R12 Oracle E-Business Tax Fundamentals SG

R12 Oracle E-Business Tax
Fundamentals
Student Guide
D49306GC30
Edition 3.0
February 2009
D58449

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Copyright 2009, Oracle. All rights reserved.
This documentation contains proprietary information of Oracle Corporation. It is provided under a license agreement containing
restrictions on use and disclosure and is also protected by copyright law. Reverse engineering of the software is prohibited. If this
documentation is delivered to a U.S. Government Agency of the Department of Defense, then it is delivered with Restricted Rights
and the following legend is applicable:
Restricted Rights Legend
Use, duplication or disclosure by the Government is subject to restrictions for commercial computer software and shall be deemed
to be Restricted Rights software under Federal law, as set forth in subparagraph (c)(1)(ii) of DFARS 252.227-7013, Rights in
Technical Data and Computer Software (October 1988).
This material or any portion of it may not be copied in any form or by any means without the express prior written permission of the
Education Products group of Oracle Corporation. Any other copying is a violation of copyright law and may result in civil and/or
criminal penalties.
If this documentation is delivered to a U.S. Government Agency not within the Department of Defense, then it is delivered with
Restricted Rights, as defined in FAR 52.227-14, Rights in Data-General, including Alternate III (June 1987).
The information in this document is subject to change without notice. If you find any problems in the documentation, please report
them in writing to Worldwide Education Services, Oracle Corporation, 500 Oracle Parkway, Box SB-6, Redwood Shores, CA 94065.
Oracle Corporation does not warrant that this document is error-free.
Oracle and all references to Oracle Products are trademarks or registered trademarks of Oracle Corporation.
All other products or company names are used for identification purposes only, and may be trademarks of their respective owners.
Author
Mary Kalway, Robert MacIssac
Technical Contributors and Reviewers
Ramasubramanian Balasundaram, Rajesh Bhatt, Nigel Chapman, Kevan Davies, Julianna
Dodick, Nirajita Mitra, Anand Naik, Pamela Rietz, Christine Rudd, Harsh Takle, Brijesh
Thakkar, Amit Vohra, Kathryn Wohnoutka, Andrea Auld, Christine Rudd
This book was published using: oracletutor

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R12 Oracle E-Business Tax Fundamentals Table of Contents
i
Table of Contents
Oracle E-Business Tax Overview...................................................................................................................1-1
Oracle E-Business Tax Overview..................................................................................................................1-2
Objectives......................................................................................................................................................1-3
Agenda...........................................................................................................................................................1-4
E-Business Tax New Product .....................................................................................................................1-5
E-Business Tax Benefits.............................................................................................................................1-7
E-Business Tax Solutions for Business Needs ..............................................................................................1-8
Integration Within Oracle E-Business Suite..................................................................................................1-12
Agenda...........................................................................................................................................................1-15
E-Business Tax Architecture .........................................................................................................................1-16
E-Business Tax Home Page...........................................................................................................................1-18
Agenda...........................................................................................................................................................1-19
E-Business Tax Key Concepts Tax Definition ...........................................................................................1-20
Key Concepts: Tax Authority........................................................................................................................1-22
Key Concepts: Tax Regime...........................................................................................................................1-23
Key Concepts: Tax ........................................................................................................................................1-24
Key Concepts: Tax Jurisdiction.....................................................................................................................1-25
E-Business Tax Key Concepts Configuration Components .......................................................................1-26
E-Business Tax Key Concepts Tax Rules Engine ......................................................................................1-29
Tax Determination Management ...................................................................................................................1-32
Agenda...........................................................................................................................................................1-34
E-Business Tax Processing............................................................................................................................1-35
Receivables Transaction Example.................................................................................................................1-36
Summary........................................................................................................................................................1-40
Part 1: Oracle E-Business Tax Basic Tax Configuration.............................................................................2-1
Part 1: Oracle E-Business Tax Basic Tax Configuration...............................................................................2-2
Objectives......................................................................................................................................................2-3
Agenda...........................................................................................................................................................2-4
E-Business Tax Home Page External Dependencies & Tax Configuration ...............................................2-6
E-Business Tax Configuration Flow External Dependencies.....................................................................2-7
E-Business Tax Configuration Flow Tax Configuration ............................................................................2-8
Tax Users.......................................................................................................................................................2-9
Profile Option Values ....................................................................................................................................2-10
Legal Entity ...................................................................................................................................................2-12
Lookup Codes................................................................................................................................................2-14
Regime-to-Rate Flow for US Sales Tax ........................................................................................................2-16
Regime-to-Rate Flow for UK VAT...............................................................................................................2-18
Agenda...........................................................................................................................................................2-20
Tax Regimes..................................................................................................................................................2-21
Tax Regime Setup .........................................................................................................................................2-22
Agenda...........................................................................................................................................................2-24
Taxes .............................................................................................................................................................2-25
Tax Setup.......................................................................................................................................................2-26
Agenda...........................................................................................................................................................2-27
Tax Statuses...................................................................................................................................................2-28
Tax Status Setup............................................................................................................................................2-29
Agenda...........................................................................................................................................................2-30
Tax Rates.......................................................................................................................................................2-31
Tax Rate Setup ..............................................................................................................................................2-32
Agenda...........................................................................................................................................................2-34
Tax Jurisdictions............................................................................................................................................2-35

