e-business tax engine – not sexy but smart - atlanta...

NOTICE: Proprietary and Confidential. This material is proprietary to Rolta / Karen Brownfield / Alyssa Johnson and contains trade secret and confidential information which is solely the property of Rolta. This material is solely for Client's internal use. This material shall not be used, reproduced, copied, disclosed, and transmitted, in whole or in part, without the express consent of Rolta / Karen Brownfield / Alyssa Johnson.

E-Business Tax Engine – Not Sexy but Smart

March 23, 2012

Karen Brownfield and Alyssa Johnson

Prepared for:

• Understanding the Past: Oracle Standard Tax• R12 E-Business Tax Engine• Benefits and Features• E-Business Tax Configurations• E-Business Tax Third Party Integration

Agenda

2Rolta / Karen Brownfield / Alyssa Johnson Proprietary & Confidential March 26, 2012

• E-Business Tax Reporting• Module Integration• Transactions Management• Tax Simulator• Summary

UNDERSTANDING PRE-R12 STANDARD TAX

• US Based entities• Lack of foreign entity controls• Manual in nature• Currency driven• Rates both manual and subscription• Common/main usage for Sales Tax

Standard Tax - Basics


• Common/main usage for Sales Tax• Use Taxes are afterthoughts• Despite Multi-national organizations (multi-org), previous

releases do not address full global control of taxes, taxing authorities, regulatory and governmental compliance.

• No single source for oversight and control of taxes both foreign and domestic

R12 E-BUSINESS TAX ENGINE

• Single Point Source – Service oriented architecture within EBS

• Self-Service User Interface:- Extended control for products-based tax- Country-specific tax content- Simple to complex country-specific legislations

Global Control with E-Business Tax


- Simple to complex country-specific legislations- Cross-border transactions- Local compliance requirements (domestic)- Constant tax changes by local jurisdictions, legislation, rates and

exceptions

• Simplified Tax Configuration

BENEFITS AND FEATURES

• Easy to follow Setup Tasks

• Required/Not Required

Ease of Configuration and Control


Required• Quick Link to

Setup Task• Global

View/Global Control

• Tax Repository• Self-Assessment/Reverse Charge• Tax Zone Types• Tax Formulas• Tax Condition Sets • Tax Simulator:

– Simulates Tax Calculations based on “What-If” scenarios

New Features with E-Business Tax


– Simulates Tax Calculations based on “What-If” scenarios– Parallel audit trail to review which Tax Rules were satisfied– Can be used to replicate standard transactions for PO, Invoices,

Invoices matched against PO’s, etc. typically integrated with the Tax Lines Interface

– A quick way to enter transactions to perform “what-if” scenarios on tax calculation, but not perform normal validation in the application forms.

NOTE: Tax Simulator emulates, but does not trigger real transactions.

Service Oriented Architecture

Tax Management

Services

Repository, Reports, Dashboards, etc.

Validate Calculate Determine AdditionalAddress Taxes Recovery Services


Rules Engine

Configuration

Definition Setup

METADATAMETADATAMETADATAMETADATA

Taxonomy & Rules

Tax Regimes Place of Registration RatesTaxes Supply Taxable Basis Recovery

PartyPartyPartyParty ProductProductProductProduct PlacePlacePlacePlace ProcessProcessProcessProcess

Tax Regime

Tax Tax Juris-diction

Tax Status

Tax Rate

RecoverRate

OU Tax Accts

CONFIGURATIONS

E-Business Tax Definitions

Tax Regime Tax Tax Jurisdictions Tax Status Tax Rate Recovery

Rate

Operating Unit Tax Accounts

Set of Tax rules that determine treatment of one or more

The geographical area where a tax is levied by a specific tax

Taxable nature of a product or service in context of a

The rate specified for a tax status in effect for a

The rate of Input Tax that is allowed to be

Tax Accounts that are associated with Tax

Distinct charge imposed by a government through a fiscal tax authority


treatment of one or more taxes administered by tax authority

tax is levied by a specific tax authority or where the specific tax rate applies

context of a transaction and a specific tax (taxable, exempt, non-taxable)

status in effect for a period of time

allowed to be recovered or offset against Output Tax

associated with Tax Rates and Recovery Rates Accounting

FOUNDATION FOR E-BUSINESS TAX ARCHITECTURE

through a fiscal tax authority

• “Body of information that relates to a party’s transaction tax activities”

• Legal entities,

Party Tax Profile - Required


• Legal entities, legal establishments and operating units that have tax requirements must have tax profiles

• First Party Legal Establishment• Operating Unit Owning Tax Content• Tax Authority• Third Party• Third Party Site

Tax Profile Party Types


• Third Party Site

• Term definition on setup form

• US Sales Tax is an example of a

Tax Regimes - Required


example of a Tax Regime

• Or in our example US Pirate Treasure Tax!!!

