Oracle Fusion Tax Series-Part 2- Configuring Tax Foundation Objects

 

In my previous blogs, I introduced Oracle Fusion Tax and walked through some of the key concepts you need to understand before getting started. In this second blog of my Oracle Fusion Tax series, I’ll be focusing on the foundational setup required for Cloud Tax. In the blogs that follow, we’ll move into more advanced topics and share additional insights to consider when implementing Fusion Tax. For this blog, since my client is based in the US, I’ll be configuring Oracle Fusion Tax specifically for US Sales and Use Tax.

Manage Tax Regime

As mentioned in my previous blog, we set up tax regimes for each geographical region—typically at the country level (or by zone in the case of the EU)—where the client operates and where distinct tax regulations apply.

Navigation: Setup and MaintenanceàFinancials OfferingàTransaction TaxàManage Tax Regime

Tax Regime Code: US SALES AND USE TAX

Tax Regime Name: US SALES AND USE TAX

Regime Level: Country

Country: United States

 

Under Control and Defaults provide some common configuration options such as :

Tax Currency : USD (Since Configuring US Tax)

Minimum Accountable Unit: 0.01 (Minimum Tax to be Applied)

Tax Precision: 2 (How many maximum decimals should be calculated)

Tax Inclusion Method: Standard Non Inclusive Handling (Will there be separate Tax Line on the invoice or will it be included in the Invoice Lines)

Rounding Rule: Nearest (Round Rule Required)

Under Configuration Options and Service Subscriptions, use the Configuration Options tab for the Business Units or Legal Entities for which you want to configure this tax regime. The Service Subscriptions option is intended for scenarios where third‑party tax services—such as Avalara or Vertex—are being implemented. For the purpose of this blog, I will focus on configuring the regime directly within the Fusion Application.

Party Name: Enter Legal Entity or Business Unit you want this regime to be enabled

Configuration for Taxes and Rules: Common Configuration with party overrides (this is generally the Best Practice-however this may change as per client requirements)

Configuration for Product Exceptions: Select Common Configuration

Refer Oracle Documentation for more information on these items-

Link: Tax Configuration Options

 

 

Save and Close

Manage Taxes

While Manage Geographies is ideally the next step in the configuration process, we generally set up geographies during the Enterprise configuration itself, making this step unnecessary.

Once the geographies are confirmed, we move on to the next step in the Manage Taxes configuration. Here, we set up the tax details under the tax regime. Each tax is defined using its tax status, tax rates, and the applicable tax rules.

Navigation: Setup and MaintenanceàFinancials OfferingàTransaction TaxàManage Taxesà Scope :US Sales and Use Tax

For US Sales and Use Tax – we typically configure 3 Taxes i.e. State, County and City- I will configure all of them step by step.

Enter Tax Information Entered in the screenshot:

 

Tax Regime Code: US SALES AND USE TAX

Configuration Owner: Global Configuration Owner (Use Global Configuration Owner if you need the following configurations for all BU’s/LE Defined)

 

Tax: STATE

Tax Name: STATE

 

Under Tax Information:

Geography Type: STATE (This is defined from Manage Geography Structure)

Parent Geography Type: Country

Parent Geography Name: United States

Tax Currency: USD

Applied Amount Handling: Prorated

 

Controls and Defaults

Tax Point Basis: Invoice (Typically what should be the basis for calculating Tax)

Tax Inclusion Method: Standard Non Inclusive Handling

Rest you can copy over directly for the screenshot- it is self explanatory.

Tax Rule Defaults (Depends on Client Requirements-best to confirm)

Place of Supply:

Procure to Pay

Bill From Party	Supplier Site Header Address
Bill to Party	Business Unit Address
Ship to Party	Ship to Location
Ship From Party	Supplier Site Header Address
Ship to, use bill to if not found	Use Ship to Location on the Invoice Line- if missing use Business Unit Address

 

Order to Cash

Bill from Party	Business Unit/Legal Entity Address
Bill to Party	Customer Site Bill To
Ship to Party	Customer Site Ship to
Ship from Party	Warehouse Address (Inventory Org Location)
Ship to, use bill to if not found	Customer site bill to or ship to

 

Tax Applicability: Applicable

 

Indirect Defaults

Create Defaults for Tax Jurisdiction, Status and Rate- for US since we have multiple states, you can default the Jurisdiction where the business Operates.

 

 

Tax Accounts

 

Enter Tax Accounts such as Liability Account for the required Business Unit you are configuring Tax for.

 

Save and Close- do the same exercise for other 2 Taxes (County and City)

In the above screenshots I have already shown how to create a Jurisdiction ,Status and Tax Rates- if you have additional Jurisdiction, Status or Rates you can directly create them from their respective tasks i.e. Manage Tax Jurisdiction, Manage Tax Status and Manage Tax Rates and Tax Recovery Rates.

 

Blog 3 of the Tax Series will touch upon Advanced Tax Conditions- stay tuned