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Tax Jurisdiction Setup ...................................................................................................................................2-36
Summary........................................................................................................................................................2-37
Part 2: Oracle E-Business Tax Basic Tax Configuration.............................................................................3-1
Part 2: Oracle E-Business Tax Basic Tax Configuration...............................................................................3-2
Objectives......................................................................................................................................................3-3
Agenda...........................................................................................................................................................3-4
E-Business Tax Home Page External Dependencies & Tax Configuration ...............................................3-6
Basic Tax Configuration Additional Setup Options ...................................................................................3-7
Agenda...........................................................................................................................................................3-9
Tax Zones ......................................................................................................................................................3-10
TCA Geography Hierarchy............................................................................................................................3-12
Tax Zone Setup..............................................................................................................................................3-13
Agenda...........................................................................................................................................................3-14
Define Tax Accounts .....................................................................................................................................3-15
Tax Account Setup ........................................................................................................................................3-17
Agenda...........................................................................................................................................................3-19
Tax Reporting Types .....................................................................................................................................3-20
Tax Reporting Type Setup.............................................................................................................................3-21
Agenda...........................................................................................................................................................3-22
Mass Create Tax Jurisdictions .......................................................................................................................3-23
Mass Create Tax Jurisdictions Setup.............................................................................................................3-24
Agenda...........................................................................................................................................................3-26
Tax Recovery Rates.......................................................................................................................................3-27
Summary........................................................................................................................................................3-28
Managing Party Tax Profiles..........................................................................................................................4-1
Managing Party Tax Profiles.........................................................................................................................4-2
Objectives......................................................................................................................................................4-3
Agenda...........................................................................................................................................................4-4
E-Business Tax Home Page Party Tax Profiles..........................................................................................4-6
Using Party Tax Profiles................................................................................................................................4-7
Party Tax Profile............................................................................................................................................4-9
First Party Legal Entity Tax Profile...............................................................................................................4-12
First Party Legal Establishment Tax Profile..................................................................................................4-14
First Party Tax Profile Setup .........................................................................................................................4-16
Operating Unit Tax Profile ............................................................................................................................4-17
Tax Authority Tax Profile .............................................................................................................................4-18
Third Party Tax Profile..................................................................................................................................4-19
Third Party Tax Profile Setup........................................................................................................................4-21
Agenda...........................................................................................................................................................4-22
Self-Assessment Setup ..................................................................................................................................4-23
Agenda...........................................................................................................................................................4-25
Offset Taxes...................................................................................................................................................4-26
Offset Taxes Setup.........................................................................................................................................4-27
Agenda...........................................................................................................................................................4-28
Tax Exemptions.............................................................................................................................................4-29
Tax Exemptions Setup...................................................................................................................................4-31
Agenda...........................................................................................................................................................4-32
Tax Registrations...........................................................................................................................................4-33
Tax Registrations Setup.................................................................................................................................4-35
Summary........................................................................................................................................................4-36
Configuration Owners and Service Providers ..............................................................................................5-1
Configuration Owners and Service Providers................................................................................................5-2
Objectives......................................................................................................................................................5-3

