e-business tax setups.doc

8/14/2019 E-BUSINESS TAX SETUPS.doc

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BASIC TAX SETUPS IN E-BUSINESS TAX

These are the basic mandatory tax setups to be performed in the E-Business Tax odu!e in "#$ to enter Tax !ines manua!!y or ca!cu!ate taxes for any transaction%

1. TAX REGIME: Tax "e&ime is setup for the taxes in each country and a &eo&raphic re&ion 'here you do business and 'here a separate tax app!ies% A tax

re&ime associates a common set of defau!t information( re&u!ations( fisca! c!assifications and re&istrations to one or more taxes 'ith same tax re)uirement%

2. TAXES: Tax is c!assification of a char&e imposed by a *o+ernment throu&h a fisca! or a tax authority% Each separate tax in a tax re&ime inc!udes records for

statuses( tax rates and ru!es used to ca!cu!ate and report tax re)uirements

3. TAX STATUS: Tax Status is the taxab!e nature of a product or ser+ice in the context of a transaction for a tax%4. TAX JURISDICTION:A &eo&raphic area 'here a tax is !e+ied by a specific tax authority%

5. TAX RATE: The rate specified for a Tax status in effect for a period of time, the tax rate can be expressed as a percenta&e or as a +a!ue per unit )uantity

6. TAX RULES: E-business tax uses the tax setups a!on& 'ith the tax ru!es to decide 'hich taxes app!y to a transaction and ho' to ca!cu!ate the tax amount for

each tax that app!ies to a transaction%

Case Study 1

Business Reui!e"en# Ca!cu!ation of USE TAX in AP In+oices based on Ship To .ocation /ip code and Ba!ancin& Se&ment of Chart of Accounts%

The re)uirement of c!ient 'as as fo!!o's

Use tax 'as ca!cu!ated in an AP In+oice based on the combination of the ba!ancin& se&ment in the chart of accounts and the 0ip code of a ship to !ocation%

In ##i different sa!es tax codes 'ere setup for each combination of ba!ancin& se&ment and ship to !ocation% An offset tax code 'as attached to each of the sa!es

tax code%

1or an in+oice 'here use tax 'as app!icab!e the user 'ou!d enter the sa!es tax code 2'hich has been attached to an offset tax code3 and +a!idate the in+oice% This

'ou!d &enerate t'o tax !ines one each for sa!es tax and offset tax%

After the up&rade to 4rac!e "#$, Use tax can be app!ied on an in+oice in t'o 'ays

# Simi!ar to ##i ma5e sa!es tax and offset tax codes to &enerate the use tax !ines in the AP in+oice%

$ Use feature of Se!f Assessed tax 2ne'!y introduced in "#$3 for accountin& of use tax !ines% Concept of Se!f Assessed tax is exp!ained

!ater in the document%

In #$is %&se s#u'( )e $&*e use' +,#i+n 2 &s #$e -&se.

#% 6efine Tax "e&ime

"esponsibi!ity 7 Na+i&ation

Tax ana&ers 8 Tax Confi&uration 8 Tax "e&ime 8 Create

6efine one tax re&ime for country United States as sho'n be!o'
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$% 6efine Taxes

6efine one tax ca!!ed US USE TAX under the tax re&ime created for United States


Tax ana&ers 8 Tax Confi&uration 8 Taxes 8 Create

C!ic5 on App!y to sa+e the chan&es

9% 6efine Tax Statuses

6efine one tax status for the tax re&ime and tax setup in the pre+ious steps%


Tax ana&ers 8 Tax Confi&uration 8 Tax Statuses 8 Create


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:% 6efine Tax ;urisdictions

6efine one tax


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C!ic5 on Tax Accounts to enter the Expense and !iabi!ity account detai!s

Enter the Tax Expense Account% If this is !eft b!an5 the expense account for ITE !ine 'i!! be used%

The Tax "eco+erab!e.iabi!ity is the Use tax .iabi!ity Account to be used%

% 6efine Tax "u!es

4rac!e pro+ides a seeded set of Tax "u!es 'hich can be used by the user for tax ca!cu!ation% 1or any transaction made the tax determination process uses these

tax ru!es to decide the taxes 'hich 'i!! app!y and the amount of tax 'hich has to be app!ied for a transaction%

!e!euisi#es /+! se##in0 u, #$e T& Rues:

S#e,1:

To decide 'hether use tax app!ied on any transaction 'ithin Payab!es modu!e a tax c!assification code ca!!ed USE TAX APP.ICAB.E 'i!! be made% A tax

c!assification code is simi!ar to a tax rate code 'ith a tax rate of ?@%


Tax ana&ers 8 Tax Confi&uration 8 Tax "ates 8 Create
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Enter the +arious County detai!s or enter a defau!t county for the state as sho'n be!o'% C!ic5 on Fie' 6etai!s

