Countries have a tax authority that regulates tax law. The laws have rules, which are set by the tax authorities. Rules determine the treatment of taxes set by the tax authorities. The rules are applicable within a boundary. Oracle E-Business Suite uses E-Business Tax (EBTAX) to calculate the tax on transactions based on rules.
In this recipe, we will look at the steps required to set up a new tax rule within a boundary for a tax authority.
Let's assume that the government has decided to introduce an additional Sales Tax of 20 percent to start on 01-APR-2011. In this recipe, we will define the new tax and enter a payables transaction for this new tax.