Cannot enter receivables invoice due to tax jurisdiction error

Module: Receivables

Oracle Version: Oracle R12

Error Message:

“The System cannot determine geographical information for this location and cannot derive a tax jurisdiction. Please contact your system administrator.”

Cause of Issue:

Jurisdiction based tax regimes use the address to determine the tax rate. Only a few countries like the United States of America use a jurisdictional based tax solution. The reason for the error is that you are using a customer that has an address in the USA. In order for Sales or Use tax to be calculated in oracle for a US operating unit, all the addresses used by customers have to be validated. If you allowed a free form entry of an address and accidently put Texxis instead of Texas for the state then the system would not know what the state was and so not state tax would be determined. To ensure the correct tax is recorded each and every time, the system has the ability t validate the address and the address validation is set to be on by default.

So why am I getting this message when I am using a US customer for a non-US operating unit, trying to bill from France for example. The reason is that Oracle shares all its customers so that a customer set up for your French entity based in the US could someday be used by a US entity you either have now or could have in the future. The customer is shared across operating units and the geography validation is an all or nothing so is set globally.

Solution:

You have two options.

1. Have US indirect tax requirements.
If you need to calculate US sales or Use tax now or in the future, then set up your US geography structure and make sure you record all your customer address correctly. To set your geography hierarchy and validation up for the US, contact us for a guide.

2. No US indirect tax requirements.
If you do not currently and do not intend to calculate US Sales and Use tax then you can turn the validation off. To do this you need to use the Trading Community Manager responsibility and un-tick all the tax and Geography validation boxes.

 

 

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