Enter the different cities for the county and c!ic5 on Fie' 6etai!s to enter the 0ip code for each city%

Enter the 0ip codes 'hich 'i!! be used for tax ca!cu!ation 'ith the code type as GTax *eo&raphy CodeH% C!ic5 on App!y after creatin&updatin& any chan&es

S#e,3: C!ee T& De#e!"inin0 &%#+! Se#s


Tax ana&ers 8 Ad+anced Setup 4ptions 8 Tax 6eterminin& 1actor Sets 8 Create
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The determinin& factor 'i!! 'or5 in the fo!!o'in& manner

Since use tax had to be ca!cu!ated on in+oices based on the ba!ancin& se&ment and ship to !ocation 'e chose the fo!!o'in& +a!ues in a determinin& factor set

#% 1!exfie!d se&ment# of the .ine account is the ba!ancin& se&ment

$% The ship to !ocation posta! code of the in+oice

9% Since use tax 'i!! app!y on!y to certain in+oices 'e chose a transaction input factor and the +a!ue is ca!!ed as tax c!assification code%

S#e,4: C!ee T& C+n'i#i+n Se#s


Tax ana&ers 8 Ad+anced Setup 4ptions 8 Tax Condition Sets 8 Create

The tax condition set is made from the tax determinin& factor set% In the abo+e screenshot 'e ha+e made a tax condition set for ba!ancin& se&ment CIP and posta!

code $$?# usin& the determinin& factor set made in the abo+e set%

TAX RULE SETU


Tax ana&ers 8 Tax Confi&uration 8 Tax "u!es


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The fo!!o'in& tax ru!es 'i!! be setup for use tax ca!cu!ation

#% 6etermine Tax App!icabi!ity Since the tax US>USE app!ies on!y for use tax 'e ma5e this tax app!icab!e on!y if the tax c!assification code in the

in+oice for an ITE !ine is GUSE TAX APP.ICAB.EH


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$% 6etermine Tax "ate 8 This ru!e 'i!! deri+e the use tax rate for the in+oices usin& the determinin& factor set and condition set% hi!e ma5in& the tax

ru!e 'e enter the determinin& factor set and the condition set made in the pre+ious steps as sho'n in be!o' screenshot%


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1or each condition set there 'i!! be a different tax rate 'hich 'i!! be app!ied%

Examp!e

As sho'n in abo+e screenshot there are : condition sets

#% C4N6>CIP>$$?# 8 This means that the ba!ancin& se&ment is CIP and ship to posta! code is $$?#% If the in+oice satisfies these t'o conditions and

the tax c!assification code is USE TAX APP.ICAB.E the tax rate used 'i!! be USE>CIP>$$?#%

#% C4N6>AC>9#?9 8 This means that the ba!ancin& se&ment is AC and ship to posta! code is 9#?9% If the in+oice satisfies these t'o conditions

and the tax c!assification code is USE TAX APP.ICAB.E the tax rate used 'i!! be USE>AC>9#?9%

1or a!! the other ru!es the defau!t +a!ues ha+e been used%

J% Concept of Se!f Assessed Tax

A se!f-assessed tax is a tax ca!cu!ated and remitted for a transaction( 'here tax 'as not !e+ied by the supp!ier but is deemed as due 2and therefore needs to bepaid by the purchaser3%

In such cases the purchaser is responsib!e for ca!cu!atin& and remittin& the tax% Se!f-assessment is a!so 5no'n as re+erse char&e or use tax in certain tax re&imes%

hen se!f-assessment app!ies to a tax !ine( E-Business Tax creates the reco+erab!e andor non-reco+erab!e distributions( and Payab!es creates an additiona!

accountin& distribution to record the !iabi!ity for the se!f-assessment%

Kou can set the se!f-assessment option

L At the tax profi!e !e+e! to defau!t to the tax re&istrations that you create for this party%

L At the tax re&istration !e+e!%

L 4n an indi+idua! tax !ine%


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E-Business Tax app!ies se!f-assessment to Payab!es in+oices recei+ed by the first party accordin& to the tax re&istration settin& of the Set for Se!f

Assessment"e+erse Char&e option% The specific tax re&istration record that E-Business Tax uses is deri+ed either from 6etermine Tax "e&istration ru!es or from

the defau!t tax re&istration%

e ha+e setup the se!f assessed tax feature at the Tax "e&istration !e+e!%

Na+i&ation Tax ana&ers 8 ome 8 Externa! 6ependencies 8 Create 1irst Party .e&a! Entity and Estab!ishments

uery the .e&a! Entity -Fie' 6etai!s 8 Estab!ishments Tab 8 uery Estab!ishment 2'hich is the 4U here3 8 "e&istrations 8 Create Tax "e&istration

