R12 – EB-Tax Setup

07/06/2015 R12EBTaxsetup|OracleAppsStore

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R12EBTaxsetup

JUNE5,2012 10COMMENTS(HTTPS://ORACLEAPPSSTORE.WORDPRESS.COM/2012/06/05/R12EBTAXSETUP/#COMMENTS)

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Taxesweredefinedunderrespectivemodulesuntil11i.ComingtoR12,TaxesareintoanewArchitecture.TheyaredefinedunderaSeparatemodulecalledEBusinessTax.TheShortname/ApplicationShortnameforEBTaxisZX.PleasegothroughthebelowdocumentonthenavigationsandhowTaxesaredefinedinR12.

InOracleR12anewmodulecalledEbusinessTaxhasbeenintroducedformaintenanceofalltaxrelatedrequirementsofdifferentgeographicallocations.ContrarytoOracle11iwherethereeachmodulehaddifferentsetupsfortaxcodeandtaxcalculations;inOracleR12Ebusinesstaxmoduleactsasacentralrepositoryforalltaxsetupsandisintegratedwithallothermodules.

ThisdocumentcoverstwospecificscenarioswhereweusedtheEbusinesstaxmodulestosetuptaxandusethetaxrulesinthemoduletocalculatetaxbasedondifferentrequirements.

BASICTAXSETUPSINEBUSINESSTAX

ThesearethebasicmandatorytaxsetupstobeperformedintheEBusinessTaxModuleinR12toenterTaxlinesmanuallyorcalculatetaxesforanytransaction.



1.TAXREGIME:TaxRegimeissetupforthetaxesineachcountryandageographicregionwhereyoudobusinessandwhereaseparatetaxapplies.Ataxregimeassociatesacommonsetofdefaultinformation,regulations,fiscalclassificationsandregistrationstooneormoretaxeswithsametaxrequirement.

2.TAXES:TaxisclassificationofachargeimposedbyaGovernmentthroughafiscalorataxauthority.Eachseparatetaxinataxregimeincludesrecordsforstatuses,taxratesandrulesusedtocalculateandreporttaxrequirements

3.TAXSTATUS:TaxStatusisthetaxablenatureofaproductorserviceinthecontextofatransactionforatax.

4.TAXJURISDICTION:Ageographicareawhereataxisleviedbyaspecifictaxauthority.

5.TAXRATE:TheratespecifiedforaTaxstatusineffectforaperiodoftime;thetaxratecanbeexpressedasapercentageorasavalueperunitquantity

6.TAXRULES:Ebusinesstaxusesthetaxsetupsalongwiththetaxrulestodecidewhichtaxesapplytoatransactionandhowtocalculatethetaxamountforeachtaxthatappliestoatransaction.

CaseStudy1

BusinessRequirement:CalculationofUSETAXinAPInvoicesbasedonShipToLocationZipcodeandBalancingSegmentofChartofAccounts.

Therequirementofclientwasasfollows:

UsetaxwascalculatedinanAPInvoicebasedonthecombinationofthebalancingsegmentinthechartofaccountsandthezipcodeofashiptolocation.

In11idifferentsalestaxcodesweresetupforeachcombinationofbalancingsegmentandshiptolocation.Anoffsettaxcodewasattachedtoeachofthesalestaxcode.

Foraninvoicewhereusetaxwasapplicabletheuserwouldenterthesalestaxcode(whichhasbeenattachedtoanoffsettaxcode)andvalidatetheinvoice.Thiswouldgeneratetwotaxlinesoneeachforsalestaxandoffsettax.

AftertheupgradetoOracleR12;Usetaxcanbeappliedonaninvoiceintwoways:

1. Similarto11imakesalestaxandoffsettaxcodestogeneratetheusetaxlinesintheAPinvoice.

1. UsefeatureofSelfAssessedtax(newlyintroducedinR12)foraccountingofusetaxlines.



ConceptofSelfAssessedtaxisexplainedlaterinthedocument.

Inthiscasestudywehaveusedoption2asthebase.

Detailedsetupsperformed

1.DefineTaxRegime

Responsibility&Navigation:

TaxManagersTaxConfigurationTaxRegimeCreate

DefineonetaxregimeforcountryUnitedStatesasshownbelow:

(https://oracleappsstore.files.wordpress.com/2012/05/110.png)


2.DefineTaxes



DefineonetaxcalledUSUSETAXunderthetaxregimecreatedforUnitedStates


TaxManagersTaxConfigurationTaxesCreate



ClickonApplytosavethechanges

3.DefineTaxStatuses

Defineonetaxstatusforthetaxregimeandtaxsetupintheprevioussteps.




