Tax Configuration: Create Tax

Platform: R12

Tax Manager --> Tax Configuration --> Taxes

A tax is defined under a tax regime. You need to define a tax regime before you define your tax.

Refer to document ‘Create Tax Regimes’.

Create Tax





Click on ‘Create’.

Main Information

Configure the Tax.

Select the previously defie tax regime code. For your tax to work, define it for party type ‘Operating Unit Owning Tax Content’ in the Configuration Owner.

You may choose to create the new tax from scratch or based on an existing tax (whereby some settings will be defaulted).

If you have localized taxes based on geography, then the need to define your tax zones before.Configure your tax at the appropriate geography type (country, state, city, region etc…). If you are not using tax zones, set your taxes at country level.

You may decide to configure Exchange rate at this level.

You can also set the Reporting Tax Authority and Collecting Tax Authority.

Controls and Defaults

Check the ‘Allow Entry of Manual Tax Lines’ if you intend to allow user to manually input tax lines on invoices. To be able to check that option, you must however check the ‘Allow Overide and Entry of Inclusive Tax Lines’ option also.

In our scenario we will not allow user to manually create tax lines nor will we allow them to override calculated tax lines.

Tax Account Controls

Tax Exeptions/Exemptions Control

Tax Recovery Controls

If you are defining recoverable taxes, then you need to check the ‘Allow Tax Recovery’ option. Along with rate for tax, you will also need to define tax recovery rate.

In our scenario, taxes are not recoverable. However we have defined them as recoverable and set the recovery rate as 0.

Defaults

Tax Reporting Codes

In some countries, you may have specific tax recording requirements. Configure this section if that is the case.

Tax Configuration: Complete First Party Legal Entity Party Tax Profile

Platform: R12

Tax Manager --> Parties --> Party Tax Profiles

On the Tax Manager Homepage, click on the ‘Go to Task’ icon.

[caption id="" align="alignnone" width="920" caption="Search First Party Legal Entity - Tax Profile"][/caption]

Ensure Party Types is ‘First Party Legal Entity’. Type in the Party Name and click on ‘Go’.

[caption id="" align="alignnone" width="893" caption="Party Tax Profiles"][/caption]

Click on ‘Update Tax Profile’.

[caption id="" align="alignnone" width="916" caption="Update Party Tax Profile"][/caption]

Configure the four sections as appropriate:

-          Main:

[caption id="" align="alignnone" width="905" caption="Party Tax Profile - Main"][/caption]

-          Classifications

[caption id="" align="alignnone" width="893" caption="Party Tax Profile - Classifications"][/caption]

-          Tax Reporting Codes

[caption id="" align="alignnone" width="905" caption="Party Tax Profile - Tax Reporting Codes"][/caption]

-          Configuration Options

[caption id="" align="alignnone" width="885" caption="Party Tax Profile - Configuration Option"][/caption]

You can see that the Tax Regime is already associated with the First Party Legal Entity.



Shameem Bauccha

1 July 2009

Tax Configuration: Create Tax Regimes

Platform: R12

Create Tax Regimes
Tax Manager --> Tax Configuration --> Tax Regimes

[caption id="" align="alignnone" width="853" caption="TaxRegimes"][/caption]

Click on ‘Create’.

[caption id="" align="alignnone" width="854" caption="Tax Regime - Main Details"][/caption]

Expand the ‘Controls and Defaults’ Region and Configure.

[caption id="" align="alignnone" width="890" caption="Tax Regime Controls and Defaults"][/caption]

Note that unless you have set the Legal Authority as Reporting Tax Authority or Collecting Tax Authority while creating the Party Tax Profile for the Legal Authority, the Legal Authority will not be available in the drop down list.
See Document ’E-Business Tax Configuration – Tax Authority Party Tax Profile’
Expand the ‘Compounding Level Controls’ region and Configure.

[caption id="" align="alignnone" width="864" caption="Tax Regime Compounding Level Controls"][/caption]

When you are done, click on ‘Continue’.

[caption id="" align="alignnone" width="1024" caption="Create Tax Regime - Configuration Option"][/caption]

Add your First Party Legal Entity. Choose your ‘Configuration for Taxes and Rules’. If you are not using Common Configuration, specify your ‘Configuration for Product Exceptions’. Specify an effective date. US localizations require Service Subscriptions. Click on ‘Service Subscriptions’ to add Service Provider.

[caption id="" align="alignnone" width="897" caption="Service Subscriptions"][/caption]

When you are done, click on ‘Finish’.

[caption id="" align="alignnone" width="900" caption="Tax Regime Creation Confirmation"][/caption]

You will get a confirmation that the tax regime was created successfully.
You can search and see that the Regime has been created.

[caption id="" align="alignnone" width="899" caption="Search Tax Regime"][/caption]

Shameem Bauccha

1 July 2009

Tax Configuration: Create Tax Authority Party Tax Profiles

Platform: R12

Create Tax Authorities Party Tax Profile

Tax Manager --> Tax Configuration --> Tax Authorities Party Tax Profiles



[caption id="" align="alignnone" width="804" caption="Party Tax Profiles"][/caption]







Select the Party Type ‘Tax Authority’. Search for the Party Name (the Legal Authority you created). Click on ‘Go’.

Note that unless your attach the Legislative Category ‘Transaction Tax’ to the Legal Authority you will not get the Legal Authority here.

Click on the ‘Create Tax Profile’ icon.

[caption id="" align="alignnone" width="808" caption="Create Party Tax Profile"][/caption]

Check the appropriate boxes if you want to set the Legal Authority as a Collecting Authority or as a Reporting Authority.

Click on the ‘Tax Reporting Codes’ tab to add Tax Reporting Codes.

[caption id="" align="alignnone" width="802" caption="Create Party Tax Profile - Tax Reporting Codes"][/caption]

See Document ‘E-Business Tax Lookup Codes’ to define quickcodes for E-Business Tax.

When you are done, click on ‘Apply’.

[caption id="" align="alignnone" width="808" caption="Party Tax Profile Confirmation"][/caption]

You will receive a confirmation message that the Party Tax Profile was successfully created.

E-Business Tax Setup: Tax Configuration

Platform: R12

Tax Configuration



[caption id="" align="alignnone" width="767" caption="E-Business Tax Setup - Tax Configuration"][/caption]





Once you are done with the external dependencies, you can begin with Tax Configuration.

The checklist for tax configuration is as follows:

1. Create Tax Authorities Party Tax Profiles


2. Create Tax Regimes


3. Create First Party Legal Entity Party Tax Profile


4. Create Tax


5. Create Tax Reporting Codes


6. Create Tax Status


7. Create Tax Jurisdictions


8. Tax Recovery Rates


9. Tax Rates

Only Tax Reporting Codes and Tax Recovery Rates are optional setups.