• Regime is setup –what’s next?

• Previous releases we would

Next Step? Create Tax


would scramble to find it

• Here we see “Create Tax” is next

• “Distinct charge imposed by a government through a

Tax


through a fiscal or tax authority”

• Notice geo structure is defined (Country and State)

• Notice the evolving setup hierarchies / entities / steps

Next Step? Create Tax Status


steps• “Regime to

Rate Flow” steps you through the setups

• “Taxable nature of a product in the context of a transaction

Tax Status


of a transaction and a specific tax on the transaction”

Next Step? Create Tax Rate


• Integration with Ledger here

• Notice the “TX”

Tax Rates and Accounts


“TX” jurisdiction here – this could be populated with tax partner

• Accountant Joy!!!! Account setups

• Notice the Ledger is the

Tax Rates and Accounts


Ledger is the intersection with operating unit

• “Guided Rule Entry” should guide you through

Next: Tax Rules


through

Tax Rules Build - Guided


• Oracle-guided setup for building Tax Rules• Multiple-Jurisdiction tax rules can be enabled for

both foreign and domestic tax regimes• Easily updateable• Choice either self or Oracle guided rule building

Tax Rules Build – Guided (con’t)


Tax Jurisdiction – Optional..


• Geographic Region or Tax Zone where tax is levied• Tax Status must be setup• Multiple-Jurisdiction taxes can be enabled for all

counties, or all provinces for a particular type of tax within a particular region/state

• One Tax Jurisdiction must be setup for a tax before transactions can be performed on that jurisdiction

E-Business Tax Configuration

Party Process-Legal Party Fiscal Classification-Registration

-Document-Transaction Fiscal Classification-Transaction Generic


Product Place

-Registration-Party Fiscal

-Goods and Services

Generic Classification-Accounting Event

-Geography associated with the transaction(s)

Legal Entity Setup - Required

Mandatory or Required setups are clearly noted

Quick link to configurations


• Geographic Region or Tax Zone where tax is levied

• Tax Status must be setup

• Multiple-Jurisdiction taxes can be enabled for all counties, or all

Party Classifications - Optional


for all counties, or all provinces for a particular type of tax within a particular region/state

• One Tax Jurisdiction must be setup for a tax before transactions can be performed on that jurisdiction

EE--Business Tax Rules EngineBusiness Tax Rules Engine

ProjectsPayables

Receivables


PurchasingInventory

Party Process

Product Place

Tax Values

4P’s determining factors

EE--Business Tax ServicesBusiness Tax Services

Does NOT provide services forDoes NOT provide services forDoes NOT provide services forDoes NOT provide services for:*Payables withholding taxes*Latin American receivables transactions*India transaction taxes


*Latin American receivables transactions*India transaction taxes

THIRD PARTY INTEGRATIONS

• Vertex- “O” Series – Order to Cash, Procure to Pay- 3.3.14, 3.3.15, 3.4, 4.0.5.3 – Order to Cash

• ADP/Taxware- Enterprise – Order to Cash, Procure to Pay- 3.5 – Order to Cash

• Thomson Reuters/Sabrix – Order to Cash, Procure to Pay

Validated Partners


• CCH, a Wolters Kluwer business – Order to Cash- Procure to Pay slated for validation April 2012

• Contact Vendor for support- For older versions Vertex/Taxware, see 1335680.1 for link to

implementation guide

• How To: R12: What versions of Vertex, ADP/Taxware and Thomson Reuters/Sabrix are validated with E-Business Tax (EBTax) [ID 465260.1]

• E-Business Tax Engine standard package integration (Pre-bundled)• Integration and Configurations:

– Licensing required– Auto Upgrade of existing server-side version if existing, and certify if

necessary the more recent versions (compared to CD versions)– Setups may include

– Install scripts, profile options, lookup codes (tax exemption reasons), provider-specific tax regimes and taxes, client-side tax software, load rates, setup tax

Third Party Tax Integration


specific tax regimes and taxes, client-side tax software, load rates, setup tax accounts (liability), turn-on address validation (make sure before creating new addresses), jurisdiction codes, validate/test provider implementation (test cases).