TaxManagersTaxConfigurationTaxStatusesCreate


4.DefineTaxJurisdictions

Defineonetaxjurisdictionforthetaxregimeandtaxsetupintheprevioussteps.


TaxManagersTaxConfigurationTaxJurisdictionsCreate


5.DefineTaxRates



DefinemultipleratesforthecombinationofCorpandShiptolocationzipcodes.AtaxrateismadeforthecombinationofTaxRegime,TaxandTaxStatus.

Forinstance:

BalancingSegmentsBAL_AandBAL_B

ShiptoLocationzipcode100and101

Thedifferentrateswhichcanbesetupare

USE_BAL_1_1005%

USE_BAL_B_10110%

USE_BAL_A_1012%

USE_BAL_B_1001%


TaxManagersTaxConfigurationTaxRatesCreate


ClickonTaxAccountstoentertheExpenseandliabilityaccountdetails





EntertheTaxExpenseAccount.IfthisisleftblanktheexpenseaccountforITEMlinewillbeused.

TheTaxRecoverable/LiabilityistheUsetaxLiabilityAccounttobeused.

6.DefineTaxRules

OracleprovidesaseededsetofTaxRuleswhichcanbeusedbytheuserfortaxcalculation.Foranytransactionmadethetaxdeterminationprocessusesthesetaxrulestodecidethetaxeswhichwillapplyandtheamountoftaxwhichhastobeappliedforatransaction.

PrerequisitesforsettinguptheTaxRules:

Step1:

TodecidewhetherusetaxappliedonanytransactionwithinPayablesmoduleataxclassificationcodecalledUSETAXAPPLICABLEwillbemade.Ataxclassificationcodeissimilartoataxratecodewithataxrateof0%.






Step2:

CreateGeographyHierarchy:

Thevariouszipcodeswhichwillbeusedinthetaxruleshavetobesetupinthegeographyhierarchyinthetradingcommunityarchitecture.


TradingCommunityManagerAdministrationGeographyHierarchy

QueryforcountryUnitedStatesinthebelowscreenshot


ClickonViewDetailstab




ChosetheStaterequiredandclickonViewDetails


EnterthevariousCountydetailsorenteradefaultcountyforthestateasshownbelow.ClickonViewDetails


EnterthedifferentcitiesforthecountyandclickonViewDetailstoenterthezipcodeforeachcity.




EnterthezipcodeswhichwillbeusedfortaxcalculationwiththecodetypeasTaxGeographyCode.ClickonApplyaftercreating/updatinganychanges


Step3:CreateTaxDeterminingFactorSets


TaxManagersAdvancedSetupOptionsTaxDeterminingFactorSetsCreate


Thedeterminingfactorwillworkinthefollowingmanner:

Sinceusetaxhadtobecalculatedoninvoicesbasedonthebalancingsegmentandshiptolocationwechosethefollowingvaluesinadeterminingfactorset:



1. Flexfieldsegment1oftheLineaccountisthebalancingsegment2. Theshiptolocationpostalcodeoftheinvoice3. Sinceusetaxwillapplyonlytocertaininvoiceswechoseatransactioninputfactorandthe

valueiscalledastaxclassificationcode.

Step4:CreateTaxConditionSets


TaxManagersAdvancedSetupOptionsTaxConditionSetsCreate


Thetaxconditionsetismadefromthetaxdeterminingfactorset.IntheabovescreenshotwehavemadeataxconditionsetforbalancingsegmentCIPandpostalcode62201usingthedeterminingfactorsetmadeintheaboveset.

TAXRULESETUP


TaxManagersTaxConfigurationTaxRules





Thefollowingtaxruleswillbesetupforusetaxcalculation:

1. DetermineTaxApplicability:SincethetaxUS_USEappliesonlyforusetaxwemakethistaxapplicableonlyifthetaxclassificationcodeintheinvoiceforanITEMlineisUSETAXAPPLICABLE





2. DetermineTaxRateThisrulewillderivetheusetaxratefortheinvoicesusingthedeterminingfactorsetandconditionset.Whilemakingthetaxruleweenterthedeterminingfactorsetandtheconditionsetmadeinthepreviousstepsasshowninbelowscreenshot.




Foreachconditionsettherewillbeadifferenttaxratewhichwillbeapplied.

Example:

Asshowninabovescreenshotthereare4conditionsets:

1. COND_CIP_62201ThismeansthatthebalancingsegmentisCIPandshiptopostalcodeis62201.IftheinvoicesatisfiesthesetwoconditionsandthetaxclassificationcodeisUSETAXAPPLICABLEthetaxrateusedwillbeUSE_CIP_62201.