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Agenda...........................................................................................................................................................5-4
E-Business Tax Home Page Configuration Owner & Options...................................................................5-7
Tax Configuration Ownership.......................................................................................................................5-8
Tax Configuration Options............................................................................................................................5-10
Configuration for Taxes and Rules................................................................................................................5-11
Configuration for Product Exceptions ...........................................................................................................5-12
Legal Entity and Operating Unit Configuration Options...............................................................................5-13
Agenda...........................................................................................................................................................5-14
Configuration Options ...................................................................................................................................5-15
Configuration Options Setup.........................................................................................................................5-16
Agenda...........................................................................................................................................................5-17
Service Subscriptions ....................................................................................................................................5-18
Service Subscriptions Setup ..........................................................................................................................5-20
Agenda...........................................................................................................................................................5-21
Event Classes.................................................................................................................................................5-22
Configuration Owner Tax Options ................................................................................................................5-24
Summary........................................................................................................................................................5-26
Fiscal Classifications........................................................................................................................................6-1
Fiscal Classifications .....................................................................................................................................6-2
Objectives......................................................................................................................................................6-3
Agenda...........................................................................................................................................................6-4
E-Business Tax Home Page Fiscal Classifications.....................................................................................6-7
Fiscal Classifications .....................................................................................................................................6-8
Agenda...........................................................................................................................................................6-10
Party Fiscal Classifications............................................................................................................................6-11
Party Fiscal Classifications Setup..................................................................................................................6-12
Legal Party Fiscal Classifications..................................................................................................................6-13
Agenda...........................................................................................................................................................6-14
Product Fiscal Classifications........................................................................................................................6-15
Product Fiscal Classifications Setup..............................................................................................................6-17
Agenda...........................................................................................................................................................6-19
Product Tax Exceptions.................................................................................................................................6-20
Product Tax Exceptions Setup.......................................................................................................................6-22
Agenda...........................................................................................................................................................6-24
Transaction Fiscal Classifications .................................................................................................................6-25
Summary........................................................................................................................................................6-27
Part 1: Setting Up Tax Rules ..........................................................................................................................7-1
Part 1: Setting Up Tax Rules .........................................................................................................................7-2
Objectives......................................................................................................................................................7-3
Agenda...........................................................................................................................................................7-4
E-Business Tax Homepage Tax Rules........................................................................................................7-6
Rule Engine ...................................................................................................................................................7-7
Rule Engine Rule Types .............................................................................................................................7-8
Rule Engine Tax Regimes ..........................................................................................................................7-10
Rule Engine Place of Supply / Taxation.....................................................................................................7-11
Rule Engine Applicability & Registration..................................................................................................7-12
Rule Engine Status & Rates........................................................................................................................7-14
Rule Engine Taxable Basis.........................................................................................................................7-16
Rule Engine Tax Calculation......................................................................................................................7-17
Rule Engine Recovery Rate........................................................................................................................7-18
Agenda...........................................................................................................................................................7-19
Tax Rule Defaults..........................................................................................................................................7-20
Agenda...........................................................................................................................................................7-22

