Subject Area Concepts
Taxation is governed by a set of rules defined by law and tax regulations. The rules, represented in the Logical 05100 - Taxation Rules View, define what is taxable, when it is taxable, where it is taxable, who is liable to pay the tax and how the tax liability is calculated. A retail enterprise and its selling locations are likely to be subject to multiple, overlapping sets of taxation rules.
The Logical 05100 Taxation Rules View entity model zooms in on defining the rules that govern:
•Taxability of goods and services (what is taxed and what is not taxed);
•When goods and services are taxed (at time of receipt by the retailer or at time of sale);
•Where goods and services are taxed (at the location where services and goods are physically delivered or at the location where the transaction is completed);
•Who is liable to pay the tax (the end-consumer or the retailer);
•Which tax authorities and tax jurisdictions a retail enterprise (and each of its selling locations) is subject to (based on the physical location of a retail site);
•How the tax liability monetary value is calculated; and
•Tax exemptions and exceptions based on the classification of goods and services and/or on the type of customer (for example, tax exempt charities).
The core entities of the Taxation Rules View include:
•TaxRateRule, which defines the percentages, thresholds, caps and other parameters used to derive tax liability from the taxable retail price of merchandise and services; and
•TaxGroupRule, which is an entity that establishes the applicability of tax rules to groups of items. It also defines the applicability of tax rules to different groups of customers. The TaxGroupRule entity is at the center of the Logical 05100 Taxation Rules View diagram. The upper right hand portion of the view shows entities that identify and describe tax authorities and jurisdictions (political entities) and the geographic area they administer. The area to the left of the TaxGroupRule entity identifies the retail business units subject to the tax rules and the merchandise classifications covered by the tax rules. The view supports scenarios where retail business units (stores) are subject to one or more tax regimes.
As noted earlier, taxes may be levied on goods whenever a transfer of ownership takes place. For retailers, this means at the time merchandise is received and/or the time it is sold.