1. COND_AMC_63103ThismeansthatthebalancingsegmentisAMCandshiptopostalcodeis63103.IftheinvoicesatisfiesthesetwoconditionsandthetaxclassificationcodeisUSETAXAPPLICABLEthetaxrateusedwillbeUSE_AMC_63103.

Foralltheotherrulesthedefaultvalueshavebeenused.

7.ConceptofSelfAssessedTax

Aselfassessedtaxisataxcalculatedandremittedforatransaction,wheretaxwasnotleviedbythesupplierbutisdeemedasdue(andthereforeneedstobepaidbythepurchaser).

Insuchcasesthepurchaserisresponsibleforcalculatingandremittingthetax.Selfassessmentisalsoknownasreversechargeorusetaxincertaintaxregimes.

Whenselfassessmentappliestoataxline,EBusinessTaxcreatestherecoverableand/ornonrecoverabledistributions,andPayablescreatesanadditionalaccountingdistributiontorecordtheliabilityfortheselfassessment.



Youcansettheselfassessmentoption:

Atthetaxprofileleveltodefaulttothetaxregistrationsthatyoucreateforthisparty.

Atthetaxregistrationlevel.

Onanindividualtaxline.

EBusinessTaxappliesselfassessmenttoPayablesinvoicesreceivedbythefirstpartyaccordingtothetaxregistrationsettingoftheSetforSelfAssessment/ReverseChargeoption.ThespecifictaxregistrationrecordthatEBusinessTaxusesisderivedeitherfromDetermineTaxRegistrationrulesorfromthedefaulttaxregistration.

WehavesetuptheselfassessedtaxfeatureattheTaxRegistrationlevel.

Navigation:TaxManagersHomeExternalDependenciesCreateFirstParty:LegalEntityandEstablishments

QuerytheLegalEntityViewDetailsEstablishmentsTabQueryEstablishment(whichistheOUhere)RegistrationsCreateTaxRegistration

SinceweareusingtheselfassessedtaxfeatureonlyforusetaxinvoiceswesetupthisoptionforthetaxUS_USEonly.Othertaxeswillnothavethisflagchecked.


8.InvoiceCreationandUseTaxcalculation



InvoicecanbecreatedinbasetableorinterfacetablewiththetaxclassificationcodeasUSETAXAPPLICABLE.Usethecorrectshiptolocationandbalancingsegmentsintheinvoice.

Thetaxruleswillbetriggeredonvalidationoftheinvoiceinbasetablesandtheusetaxlinewillbegenerated.

Sinceweareusingtheselfassessedtaxfeaturetherewillnotbeanytaxdisplayedontheinvoiceline,thetaxdetailswillbevisibleintheTaxDetailsform.Theywillalsonotbestoredinap_invoice_lines_alltable;insteadtheywillbestoredinzx_linestablewiththetrx_idwhichwillbetheinvoice_idoftheinvoice.






Taxlinesformindicatingtheusetaxdetails.



CaseStudy2

BusinessRequirement:CalculationofSALESTAXinAPforInvoicesmadefromsourceERSbasedonSuppliersitepincode



Therequirementofclientwasasfollows:

ThereweremanyinvoicescreatedinAPusingtheERSsourcei.ecreatethePOandReceiptinPurchasingmoduleandthenrunthePayonReceiptprogramtogeneratetheinvoiceininterfacetableswithsourceasERS.

ThestandardPayablesOpenInterfaceImportprogramwillthenimporttheseinvoicesintobaseoracle.

SalestaxappliesonsomeoftheseERStransactionsbasedonthezipcodeofsuppliersite.

Forinstance:AnERSinvoicewithasuppliersiteAhavingzipcode63301hasataxrateof10%tobeappliedwhereassuppliersiteBhavingzipcode62284hasataxrateof6%tobeapplied.

SincetheERSinvoicewhichisinsertedintotheinterfacetableconsistsofonlyITEMlineweneededtoinsertonemoreTAXlinewiththecorrectamount.Additionallythetotalinvoiceamountalsohastobecorrectedtoincludethetaxamount.

Detailedsetupsperformedforthesame.

1.DefineTaxRegime


TaxManagersTaxConfigurationTaxRegimeCreate

DefineonetaxregimeforcountryUnitedStatesasshownbelow:





2.DefineTaxes

DefineonetaxcalledUSSALESTAXunderthetaxregimecreatedforUnitedStates


TaxManagersTaxConfigurationTaxesCreate





ClickonApplytosavethechanges

3.DefineTaxStatuses

Defineonetaxstatusforthetaxregimeandtaxsetupintheprevioussteps.


