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: 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.

E-Business Tax Lookup Codes

Platform: R12








ZX_INPUT_CLASSIFICATIONS                                     Used to create tax classification codes for use in tax determination. Release 11i tax codes and tax groups migrate to E-Business Tax as tax classification codes. Payables and Purchasing tax codes migrate as tax classification codes under ZX_INPUT_CLASSIFICATIONS.

ZX_OUTPUT_CLASSICATIONS                                    Release 11i Receivables and Projects tax codes migrate as tax classification codes under ZX_OUTPUT_CLASSICATIONS.

ZX_WEB_EXP_TAX_CLASSIFICATIONS                    Tax Classification Codes for Internet Expense Transactions

ZX_EXEMPTION_REASON_CODE                              Reasons for Tax Exemptions

ZX_JEBE_VAT_TRANS_TYPE                                        Tax Transaction Types to be used when setting up tax rate. Tax Rate Transaction Types represent legal authority codes

ZX_REGISTRATIONS_REASON                                    Tax Registration Reason Codes (for reporting only)

ZX_REGISTRATIONS_TYPE                                           Allows the organization of Registration Types in Categories

ZX_REGISTRATION_STATUS                                        Tax Registration Status Codes. Tax Registration Status Codes are used as determining factors in tax rules. Seeded Values are: Agent, Registered, Not Registered.

ZX_TAX_TYPE_CATEGORY                                           Tax types to classify taxes. Seeded Values are: Sales, VAT, Excise, Custom Duty, Environmental.

Shameem Bauccha

1 July 2009

E-Business Tax setup: Other Prerequisites

Platform: R12



Other Prerequisites

Below is the list of other major prerequisites before you can configure tax.

1. Setup Accounts and Accounting Information
   
   
   
   1. Ledgers
   
   
   2. Legal Entity Balancing Segments
   
   
   3. Accounting Setup
   
   
   4. Complete Accounting Setup
   
   
   
   

Refer to ‘Accounting Setup Manager’ (Document to follow).

1. Setup Oracle Inventory
   
   
   
   1. Define Inventory Value Sets
   
   
   2. Define Inventory Item Category Structure
   
   
   3. Define Category Set
   
   
   4. Define Inventory Categories
   
   
   5. Associate Inventory Items to Category sets
   
   
   
   

Refer to ‘Inventory Tutorial’ (Document to follow).



Shameem Bauccha

30 June 2009

E-Business Tax Setup: Create E-Business Tax Lookups

Platform: R12



Create User Extensible Tax Lookup Codes



E-Business Tax Administrator --> Home --> Task List --> External Dependencies --> Create User Extensible Tax Lookup Codes

Click on the ‘Go to Task’ icon.

[caption id="" align="alignnone" width="754" caption="E-Business Tax Lookup Codes"][/caption]



Use this window to update existing lookup codes and add additional lookup codes

See also ‘E-Business Tax Lookup Codes in R12’.

Shameem Bauccha

1 Jul 2009

E-Business Tax setup: Create Tax Authorities

Platform: R12



Create Reporting and Collecting Tax Authorities

E-Business Tax Administrator --> Home --> Task List --> External Dependencies --> Create Collecting and Reporting Tax Authorities

Click on the ‘Go to Task’ icon.

[caption id="" align="alignnone" width="926" caption="Legal Authorities"][/caption]

If you have not yet defined a Legal Authority while doing GL setup (in the Legal Entity Configurator Module), you may do so now by clicking on ‘Create’.

[caption id="" align="alignnone" width="916" caption="Create Legal Authority"][/caption]

Click on ‘Save and Add Details’.

[caption id="" align="alignnone" width="856" caption="Legal Authority Confirmation"][/caption]

You will get a confirmation message that the Legal Authority has been created.

You can go to the ‘Contact Information’ tab to add contacts and addresses.

Note:

You may also create the Legal Authority as follows:

Legal Entity Manager --> Setup --> Legal Authorities



[caption id="" align="alignnone" width="856" caption="Legal Entity Configurator - Legal Authorities"][/caption]





Click on ‘Create’ and proceed as already explained.

You can query and search for the Legal Authority.

[caption id="" align="alignnone" width="853" caption="Legal Authority Search"][/caption]

Note that you can add legislative categories if required. Click on the ‘View Details’ icon.

[caption id="" align="alignnone" width="852" caption="Legal Authority"][/caption]

Click on ‘Update’.

[caption id="" align="alignnone" width="851" caption="Update Legal Authority"][/caption]

Click on ‘Add Legislative Category’.

[caption id="" align="alignnone" width="724" caption="Add Legislative Category"][/caption]

The ‘Search and Select: Add Legislative Category’ window is opened. Click on Go. Check the appropriate categories and click on ‘Select’.

Note: When you set up a Legal Authority, set its Legislative Category to ‘Transaction Tax’.

Refer to Document ‘Legislative Categories’ (Document to follow).



[caption id="" align="alignnone" width="850" caption="Updated Legal Authority"][/caption]



Click on ‘Apply’.

Shameem Bauccha

1 July 2009

Shameem Bauccha

1 July 2009

E-Business Tax Setup: Create First PartyLegal Entity and Establishment

Platform: R12

Create First Party: Legal Entity and Establishments

This is a required step if you want to use E-Business Tax. If you are using General Ledger, then you will have already defined the Legal Entity and Establishment.

Refer to the following documents:

-          Accounting Setup Manager

-          Legal Entity and Establishment

You need to define the following:

-          Legal Entity

-          Legal Establishments for the Legal Entity

Note that Legal Establishments are setup under a parent Legal Entity.