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Make Tax Available on Transactions ............................................................................................................7-23
Agenda...........................................................................................................................................................7-25
Oracle Tax Simulator.....................................................................................................................................7-26
Troubleshooting the Tax Configuration ........................................................................................................7-28
Agenda...........................................................................................................................................................7-30
Tax Rules Entry.............................................................................................................................................7-31
Tax Rules Guided Rule Entry.....................................................................................................................7-32
Tax Rules Guided Rule Entry Setup...........................................................................................................7-35
Summary........................................................................................................................................................7-37
Objectives......................................................................................................................................................8-3
Agenda...........................................................................................................................................................8-4
Determining Factors ......................................................................................................................................8-7
Determining Factor Party ...........................................................................................................................8-9
Determining Factor Product .......................................................................................................................8-11
Determining Factor Place ...........................................................................................................................8-12
Determining Factor Process........................................................................................................................8-14
Agenda...........................................................................................................................................................8-16
Tax Determining Factor Set...........................................................................................................................8-17
Tax Determination Set Setup for Tax Rules..................................................................................................8-19
Regime Determination Set Setup...................................................................................................................8-21
Agenda...........................................................................................................................................................8-22
Tax Formulas.................................................................................................................................................8-23
Tax Formula Setup ........................................................................................................................................8-25
Agenda...........................................................................................................................................................8-26
Tax Condition Sets ........................................................................................................................................8-27
Tax Condition Sets Setup ..............................................................................................................................8-28
Summary........................................................................................................................................................8-29
Objectives......................................................................................................................................................9-3
Agenda...........................................................................................................................................................9-4
Rules in Detail Example UK Rules Setup (Intra EU Sales) ..........................................................................9-7
UK Rules Setup - Intra EU Sales...................................................................................................................9-8
Agenda...........................................................................................................................................................9-15
Rules in Detail Example Summary UK Rules Setup (Intra EU Sales) ..........................................................9-16
Agenda...........................................................................................................................................................9-18
Tax Rules.......................................................................................................................................................9-19
Tax Rules Expert Rule Entry......................................................................................................................9-20
Summary........................................................................................................................................................9-21
Tax Recovery ...................................................................................................................................................10-1
Tax Recovery.................................................................................................................................................10-2
Objectives......................................................................................................................................................10-3
Agenda...........................................................................................................................................................10-4
E-Business Tax Homepage Tax Recovery .................................................................................................10-6
Tax Recovery.................................................................................................................................................10-7
Value Added Tax Overview..........................................................................................................................10-8
Regime-to-Rate Flow with UK VAT.............................................................................................................10-9
Agenda...........................................................................................................................................................10-10

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Tax Recovery Rates.......................................................................................................................................10-11
Agenda...........................................................................................................................................................10-13
Rule Engine Recovery Rate........................................................................................................................10-14
Agenda...........................................................................................................................................................10-15
Tax Recovery Processing ..............................................................................................................................10-16
Summary........................................................................................................................................................10-18
Managing Taxes on Transactions...................................................................................................................11-1
Managing Taxes on Transactions ..................................................................................................................11-2
Objectives......................................................................................................................................................11-3
Agenda...........................................................................................................................................................11-4
E-Business Tax Homepage Oracle Tax Simulator .....................................................................................11-6
Services .........................................................................................................................................................11-7
Payables Transactions....................................................................................................................................11-10
Payables Transactions Invoices Matched to POs.......................................................................................11-12
Payables Transactions Prepayment Invoices ..............................................................................................11-14
Payables Transactions Price Corrections....................................................................................................11-16
Receivables Transactions...............................................................................................................................11-17
Receivables Transactions Debit and Credit Memos ...................................................................................11-18
Intercompany Transactions............................................................................................................................11-20
Agenda...........................................................................................................................................................11-22
Managing Detail Tax Lines ...........................................................................................................................11-23
Agenda...........................................................................................................................................................11-25
Managing Summary Tax Lines .....................................................................................................................11-26
Agenda...........................................................................................................................................................11-28
Managing Tax Distributions..........................................................................................................................11-29
Agenda...........................................................................................................................................................11-31
Managing Tax Exemptions............................................................................................................................11-32
Agenda...........................................................................................................................................................11-34
Using the Oracle Tax Simulator to Enter Transactions .................................................................................11-35
Summary........................................................................................................................................................11-37
Tax Reporting Ledger.....................................................................................................................................12-1
Tax Reporting Ledger....................................................................................................................................12-2
Objectives......................................................................................................................................................12-3
Agenda...........................................................................................................................................................12-4
E-Business Tax Home Page Requests ........................................................................................................12-6
Tax Reporting................................................................................................................................................12-7
Tax Reporting Ledger....................................................................................................................................12-9
XML Publisher ..............................................................................................................................................12-11
Agenda...........................................................................................................................................................12-13
E-Business Tax Reports.................................................................................................................................12-14
Agenda...........................................................................................................................................................12-16
EMEA VAT Reports .....................................................................................................................................12-17
Latin American Tax Reports .........................................................................................................................12-18
Asia/Pacific Tax Reports ...............................................................................................................................12-20
Summary........................................................................................................................................................12-22
Appendix A: Managing Migrated Tax Data .................................................................................................13-1
Appendix A: Managing Migrated Tax Data ..................................................................................................13-2
Objectives......................................................................................................................................................13-3
Agenda...........................................................................................................................................................13-4
Commitment To Continuity Direct Path From 11i ........................................................................................13-5
Tax Definition Upgrade Flow........................................................................................................................13-6
Release 11i Architecture................................................................................................................................13-7
Tax Code Migration.......................................................................................................................................13-8