TaxManagersTaxConfigurationTaxStatusesCreate




4.DefineTaxJurisdictions

Defineonedefaulttaxjurisdictionforthetaxregimeandtaxsetupintheprevioussteps.


TaxManagersTaxConfigurationTaxJurisdictionsCreate


5.DefineTaxRates

Definetaxratesforeachsuppliersitezipcode.AtaxrateismadeforthecombinationofTaxRegime,TaxandTaxStatus.

Forinstance:

Suppliersitezipcodesare63119and61548.

Thedifferentrateswhichwillbesetupare

SALES_631197.575%

SALES_615487.25%






ClickonTaxAccountstoentertheExpenseandliabilityaccountdetails



EntertheTaxExpenseAccount.IfthisisleftblanktheexpenseaccountforITEMlinewillbeused.

TheTaxRecoverable/LiabilityistheUsetaxLiabilityAccounttobeused.Sincethisisasalestaxrateweenterthedefaultaccountof000forthesame.



6.DefineTaxRules

OracleprovidesaseededsetofTaxRuleswhichcanbeusedbytheuserfortaxcalculation.Foranytransactionmadethetaxdeterminationprocessusesthesetaxrulestodecidethetaxeswhichwillapplyandtheamountoftaxwhichhastobeappliedforatransaction.

PrerequisitesforsettinguptheTaxRules:

Step1:

TodecidewhetherusetaxappliedonanytransactionwithinPayablesmoduleataxclassificationcodecalledSALESTAXAPPLICABLEwillbemade.Ataxclassificationcodeissimilartoataxratecodewithataxrateof0%.




Step2:CreateGeographyHierarchy:

Thevariouszipcodeswhichwillbeusedinthetaxruleshavetobesetupinthegeographyhierarchyinthetradingcommunityarchitecture.Setupthezipcodestobeusedforthesuppliersiteswheresalestaxneedstobecalculatedbasedonthestep2inPoint6inCasestudy1.

Step3:CreateTaxDeterminingFactorSets


TaxManagersAdvancedSetupOptionsTaxDeterminingFactorSetsCreate




Thedeterminingfactorwillworkinthefollowingmanner:

SincesalestaxhadtobecalculatedoninvoicesbasedonthesuppliersiteforERSinvoicesthedeterminingfactorswouldbe:

1. GeographyShipFrompostalcode2. TransactionInputFactorTaxclassificationcodewhichwillbeusedforERSinvoices.

Step4:CreateTaxConditionSets


TaxManagersAdvancedSetupOptionsTaxConditionSetsCreate


Thetaxconditionsetismadefromthetaxdeterminingfactorset.Intheabovescreenshotwehavemadeataxconditionsetforpostalcode61548andtaxclassificationcodeSALESTAXAPPLICABLEusingthedeterminingfactorsetmadeintheaboveset.

TAXRULESETUP


TaxManagersTaxConfigurationTaxRules





Thefollowingtaxruleswillbesetupforusetaxcalculation:

3. DetermineTaxApplicability:SincethetaxUS_SALESappliesonlyforERSSalesTaxwemakethistaxapplicableonlyifthetaxclassificationcodeintheinvoiceforanITEMlineisSALESTAXAPPLICABLE





4.DetermineTaxRateThisrulewillderivethesalestaxratefortheinvoicesusingthedeterminingfactorsetandconditionset.Whilemakingthetaxruleweenterthedeterminingfactorsetandtheconditionsetmadeinthepreviousstepsasshowninbelowscreenshot.





Foreachconditionsettherewillbeadifferenttaxratewhichwillbeapplied.

Example:

Asshowninabovescreenshotthereare4conditionsets:

1. COND_SALES_63119Thismeansthatiftheshipfrompostalcodeis63119andthetaxclassificationcodeintheinvoiceisSALESTAXAPPLICABLEthenthetaxrateusedwillbeSALES_63119.

1. COND_SALES_61548Thismeansthatiftheshipfrompostalcodeis61548andthetaxclassificationcodeintheinvoiceisSALESTAXAPPLICABLEthenthetaxrateusedwillbeSALES_61548.



Foralltheotherrulesthedefaultvalueshavebeenused.

7.InvoiceCreationandSalesTaxcalculationforERSinvoice.

GeneratetheERSinvoiceintheinvoiceinterfacetablesusingtheprogramPayonReceiptprogram.

