Regime is a set of conditions mainly political. Effectively one the conditions imposed can be taxation related. In EBiz tax, you can create a new responsibility based on Tax Manager responsibility per OU, by setting MO Operating Unit. Once within this responsibility, you can define the Tax Rules, Rates and condition. 
To allow defining taxation for Regimes [a politically governed unit], there is something called as regime to rate flow in R12. Using this you can build taxes based on rules. These tax rules are based on 4Ps, which are product, place, party and process. Using the EBiz Tax module in R12, you can define taxation that will be dependent on one of these four Ps. For example the taxation can vary for consumable product and for engineering products. Likewise for California and New York the taxation can vary. In some countries with agricultural subsidies, the taxation on necessities like food products could be lower.
The country regime is driven by regime to rate flow, and the configurations that we do in regime to rate flow variation factors for variations in taxation rules to be implemented.
Any tax in the world is based on either party specific or place specific or product specific or process specific. By process specific it means this is associated with a type of transaction. To begin with we need to know the geographic tax structure of the country and how exactly the product types relate to transactions.
The regime to rate flow is a wizard, in which the first thing we do is to create a regime. However the regime itself belongs to Tax Authority, for example Government of Canada. Within the tax authority you can have regime. A Tax authority is the tax administrator of the country. But within the Tax authority there will be different bodies that manage Central Sales Tax or State Sales Tax or VAT etc. These different bodies are called regimes. In 11i the equivalent of Tax Regimes was the Tax Locations. Likewise the different Tax states from 11i are now available as jurisdictions in R12.
Within the regimes you can build rules. These rules can be based on 4 Ps.
After defining the regime, you will define something called as "Tax". This is a charge that people will incur or recover. Next we need to define jurisdiction which is an optional setup. Jurisdiction for example specifies that a tax "ABC" applies to country "DEF". The tax could be specific to country or to state. Therefore jurisdiction is a geographical location or an area to which this tax applies.
The step by step guide for implementing Tax by Location in R12 is given in this Metalink https://support.oracle.com/CSP/main/article?cmd=show&type=ATT&id=557139.1:EBTAX
This document can alternately be downloaded from link http://tinyurl.com/23smd2n
You could have 0% tax or exempt tax or a reduced rate tax as Tax Status, for a regime for a particular tax that you have defined and for possibly a jurisdiction. This is the purpose of tax statuses.
After defining the Regime, Tax Name, Jurisdiction, Tax Status- next we specify a Tax Rate. This can be a 10 or 12% etc on the combination of "Regime+Tax Name+Jurisdiction+Tax Status".
Based on these the jurisdiction of the transaction, tax, tax status- a Tax rate will be specified. Then tax rules are applied, based on the tax rules, which is a place where you can give the rules based on 4 Ps. Basically, when a transaction occurs, it can determine the Product,Place, Party and processes. There are 8 rules given here, these 8rules generate exceptions to the arrive at the generic tax.
These tax Rules can be based on
a. Place of supply, based on where you are billing or shipping the product
b. Determination of the applicability of the tax
c. Determination of the tax registration
d. Determination of the tax based on status.
e. Tax rate
f. Taxable basis - based on line amount
g. Recovery Rates
h. Calculation tax amount = tax basis * tax rate
There are two type of rules, one is guided rule or expert rules.
Guided rule is a 5 step process, this is like a wizard and is used for creating a new rule.
If the setup is based on existing conditions or factors, then we use expert rules which is a 3 steps process. Expert rules has two less steps because you leverage the existing tax conditions/factors.
A typical example could be that if bill to is from London and ship to is from Dublin, then tax should be 5%.
In the next article, you will see a step by step guide for creating a new tax regime with a simple rule.
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