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Data Ownership.............................................................................................................................................13-10
Operating Unit Tax Profiles...........................................................................................................................13-11
Agenda...........................................................................................................................................................13-13
Tax Classification Codes ...............................................................................................................................13-14
Agenda...........................................................................................................................................................13-16
Application Tax Options ...............................................................................................................................13-17
Tax Defaulting Hierarchy Upgrade Flow......................................................................................................13-19
Agenda...........................................................................................................................................................13-21
Configuration Owner Tax Options ................................................................................................................13-22
Agenda...........................................................................................................................................................13-24
Tax Account Information ..............................................................................................................................13-25
Agenda...........................................................................................................................................................13-26
Direct Tax Rate Determination Rule .............................................................................................................13-27
Agenda...........................................................................................................................................................13-29
Stages of Implementation - From 11i to R12.................................................................................................13-30
Tax Configuration Migration Path.................................................................................................................13-31
Point A Scenario VAT Upgrade Mapping..................................................................................................13-33
Point B Scenario VAT Upgrade Mapping..................................................................................................13-34
Summary........................................................................................................................................................13-36

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Preface
Profile
Before You Begin This Course
Before you begin this course, you should have the following qualifications:
Basic knowledge of business accounting concepts.
Working experience with business tax requirements.
Thorough knowledge of Oracle Applications.
Prerequisites
R12 Navigate Oracle Applications
R12 eBusiness Suite Essentials for Implementers
How This Course Is Organized
R12 Oracle E-Business Tax Fundamentals Ed 3 is an instructor-led course featuring lecture and
hands-on exercises. Online demonstrations and written practice sessions reinforce the concepts
and skills introduced.

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Related Publications
Oracle Publications
Title Part Number
Oracle E-Business Tax Implementation Guide B25960-01
Oracle E-Business Tax User Guide B25959-01
Oracle E-Business Tax Reporting Guide B31346-01
Oracle Inventory User's Guide B31547-01
Oracle Financials for Europe User Guide B31520-01
Oracle Financials for the Americas User Guide B31525-01
Oracle Financials for Asia/Pacific User Guide B31519-01
Additional Publications
System release bulletins
Installation and users guides
Read-me files
International Oracle Users Group (IOUG) articles
Oracle Magazine

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Typographic Conventions
Typographic Conventions in Text

Convention Element Example
Bold italic Glossary term (if
there is a glossary)
The algorithm inserts the new key.
Caps and
lowercase
Buttons,
check boxes,
triggers,
windows
Click the Executable button.
Select the Cant Delete Card check box.
Assign a When-Validate-Item trigger to the ORD block.
Open the Master Schedule window.
Courier new,
case sensitive
(default is
lowercase)
Code output,
directory names,
filenames,
passwords,
pathnames,
URLs,
user input,
usernames
Code output: debug.set (I, 300);
Directory: bin (DOS), $FMHOME (UNIX)
Filename: Locate the init.ora file.
Password: User tiger as your password.
Pathname: Open c:\my_docs\projects
URL: Go to http://www.oracle.com
User input: Enter 300
Username: Log on as scott
Initial cap Graphics labels
(unless the term is a
proper noun)
Customer address (but Oracle Payables)
Italic Emphasized words
and phrases,
titles of books and
courses,
variables
Do not save changes to the database.
For further information, see Oracle7 Server SQL Language
Reference Manual.
Enter user_id@us.oracle.com, where user_id is the
name of the user.
Quotation
marks
Interface elements
with long names
that have only
initial caps;
lesson and chapter
titles in cross-
references
Select Include a reusable module component and click Finish.