• Business Processes:– Service Provider Codes definitions (Vertex=Geocodes,

Taxware=Jurisdiction Code)– Handling Exemptions– Reconciliations and Procedures

Regime to Rate Flow

Integration for current rates, and location based tax controls

Tax Relationship Flow - Detail


TAX MANAGEMENT REPORTING

• Single reporting solution to address complex global tax requirements from P2P transactions in a summary format of tax information from AR, AP and the GL.

• Tax Extract copies the data to the interface tables• Use Oracle Reports, XML Publisher, or RXi tools to

Tax Reporting Ledger


• Use Oracle Reports, XML Publisher, or RXi tools to specify which data columns to use and what format you want.

• TRL supports Deferred Output Tax Register, Recoverable/Non-Recoverable Tax Register, Single Cross Product Tax Register, Standard Input and Output Tax Registers

• Common Report Parameters:- Reporting Level (multi-org access)- Reporting Context (reporting level=ledger, OU, etc)- Company Name- Accounting Status (accounted, unaccounted, both)- Currency- GL Date

E-Business Tax Reporting Setups and Programs


- GL Date- Transaction Date

• XML Publisher Reports generation

• Customers with 0 VAT and no VAT Registration Number

• Financial Tax Register• Intra-EU Audit Trail Report• Tax Received

E-Business Tax Reports - Examples


• Tax Received• Tax Reconciliation/ by Taxable Account• Tax Register• Tax Audit• Tax-Only Open Invoices Report

• EMEA VAT reporting: Oracle Financials for Europe, using E-Business tax data extracts to retrieve VAT for EMEA.

• EMEA VAT reports are XML reports• Latin America Tax Reporting: Makes use of the

Latin Tax engine for country-specific reports

E-Business Special Tax Reports


Latin Tax engine for country-specific reports• Asia Pacific Tax Reporting: Makes use of both

Payables and Receivables tax transactions for reporting requirements

• Some Asia Pacific Tax Reports are XML reports

TAX SIMULATOR – WHAT IF

• Ability to test tax changes and rules• Test bed for entering PO’s, Invoices, Invoices

matched against PO’s integrated with Tax Lines Interface

• Create What-If scenarios on tax calculations

Simulation Key Functionality


• Create What-If scenarios on tax calculations without affecting environment with real transactions

• Ability to enter transactions with fewer validations to test your What-If scenarios

Simulation Example - Receivables


UPGRADE FROM 11I

• 11i Tax codes become R12 Tax Classification Codes

• Tax classification codes are entered on the transaction lines and the tax rate associated with the tax classification code is then applied to the

Tax Code Upgrade from 11i to 12


the tax classification code is then applied to the transaction

• Contact support to verify have latest scripts to upgrade 11i transactions to R12 with correct taxes and rates- Test changes to upgraded transactions

• A tax regime is created for each operating unit defined in 11i. Tax regimes are named as “2 digit country code (from the Operating Unit Addre ss) –TAX”, (ex: US-TAX) and hold the tax setup that has been upgraded

• Regimes created for use with integration partners such as Taxware and Vertex have a slightly different naming convention and are typically upgraded as "US-Sales-Tax-101 "

• A Tax is created for each tax code• A Tax Status is created for each tax code• A Tax Rate is created for each tax code

What does this look like in Ebiz Tax


• A Tax Rate is created for each tax code• Tax codes are created and stored in a lookup table as "Output" tax

classification codes for O2C and “Input” for P2P• The tax regime has a "subscription" defined to the operating unit(s) where

taxes are to be calculated for the regime Country.• A Tax "Rule" is then created as a "Direct rate rule". This simple rule hard-

codes the relationship between the tax classification code and the tax, tax status and tax rate. When a transaction is entered and the user picks the tax classification code, the direct rate rule automatically retrieves and associates each of these items to the transaction and does the tax calculation

• Similar to tax codes except in a few key areas• In both cases the user enters the tax

classification code• The key difference is that the Direct Rate rule

that is created has additional formulas that are

Tax Groups


that is created has additional formulas that are used to determine when each of the underlying tax rates should apply