Click on the ‘Go to Task’ icon. Alternatively you may also navigate as follows:

Legal Entity Manager --> Legal Entity Configurator



[caption id="" align="alignnone" width="852" caption="Legal Entity Configurator Homepage"][/caption]







First Party: Legal Establishment

Setup a Legal Establishment for each office, warehouse, centre etc. which requires registration with a tax authority for one or more taxes. You can setup Party Tax Profiles for each Legal Establishment.

[caption id="" align="alignnone" width="855" caption="First Party Legal Entity and Establishment"][/caption]

Set the following for each Legal Establishment:

-          Party Tax Profiles

-          Tax Registrations

[caption id="" align="alignnone" width="854" caption="Establishment"][/caption]

Also setup your Operating Unit.

See Document ‘Operating Unit’ (Document to follow).



Shameem Bauccha

1 July 2009

E-Business Tax Setup: External Depedencies

Platform: R12

External Dependencies



[caption id="" align="alignnone" width="743" caption="E-Business Tax Setup - External Dependencies"][/caption]







E-Business Administrator --> Home

When you navigate to the E-Business Tax Homepage, you will see a task list that need to be configured before you can use tax in any module.

The task list is broken down in 2 major sections:

1. External Dependencies


2. Tax Configuration

External Dependencies refers to setups on other applications that need to be completed before we can complete with tax configuration.



External Dependencies:

1. Create First Party: Legal Entity and Establishments. This is a required step. You need to create a legal entity and an establishment


2. Create Reporting and Collecting Tax Authorities. You need to have at least one Legal Authority defined. You can set the Legal Authority as Reporting and Collecting Tax Authorities. In some cases these may be two separate Legal Authorities.


3. Create User Extensible Tax Lookup Codes. Preset values already exist. You may decide to alter/add values according to your own requirements.


4. Create Item Category sets. This is at Inventory level.


5. Create Item Categories. This is at inventory level.


6. Create Party Class Category.


7. Create Class Category Codes.


8. Create Geography. If you have taxes that vary depending on geographical location, then you need to configure geography. This setup will be specific to country requirements where the Operating Unit has transactions.


9. Create Tax Zone Types. You can go at levels lower than country level also in case taxes vary within a country (from state to state for example).

In this long list, only the first two tasks are required in all cases.



Shameem Bauccha

1 July 2009

E-Business Tax Setup: Setting Up TCA Geography Hierarchy

Platform: R12

E-Business Tax TCA Geography Hierarchy

In case taxes are levied at a level lower than country level (example at province level) or tax characteristics vary at a level lower than country level, TCA Geography hierarchy must be defined.

TCA Geography hierarchy much be set for each country where there is a tax requirement. The TCA geography hierarchy provides a single reference source for all geographical and location-based information for all E-Business Suite applications.

TCA Geography must be set-up before you can define the following tax-related setups:

-          Legal Entities and Establishments

-          Tax Zones

-          Tax Regimes

-          Taxes

-          Tax Jurisdictions

-          Tax Rules

Use TCA Administration to maintain the following aspects of Geography hierarchy:

-          Country Structure

-          Geography Types

-          Address Validations



In our case we are not using TCA Geography Hierarchy as we have only one tax levied at country level.

Shameem Bauccha

1 July 2009

E-Business Tax Setup: Setup Tax Users

Platform: R12

Seeded E-Business Tax Responsibilities

Oracle E-Business Tax provides 3 seeded responsibilities which you can assign to your tax-users:

-          Tax Manager: Highest level of access. Assign to users responsible to setup and maintaining tax configuration data

-          Tax Administrator: Assign this responsibility to users who will provide E-Business Tax technical setup and support services.

-          Oracle Tax Simulator: Assign to users responsible to test tax setups.

You can of course define your own custom responsibilities.

See document ‘Designing Custom Responsibility’ (Document to follow).

Shameem Bauccha

30 June 2009

Oracle E-Business Tax Overview

Platform: R12

Copyright Info: Entire Document sourced from Oracle Help


Oracle E-Business Tax

[caption id="" align="alignnone" width="829" caption="E-Business Tax Homepage"][/caption]

E-Business Tax allows transaction tax requirements in all geographic locations where the company has business. Configure your taxes to include rules, default values etc. for each tax requirement. At transaction time E-Business Tax uses tax configuration to determine which tax applies. Based on this the tax amounts are calculated.

Tasks involved in setting up tax requirement fall in the following categories:

1. Setting up transaction taxes. Evaluate your tax configuration first.


2. Completing all of the setups and settings related to the processing of taxes on transactions.


3. Setting up tax rules and defaults to manage tax processing.

E-Business Tax and Transaction Taxes

E-Business Tax provides tax services for Order to Cash and Procure to Pay business flows in these applications:

• Advanced Global Intercompany System


• Consigned Inventory


• Oracle General Ledger


• Oracle Internet Expenses


• Oracle iProcurement


• Oracle iStore


• Oracle Order Capture


• Oracle Order Management


• Oracle Payables


• Oracle Projects


• Oracle Purchasing


• Oracle Receivables


• Oracle Services Contracts


• Oracle Trade Management

E-Business Tax does not provide tax services for these transactions:

• Payables withholding taxes.


• Latin American Receivables transactions.


• India transaction taxes.

You can continue to set up and maintain these taxes in the Oracle E-Business Suite using the functionality available from Release 11i.

Oracle Help

30 June 2009