This subject is covered in Unit II, Lesson 3, Working with
Objects.
Uppercase SQL column
names, commands,
functions, schemas,
table names
Use the SELECT command to view information stored in the
LAST_NAME
column of the EMP table.
Arrow Menu paths Select File > Save.
Brackets Key names Press [Enter].
Commas Key sequences Press and release keys one at a time:
[Alternate], [F], [D]
Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]

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Typographic Conventions in Code

Convention Element Example
Caps and
lowercase
Oracle Forms
triggers
When-Validate-Item

Lowercase Column names,
table names
SELECT last_name
FROM s_emp;

Passwords DROP USER scott
IDENTIFIED BY tiger;
PL/SQL objects OG_ACTIVATE_LAYER
(OG_GET_LAYER (prod_pie_layer))

Lowercase
italic
Syntax variables CREATE ROLE role
Uppercase SQL commands and
functions
SELECT userid
FROM emp;
Typographic Conventions in Oracle Application Navigation Paths
This course uses simplified navigation paths, such as the following example, to direct you
through Oracle Applications.
(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve
This simplified path translates to the following:
1. (N) From the Navigator window, select Invoice then Entry then Invoice Batches
Summary.
2. (M) From the menu, select Query then Find.
3. (B) Click the Approve button.
Notations:
(N) = Navigator
(M) = Menu
(T) = Tab
(B) = Button
(I) = Icon
(H) = Hyperlink
(ST) = Sub Tab

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Typographical Conventions in Oracle Application Help System Paths
This course uses a navigation path convention to represent actions you perform to find
pertinent information in the Oracle Applications Help System.
The following help navigation path, for example
(Help) General Ledger > Journals > Enter Journals
represents the following sequence of actions:
1. In the navigation frame of the help system window, expand the General Ledger entry.
2. Under the General Ledger entry, expand Journals.
3. Under Journals, select Enter Journals.
4. Review the Enter Journals topic that appears in the document frame of the help system
window.

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Oracle E-Business Tax Overview
Chapter 1 - Page 1
Oracle E-Business Tax
Overview
Chapter 1

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Chapter 1 - Page 2

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Chapter 1 - Page 3
Objectives

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Chapter 1 - Page 4
Agenda

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E-Business Tax New Product

E-Business Tax New Product
Oracle E-Business Tax:
Is a new product in this release.
Provides the infrastructure for transaction tax knowledge management and delivery using
a global system architecture that is configurable and scalable for adding country-specific
tax content.
Is a single point solution for managing transaction-based tax.
Uniformly delivers tax services to all E-Business Suite business flows through one
application interface.
Consists of a tax knowledge base, a variety of tax services that respond to specific tax
events, a set of repositories (for tax content and tax recording) that allows customers to
manage their local tax compliance needs in a proactive manner, as well as the ability to
integrate with external tax content providers through a single integration point.

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Features
Features of E-Business Tax include:
Date affectivity on your tax configuration.
Tax simulator which enables you to test your tax configuration.
Classify your tax exceptions:
- Item.
- Intended use.
- Place of supply.
Look for commonalities:
- Define a classification rule to apply to many suppliers.
- Group geography facts using TCA Geography model.

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E-Business Tax Benefits

E-Business Tax Benefits
E-Business Tax delivers the following benefits:
Migration to Release 12 from Release 11i.
Minimize the need for detailed regional tax knowledge.
Simplified setup.
Minimize the risk associated with tax compliance.
Tax data modeling tool.
Automatic tax handling for:
- Sales and use tax.
- Compound tax and surcharges.
- Deferred tax.
- Multiple tax registrations.

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E-Business Tax Solutions for Business Needs

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Integration Within Oracle E-Business Suite

Integration Within Oracle E-Business Suite
Oracle E-Business Tax provides transaction tax services for these products:
Purchasing
iProcurement
Receivables
Payables
Project Accounting
Trade Management
General Ledger
Upstream/downstream products incorporating Oracle E-Business Tax are:
Consigned Inventory
Cash Management
Collections
Property Management
iSupplier Portal

