are usually defined by the tax authority for the taxes of a given tax regime.

Set up party fiscal classifications for your first parties, customers and customer sites, and suppliers and supplier sites. Update the legal classification tax usage of legal activity codes according to your tax determination and tax reporting requirements.

You create a party fiscal classification by assigning a Trading Community Architecture (TCA) class category to a party fiscal classification type code that you define. The TCA class codes defined under the class category become fiscal classification codes belonging to the party fiscal classification type. TCA classifications let you classify parties and other business entities into user-definable categories. For example, you may want to classify parties according to tax handling requirements, such as End Consumer, Distributor, Non-Profit Organization, and so on.

You can create a hierarchy of party fiscal classification types to reflect the levels of codes and sub-codes within the TCA classification. You then associate each party fiscal classification type code to each tax regime that requires this party classification for tax determination and/or tax reporting purposes. Where necessary, you can assign party fiscal classifications to parties and party sites.

Note: You can only use a TCA class category for one party fiscal classification type or one group hierarchy. You cannot create multiple party fiscal classification types for the same TCA class category.

For tax rule usage, the party fiscal classification types that you create become determining factor names of the Party Fiscal Classification determining factor class. When you select a party fiscal classification type as a determining factor, the associated party fiscal classification codes become available as tax condition values.

Prerequisites

Before you can set up party fiscal classifications, you may need to complete one or more of these tasks:

• Set up TCA class categories and class codes. (mandatory)

• Set up tax regimes. (mandatory)

• Set up tax reporting types. (optional)

To set up a party fiscal classification:

1. Navigate to the Create Party Fiscal Classification Types page.

2. Enter in the Party Classification field the TCA class category to use with this party fiscal classification type. You can use the View Existing Party Fiscal Classification Associations region to review the TCA class categories already in use.

   The Fiscal Classification Codes region displays the class codes defined for the TCA class category that you enter. E-Business Tax automatically considers these as party fiscal classification codes of the party fiscal classification type.

3. If necessary, enter the number of levels in the hierarchy for this party fiscal classification type.

4. If you are creating a hierarchy to match the TCA class category, enter in the Type Group field a name to identify this hierarchy.

5. Enter a party fiscal classification type code and name.

   You may want to use a naming convention that is similar to the TCA class category, or that is in accordance with tax authority requirements.

6. Enter the effective date range for this party fiscal classification type.

7. Assign the party fiscal classification type to all applicable tax regimes and enter an effective date range for each tax regime assignment.

   Enter a tax regime assignment date range that is within the date range of both the party fiscal classification type and the tax regime.

8. If you associated tax reporting types with fiscal classification, enter any applicable tax reporting codes.