UpdatethefollowingvaluesfortheERSinvoiceintheinterfacetable:

TAXCLASSIFICATIONCODESALESTAXAPPLICABLE

CALCULATETAXAMOUNTDURINGIMPORTSettheflagtoY

ADDTAXTOINVOICEAMOUNTSettheflagtoY

ThecalculatetaxamountflagandaddtaxtoinvoiceamountissettoYsothatthePayablesOpenInterfaceImportprogramwouldtriggertaxrulesandcalculatethetaxamountandalsoaddthetaxamounttotheinvoiceamount.Hencetheinvoicewillbeimportedwiththetaxlineandcorrectinvoiceamount.

Followingistheupdatescriptforthesame:

UPDATEapps.ap_invoices_interface

SETadd_tax_to_inv_amt_flag=Y

ANDcalc_tax_during_import_flag=Y

WHEREsource=ERS

UPDATEapps.ap_invoice_lines_interface

SETtax_classification_code=SALESTAXAPPLICABLE

WHEREinvoice_idIN(SELECTinvoice_id

FROMapps.ap_invoices_interface

WHERESOURCE=ERS)

SnapshotsofERSinvoicesintheinterfacetable.

Invoiceheaderintheinterfacetablebeforeitwasprocessed.




Invoicelineintheinterfacetable


Suppliersitepincode62223


Afterimportingthisinvoice;thetaxlinehasgotgeneratedbasedonthetaxruleforSuppliersite.Theinvoiceamounthasalsochangedfrom1000to1073.50





CaseStudy3

PleasecheckthefollowinglinkforanotherCaseStudy

HowtoSetupOracleApplicationsR12EBTax(https://oracleappsstore.files.wordpress.com/2012/05/howtosetuporacleapplicationsr12ebtax1.doc)



FILEDUNDEREBTAX,GENERALLEDGER TAGGEDWITHEBTAX,TAX

AboutAsokanIhavearound10yearsofWorkingExperienceintheIndustry.HavedonevariousroleslikeDeveloper,Lead,Architectetc.

10ResponsestoR12EBTaxsetup

Surendrasays:November5,2012at1:03AMThanksMr.Asokan,iamneworacleR12

neddurhelptodevelopmyknowledge.

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Replyganeshsays:April10,2013at6:10AMItaverygudandusefuldocument.

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ReplyAsokansays:April10,2013at8:17AMThankyou,Ganesh

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ReplyRaghavendrasays:April17,2013at3:41PMThanksthisisagooddocument.Ihavearequestforyou.Weareupgradedfrom11itoR12,determinationfactorsetisSTCC,butbusinesswantstousethenewfeatureofShiptoLocationbasedtaxinPurchasing.Pleaseprovideanydocumentorinsightintothis.Doweneedtoreimplementoranynewruleswillhelpusout.

Thanks&Regards,Raghu

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ReplyAsokansays:April17,2013at3:57PMIdonthaveanydocsrelatedtothisrequest.Tryusingtaxrules.

Thanks,Asokan

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ReplyRavikanthsays:October2,2013at4:02AMHiAsokan,

Weareupgradingfrom11.5.10.2toR12.1.3ascurrentlytheclientisnotusinganytaxationin



Weareupgradingfrom11.5.10.2toR12.1.3ascurrentlytheclientisnotusinganytaxationinERPsystem,ButaseparatesetupneedstobeconfiguredforEBusinesstax.canyousharewhatminimumsetupsneedstobeconfiguredsothatmynewR12systemworkswithoutanytaxation.

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ReplyAsokansays:October7,2013at10:22AMHiRavi,

Sorryforthedelayinreply.Idonthaveanydocumentsrelated,butIrememberwesettingupcustomtaxratesintheupgradedInstanceastheywerenotcarried.Alsowedidaddfewtaxrulestofunctionitthesameway.

Hopethishelps.

Thanks,Asokan

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ReplyMeenusays:January27,2014at6:18PMHiAsokan,

AmworkinginOraclefromlongbutamstuckwithataxrulesetupashavenevergotachancetoworkintaxes.Myrequirementistotriggeraparticulartax(5050)whichisalreadydefinedforparticulariprocurementcategoryie(mealexpenses)Canyoupleaseguideashowthefunctionalitycanbeachieved.

Rgds,



Rgds,Meenu

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Replyprasannasays:September15,2014at7:39AMHiAll,

IhaveaissueinEBTinwhichIhavesalesorderwithtwolinesoneisInventoryItem&theotheroneisServiceItem,Taxiscalculatingforboththeitemskindlyletmeknowhowtoresolvethisissue.

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Replymaheswarreddysays:November14,2014at10:39PMHiSir,mynameismaheswarreddysourverygreatsirandihaveonedoubt.multipletaxraterequirementthattimewhatcanidosir

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R12 – EB-Tax Setup

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