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Internet Expense
Service Contracts
Order Capture
Order Management
iStore
Inventory Management (also Intercompany)
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 within the corresponding application.
Payables Integration
E-Business Tax integration points with Payables include:
Product event classes:
- Standard invoices.
- Prepayment invoices.
- Expense reports.
Tax calculation at line and distribution level.
Additional tax attributes.
Backward compatible (11i) tax calculation support:
- Capture tax classification code (same behavior as 11i tax code).
Tax user interfaces (UIs) integrated for viewing and modifying tax lines.
Self assess tax handling.
Purchasing Integration
E-Business Tax integration points with Purchasing include:
- Requisition.
- Release.
- Purchase order and agreement.
Tax calculation at shipment line and distribution level.
Additional tax attributes - captured using common UIs.
Tax UIs integrated for viewing tax lines.
Backward compatible (11i) tax calculation support.
Receivables Integration
E-Business Tax integration points with Receivables include:
- Invoice.
- Debit memo.

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- Credit memo.
- Adjustment.
Additional tax attributes captured using common UIs.
Backward compatible (11i) tax calculation support.
Tax UIs integrated for viewing and modifying tax lines.
Non recoverable adjustments handled by Receivables (same as in 11i).
General Ledger Integration
E-Business Tax integration points with General Ledger include:
Supports only backward compatible tax calculation.
Uses tax rate code for tax calculation.
Similar to release 11i, for a journal entry line only one tax line is calculated using tax rate
defined for the selected tax rate code on the journal entry line.

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Agenda

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E-Business Tax Architecture

The E-Business Tax architecture consists of five tiers:
1. The Tax Definition tier is the tax data that you set up for each tax regime and tax that
your company or institution is subject to (also called the regime-to-rate flow). A tax
authority administers the taxes of a tax regime. Each tax within a tax regime comprises a
certain number of tax statuses, tax rates (and recovery rates, if applicable), and tax
jurisdictions.
2. The Configuration tier identifies the factors that participate in determining the tax on an
individual transaction. These taxability factors are:
a. Party - The parties involved in the transaction. This can include first party legal
entities; ship from/ship to parties; bill from/bill to parties; tax registrations and
registration statuses of each party; type or classification of a party.
b. Product The products transacted. This includes the designation of physical goods or
services, and in some cases the type or classification of the good or service.

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c. Place - The places involved in the transaction, including the ship from and ship to
locations, and the bill from and bill to locations. Other placessuch as point of origin
or point of acceptancemay also be factors, depending on the applicable tax
regulations.
d. Process - The kind of transaction that takes place. This can include: Procure to Pay
transactions, such as purchases, prepayments, and requisitions; Order to Cash
transactions, such as sales, credit memos, and debit memos; the type of sale or
purchase, for example, retail goods, manufactured goods, intellectual property,
resales.
Each of these factors can become determining factors in the creation of tax rules.
3. The Rule Engine tier comprises of the set of tax rules that are used to determine and
calculate tax on a transaction. You define tax rules for each combination of tax regime, tax
and configuration owner. You create tax rules by translating the tax regulations of a tax
authority into determining factors and tax conditions that the E-Business Tax tax rules
engine uses to evaluate the applicability of a tax on each transaction line. Tax rules
determine: the applicability of a tax; the place of supply and tax jurisdiction of the
transaction; the tax registration; the tax status and tax rate; the recovery rate (if
applicable); and the taxable basis and tax formula to use in calculation.
4. The Services tier manages the calculation of the tax amounts, and tax recovery amounts
(if applicable).
5. The Tax Management tier maintains all of the tax information pertaining to each
transaction, for use in tax reporting.
These tiers are discussed in further details throughout this course.
For complete details on setting up and using Oracle E-Business Tax, see: Oracle E-Business
Tax Implementation Guide and Oracle E-Business Tax User Guide.

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E-Business Tax Home Page

E-Business Tax Home Page
The E-Business Tax home page lets you manage the navigation to each of the E-Business Suite
applications and E-Business Tax components involved in setting up and maintaining your tax
configuration. The Page Hierarchy Personalization user interface displays the entire layout of a
configurable page in a hierarchy table, or HGRID.
The Setup Tasks region uses the HGRID to organize the required and optional setup tasks that
you need to complete your tax configuration. Certain setup tasks are conditionally required,
depending upon the details of your tax configuration. You can navigate to each setup page or
setup flow from the from the Setup Tasks region. Complete the setup tasks in the order
indicated to create a tax configuration.
Note. You must ensure that you complete all prerequisite implementation tasks in all
applicable E-Business Suite applications before you use the Setup Tasks region.