Since 'e are usin& the se!f assessed tax feature on!y for use tax in+oices 'e set up this option for the tax US>USE on!y% 4ther taxes 'i!! not ha+e this f!a&

chec5ed%

M% In+oice Creation and Use Tax ca!cu!ation

In+oice can be created in base tab!e or interface tab!e 'ith the tax c!assification code as USE TAX APP.ICAB.E% Use the correct ship to !ocation and ba!ancin&

se&ments in the in+oice%

The tax ru!es 'i!! be tri&&ered on +a!idation of the in+oice in base tab!es and the use tax !ine 'i!! be &enerated%

Since 'e are usin& the se!f assessed tax feature there 'i!! not be any tax disp!ayed on the in+oice !ine( the tax detai!s 'i!! be +isib!e in the Tax 6etai!s form% They

'i!! a!so not be stored in ap>in+oice>!ines>a!! tab!e, instead they 'i!! be stored in 0x>!ines tab!e 'ith the trx>id 'hich 'i!! be the in+oice>id of the in+oice%


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Tax !ines form indicatin& the use tax detai!s%

Case Study 2

Business Reui!e"en# Ca!cu!ation of SA.ES TAX in AP for In+oices made from source E"S based on Supp!ier site pin code

The re)uirement of c!ient 'as as fo!!o's

There 'ere many in+oices created in AP usin& the E"S source i%e create the P4 and "eceipt in Purchasin& modu!e and then run the GPay on "eceiptH pro&ram to

&enerate the in+oice in interface tab!es 'ith source as E"S%
http://oracleappsstore.files.wordpress.com/2012/05/311.pnghttp://oracleappsstore.files.wordpress.com/2012/05/30.pnghttp://oracleappsstore.files.wordpress.com/2012/05/291.pnghttp://oracleappsstore.files.wordpress.com/2012/05/281.png


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The standard Payab!es 4pen Interface Import pro&ram 'i!! then import these in+oices into base orac!e%

Sa!es tax app!ies on some of these E"S transactions based on the 0ip code of supp!ier site%

1or instance An E"S in+oice 'ith a supp!ier site A ha+in& 0ip code 99?# has a tax rate of #?@ to be app!ied 'here as supp!ier site B ha+in& 0ip code $$M: has

a tax rate of @ to be app!ied%

Since the E"S in+oice 'hich is inserted into the interface tab!e consists of on!y ITE !ine 'e needed to insert one more TAX !ine 'ith the correct amount%

Additiona!!y the tota! in+oice amount a!so has to be corrected to inc!ude the tax amount%

6etai!ed setups performed for the same%

#% 6efine Tax "e&ime


Tax ana&ers 8 Tax Confi&uration 8 Tax "e&ime 8 Create

6efine one tax re&ime for country United States as sho'n be!o'

$% 6efine Taxes

6efine one tax ca!!ed US SA.ES TAX under the tax re&ime created for United States


Tax ana&ers 8 Tax Confi&uration 8 Taxes 8 Create


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C!ic5 on App!y to sa+e the chan&es

9% 6efine Tax Statuses

6efine one tax status for the tax re&ime and tax setup in the pre+ious steps%


Tax ana&ers D Tax Confi&uration D Tax Statuses D Create


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:% 6efine Tax ;urisdictions

6efine one defau!t tax


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Enter the Tax Expense Account% If this is !eft b!an5 the expense account for ITE !ine 'i!! be used%

The Tax "eco+erab!e.iabi!ity is the Use tax .iabi!ity Account to be used% Since this is a sa!es tax rate 'e enter the defau!t account of ??? for the same%

% 6efine Tax "u!es

4rac!e pro+ides a seeded set of Tax "u!es 'hich can be used by the user for tax ca!cu!ation% 1or any transaction made the tax determination process uses these

tax ru!es to decide the taxes 'hich 'i!! app!y and the amount of tax 'hich has to be app!ied for a transaction%

!e!euisi#es /+! se##in0 u, #$e T& Rues:

S#e,1:

To decide 'hether use tax app!ied on any transaction 'ithin Payab!es modu!e a tax c!assification code ca!!ed SA.ES TAX APP.ICAB.E 'i!! be made% A tax

c!assification code is simi!ar to a tax rate code 'ith a tax rate of ?@%


Tax ana&ers 8 Tax Confi&uration 8 Tax "ates 8 Create

S#e,2: C!ee Ge+0!&,$( ie!&!%$(:

The +arious 0ipcodes 'hich 'i!! be used in the tax ru!es ha+e to be setup in the &eo&raphy hierarchy in the tradin& community architecture% Set up the 0ip codes to

be used for the supp!ier sites 'here sa!es tax needs to be ca!cu!ated based on the step $ in Point in Case study #%

S#e,3: C!ee T& De#e!"inin0 &%#+! Se#s"esponsibi!ity 7 Na+i&ation

Tax ana&ers 8 Ad+anced Setup 4ptions 8 Tax 6eterminin& 1actor Sets 8 Create


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The determinin& factor 'i!! 'or5 in the fo!!o'in& manner

Since sa!es tax had to be ca!cu!ated on in+oices based on the supp!ier site for E"S in+oices the determinin& factors 'ou!d be

#% *eo&raphy 8 Ship 1rom posta! code

$% Transaction Input 1actor 8 Tax c!assif ication code 'hich 'i!! be used for E"S in+oices%

S#e,4: C!ee T& C+n'i#i+n Se#s


Tax ana&ers 8 Ad+anced Setup 4ptions 8 Tax Condition Sets 8 Create

The tax condition set is made from the tax determinin& factor set% In the abo+e screenshot 'e ha+e made a tax condition set for posta! code #=:M and tax

c!assification code SA.ES TAX APP.ICAB.E usin& the determinin& factor set made in the abo+e set%

TAX RULE SETU


Tax ana&ers 8 Tax Confi&uration 8 Tax "u!es


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The fo!!o'in& tax ru!es 'i!! be setup for use tax ca!cu!ation

9% 6etermine Tax App!icabi!ity Since the tax US>SA.ES app!ies on!y for E"S Sa!es Tax 'e ma5e this tax app!icab!e on!y if the tax c!assification code

in the in+oice for an ITE !ine is GSA.ES TAX APP.ICAB.EH


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4. 6etermine Tax "ate 8 This ru!e 'i!! deri+e the sa!es tax rate for the in+oices usin& the determinin& factor set and condition set% hi!e ma5in& the tax ru!e 'e

enter the determinin& factor set and the condition set made in the pre+ious steps as sho'n in be!o' screenshot%

1or each condition set there 'i!! be a different tax rate 'hich 'i!! be app!ied%


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Examp!e

As sho'n in abo+e screenshot there are : condition sets

#% C4N6>SA.ES>9## 8 This means that if the ship from posta! code is 9## and the tax c!assification code in the in+oice is SA.ES TAX

APP.ICAB.E then the tax rate used 'i!! be SA.ES>9##%

#% C4N6>SA.ES>#=:M 8 This means that if the ship from posta! code is #=:M and the tax c!assification code in the in+oice is SA.ES TAX

APP.ICAB.E then the tax rate used 'i!! be SA.ES>#=:M%

1or a!! the other ru!es the defau!t +a!ues ha+e been used%

J% In+oice Creation and Sa!es Tax ca!cu!ation for E"S in+oice%

*enerate the E"S in+oice in the in+oice interface tab!es usin& the pro&ram Pay on "eceipt pro&ram%

Update the fo!!o'in& +a!ues for the E"S in+oice in the interface tab!e

TAX C.ASSI1ICATI4N C46E 8 SA.ES TAX APP.ICAB.E

CA.CU.ATE TAX A4UNT 6U"IN* IP4"T 8 Set the f!a& to K

A66 TAX T4 INF4ICE A4UNT 8 Set the f!a& to K

The ca!cu!ate tax amount f!a& and add tax to in+oice amount is set to K so that the Payab!es 4pen Interface Import pro&ram 'ou!d tri&&er tax ru!es and ca!cu!ate

the tax amount and a!so add the tax amount to the in+oice amount% ence the in+oice 'i!! be imported 'ith the tax !ine and correct in+oice amount%

1o!!o'in& is the update script for the same

UP6ATE apps%ap>in+oices>interface

SET add>tax>to>in+>amt>f!a& O KQ

AN6 ca!c>tax>durin&>import>f!a& O KQ

E"E source O E"SQ

UP6ATE apps%ap>in+oice>!ines>interface

SET tax>c!assification>code O SA.ES TAX APP.ICAB.EQE"E in+oice>id IN 2SE.ECT in+oice>id

1"4 apps%ap>in+oices>interface

E"E S4U"CE O E"SQ3

Snapshots of E"S in+oices in the interface tab!e%

In+oice header in the interface tab!e before it 'as processed%

In+oice !ine in the interface tab!e

Supp!ier site pincode 8 $$$9


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After importin& this in+oice, the tax !ine has &ot &enerated based on the tax ru!e for Supp!ier site% The in+oice amount has a!so chan&ed from #??? to #?J9%=?


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e-business tax setups.doc

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