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.

Search First Party Legal Entity - Tax Profile

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

Party Tax Profiles

Click on ‘Update Tax Profile’.

Update Party Tax Profile

Configure the four sections as appropriate:

-          Main:

Party Tax Profile - Main

-          Classifications

Party Tax Profile - Classifications

-          Tax Reporting Codes

Party Tax Profile - Tax Reporting Codes

-          Configuration Options

Party Tax Profile - Configuration Option

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

TaxRegimes

Click on ‘Create’.

Tax Regime - Main Details

Expand the ‘Controls and Defaults’ Region and Configure.

Tax Regime Controls and Defaults

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.

Tax Regime Compounding Level Controls

When you are done, click on ‘Continue’.

Create Tax Regime - Configuration Option

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.

Service Subscriptions

When you are done, click on ‘Finish’.

Tax Regime Creation Confirmation

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

Search Tax Regime

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

Party Tax Profiles

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.

Create Party Tax Profile

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.

Create Party Tax Profile - Tax Reporting Codes

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

When you are done, click on ‘Apply’.

Party Tax Profile Confirmation

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

E-Business Tax Setup: Tax Configuration

Platform: R12

Tax Configuration

E-Business Tax Setup - Tax Configuration

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.

E-Business Tax Lookup Codes

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.

Legal Authorities

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’.

Create Legal Authority

Click on ‘Save and Add Details’.

Legal Authority Confirmation

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

Legal Entity Configurator - Legal Authorities

Click on ‘Create’ and proceed as already explained.

You can query and search for the Legal Authority.

Legal Authority Search

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

Legal Authority

Click on ‘Update’.

Update Legal Authority

Click on ‘Add Legislative Category’.

Add Legislative Category

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).

Updated Legal Authority

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

Legal Entity Configurator Homepage

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.

First Party Legal Entity and Establishment

Set the following for each Legal Establishment:

-          Party Tax Profiles

-          Tax Registrations

Establishment

Also setup your Operating Unit.

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

Shameem Bauccha

1 July 2009