Products overview
Transactions processed include either a product code or commodity code associated with a product.
Determination uses this transaction data to drive rule selection, select exemption certificates, or fully exempt the product according to your configuration.
ONESOURCE content provides a large set of products and related rules so the correct tax rate's selected.
Because Determination will always tax at the standard rate when a product isn't matched, you don't need to maintain all possible products in Determination. This exception-based processing enables faster processing and less required maintenance of the Determination product tree.
Submitting and matching products
Determination gives you 2 ways to include products in your transaction.
- You can submit a commodity code.If you pass in the <COMMODITY_CODE> element, Determination attempts to directly match this code to a product in the Determination Product Tree. When Determination examines a commodity code, it attempts to match the code by first evaluating the entire code submitted, and then by stripping off one character at a time from the end of the code until it either finds a match or fails.
- You can submit a product code.If you pass in the <PRODUCT_CODE> element, Determination attempts to map this code to a product in Determination. By default, Determination examines the active product mapping group specified for the transacting company, the XML input can also specify a different product mapping group if desired.
In each case:
- Custom products get searched first and, if one matches the product submitted in the transaction, that product gets used.
- If no matching custom product's found, ONESOURCE content products are searched and, if a matching product's found, it's used.
- If neither contains a matching product, products aren't considered and standard taxability (depending on other transaction values) applies to the transaction.
- Both the product code and commodity code are given equal weight, and the matching rule with the highest rule order's selected.
Product matching using parent products
The hierarchical arrangement of products enable you to match products based on parent products using either of the following means.
- Product Code:If you submit a product code, and a rule contains a product that's a parent of the product submitted, the rule will match. For example, if you submit a product which maps to Tea, and the rule contains the product coffee, tea, mate and spices, the rule will match (assuming a match on non-product criteria as well).
- Commodity Code:If you submit a commodity code, and a rule contains a product that's a parent of the product submitted, the rule will match. For example, if you submit the commodity code 0902 (which maps to tea), and the rule contains the product coffee, tea, mate and spices, the rule will match (assuming a match on non-product criteria as well).
- Commodity code matches don't need to match exactly.Consider a transaction where the submitted commodity code is 090230, which doesn't exist in any product group. Determination attempts to first match that number, then strips off numbers one at a time to attempt to match a product. In this example, it would attempt to match 09023, which would fail, and then 0902, which would map to tea and would match the rule as shown above.
Managing custom products
In some cases, ONESOURCE content may not contain all of the products you need. For example, a sales tax holiday may apply to a product that isn't covered by Determination. In this case, you'll need to create a custom product. You can add the following:
- Create 1 or more custom productsin the Custom Product Categories section of the Products and Services page. You can create products in a hierarchy to enable partial matching, or in a flat list to require an absolute match.
- Create product mappingsthat your ERP (enterprise resource platform) system's product codes can map to the newly-created custom products. You must create mappings, even if your ERP system's product code uses the same name as the new custom product. You can create these mappings on the Conditional Mappings page.
- Create custom rules, product exemptions, and exemption certificatesthat result in the desired taxability for the custom product for each authority or customer.note
- Commodity codes must be unique within a customer product group but can duplicate (override) a commodity code in ONESOURCE content. For example, you can't use 2 commodity codes with the number >09 in the Harmonized Custom Product Group
- You can use the commodity code 09 for a single custom product to force Determination to select a custom product with that number rather than a ONESOURCE content product with that number.
Custom products can be created by a company and shared with that company's child companies. If a company obtains its data from a parent or other ancestor, it can't manage its own products.
Customer product mappings that are mapped to the U.S. Product Group can't access products in the INTL Product Groups. For example, if Puerto Rico was incorrectly identified as a country, a custom product mapped to the U.S. Product Group wouldn't be located.
Product groups
Determination provides 1 U.S. and 6 International Product Groups.
These groups contain products for authorities that use similar product taxability. When you create custom products or custom authorities, you need to specify the same product group used by other authorities found in the transaction.
In this example, you would need to add a product to 3 product groups:
- If you're adding a product for which you want to create taxability rules in France, add it to the Harmonized group.
- If you want it to also be applicable to the U.S., add it to the U.S. group.
- And finally, if you want it to be applicable in India, also add it to the Non-Harmonized group.
Each authority specifies membership in 1 and only 1 product group.
International product groups
- Harmonized:An International product group with Goods and Services. The Goods portion of the product group contains information from the Harmonized Coding System of the World Customs Organization.
- Non-Harmonized:An International product group in which product names and commodity codes are based on the United Nations Standard Products and Services Code (UNSPSC).
- Brazil:A product group for products specific to Brazil authorities.
- India GST:A product group specific to India authorities.
These product groups can be used to associate products custom authorities, but aren't recommended for us:
- Canada:A product group for products specific to Canada custom authorities.
- Independent:A product group for products not falling into any other category.importantThomson Reuters strongly advises that you add any custom products to the Harmonized, Non-Harmonized, or Brazil product groups rather than the Canada or Independent product groups. In this way, you can share these products between your custom authorities and the standard tax data provider authorities.
U.S. product group
This group is attached to all U.S. authorities. Product names and commodity codes are based on the UNSPSC.