• Jurisdictions are migrated for these records and are associated to tax rates

• Each Tax Rate will have an associated jurisdiction that includes the state, county and city/postal code

• These jurisdictions are linked to geography

Locations Based Taxes


• These jurisdictions are linked to geography records that tie back to actual registered location in the TCA

• As in 11i, Location based taxes calculate using the jurisdiction and do not require specific tax codes

• After the upgrade, the system will set "Configuration Owner Tax Options" for each product and event class (e.g. Invoices, Credit Memo, etc). This will be set as "Standard Tax Classification Code" or STCC following an upgrade

• Combined with the Direct Rate Rule that are created during the 11i upgrade result in a unique branch of code to be called when calculating taxes

What is the STCC?


during the 11i upgrade result in a unique branch of code to be called when calculating taxes

• R12 "Fresh" setup uses the "Determine Tax Regime" tax determination method not STCC

• See MOS ID 1062897.1 ‘Case Study: How to Switch From an Upgraded Tax Regime to a New Tax Regime -Canada HST example’

• In release 12, the tax location flexfield has been replaced by the TCA geography hierarchy

• Geography and Tax validation must be reviewed and configured to meet organizational needs

• Critical to configure address validation early in the upgrade process. Failure to do so will cause issues

Tax Location Flexfield


upgrade process. Failure to do so will cause issues if any customer data is entered or imported. This is particularly relevant if migrating data from a non-Oracle legacy system into R12

• State, County and City must all be defined in TCA for US-based setups where the organization taxes at all three levels

• Exemptions are migrated and have much the same capabilities

• In 11i - Exemption records linked to the customer or ship to

customer site record

• In R12

Exemptions


• In R12 - Exemption records tied to the Party or ship-to Party site

• With the broader adoption of the TCA structure to include Vendors and Employees, this is an important distinction that should be noted if you define any custom reports or query base tables to report on exemptions

• If the configuration owner tax options are set to “STCC”, users CANNOT- Create new tax rules - Modify or add to existing tax rules - Modify existing tax formulas - Newly implement partner integrations such as Vertex or

Restrictions on Migrated Setups


- Newly implement partner integrations such as Vertex or Taxware

- Set up new tax groups- Patch 9723745 allows users to add new tax rates to an

existing tax rate (not create new rates). For example if a jurisdiction rate has changed from 5% to 6%, the old rate could be end dated and create the new rate

• Upgraded Regime- Faster - Exemptions are regime specific so a new regime

means all new exemptions must be defined - Few changes for the end user

Pro/Cons for Upgrading or Fresh Implementation of Regimes


• Fresh Implementation- More flexibility to add/remove tax codes - 11i PL*SQL rules do not migrate - Able to automate many of the tax decisions through the

creation of tax rules

SUMMARY

• E-Business Tax (EBTax) Information Center [ID 11175 44.1]• Information Center: Use E-Business Tax Release 12 a nd

later [ID 1336679.2]

• EBusiness Tax Seed Data [ID 463001.1] • Case Study: Setup R12 E-Business Tax (EBTax) for Canada:

Helpful Documentation


• Case Study: Setup R12 E-Business Tax (EBTax) for Canada: Includes 2010 HST Changes [ID 577996.1]

• E-Business Tax For Oracle Purchasing [ID 464243.1]• eBusiness Tax Release 12 Error Messages: Causes and

Actions [ID 744185.1] • How to obtain debug logfile for R12 E-Business Tax (EBTAX)

[ID 417238.1]

• Greater Efficiencies through automated processes • Improved Consistencies utilizing global tax rules, allowing

the business to conform to governmental requirements both foreign and domestic.

• Allowing Better Control of the decision-making process through increased global visibility of the enterprise

Summary – Global Benefit


through increased global visibility of the enterprise• Ease of configurability and usage• Ability to test/pre-determine taxable scenarios

Release 12 Books by Rolta Employees


The Release 12 Primer –Shining a Light on the

Release 12 World

The ABCs of Workflow for Oracle E-Business Suite

Release 11i and Release 12

Available from Amazon.com, Barnes & Noble (bn.com)

Lulu.com

Questions?

Thank You !!


Karen [email protected]

Alyssa [email protected]

e-business tax engine – not sexy but smart - atlanta...

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