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Agenda

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E-Business Tax Key Concepts Tax Definition

E-Business Tax Key Concepts Tax Definition
The basic tax configuration includes the regime-to-rate flow for each tax regime.
Tax Authority
A government entity that regulates tax law, administers, or audits one or more taxes.
Tax Regime
The set of tax regulations that determine the treatment of one or more taxes administered by a
tax authority.
Examples of a tax regime include:
A sales and use tax in the United States includes rules for state, county, and city sales and
use taxes.
An excise tax regime in India includes rules for excise tax and additional excise tax.
A VAT tax regime in Argentina includes rules for standard VAT, additional VAT, and
perception VAT.
Tax
A distinct charge imposed through a fiscal or tax authority.
Examples of a tax include VAT for the United Kingdom and TVA for France.

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Tax Jurisdiction
A geographical area where a tax is levied by a specific tax authority or where a specific tax rate
applies.
Examples of tax jurisdictions include:
The tax jurisdiction for VAT in Germany is the country of Germany.
The tax jurisdiction for a San Jose city tax is the City of San Jose, California.
The tax jurisdiction for Provincial Goods and Services tax (PST) in Canada is a particular
Province, such as Ontario or British Columbia.
Tax Status
The taxable nature of a product or service in the context of a transaction for a tax type.
Examples of a tax status include taxable standard rate, zero rated, exempt, and non-taxable. A
tax status is similar to the concept of the tax type definition used within Payables and
Receivables in releases prior to Release 12.
Tax Rate
The rate specified for a tax status in effect for a period of time. You can express the tax rate as
a percentage or as a value per unit quantity.
An example of a tax rate is 7.5% for a state sales and use tax.
Recovery Rate
The rate of input tax that is allowed to be recovered or offset against output tax.
The recovery rate is applicable to VAT taxes. For example, organizations that only produce
VAT applicable goods and services can use 100% recovery rate on most purchases.
Organizations that produce VAT exempt goods and services, for example, financial
institutions, have a 0% recovery rate.
Operating Unit Tax Accounts
The tax accounts that the system uses to post the tax amounts derived from your transactions.
The tax accounts you define serve as default accounting information for taxes, tax rates, tax
jurisdictions, and tax recovery rates.

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Key Concepts: Tax Authority

Key Concepts: Tax Authority
Tax Authority is a government entity that regulates tax law, administers, and/or audits one or
more taxes. Some examples of tax authorities are:
Brazil - Secretaria da Fazenda Estadual (State Revenue Office)
Brazil - Secretaria da Receita Federal (Federal Revenue Office)
California, USA - California State Board of Equalization
Canada -Canadian Customs and Revenue Agency
France - Ministry of Economy, Finance and Industry
Germany - Federal Ministry of Finance
India - Central Board of Customs and Excise
Singapore -Inland Revenue Authority of Singapore
United Kingdom - HM Customs and Excise

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Key Concepts: Tax Regime

Key Concepts: Tax Regime
Tax Regime is the set of tax rules that determine the treatment of one or more taxes
administered by a tax authority. Some examples of tax regimes are:
Brazil - RICMS -> ICMS Regulation
Brazil - RIPI -> IPI Regulation
California, USA - California Sales Tax
Canada - Canadian Goods and Services Tax
India - Excise Tax
Singapore - Singapore Goods and Services Tax
United Kingdom - UK VAT

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Key Concepts: Tax

Key Concepts: Tax
We can define Tax by a classification of a charge imposed by a government through a fiscal or
tax authority. Some examples of taxes are:
Tax Regime: Taxes:
------------------------------------------------ ----------------------------------------------------
RICMS - Regulamento do ICMS ICMS, ICMS-ST (Tributary Substitution)
RIPI - Regulamento do IPI IPI
California Sales Tax State Sales Tax
California Sales Tax District Sales tax
Canadian Goods and Services Tax GST
Canadian Sales Tax PST
India Excise and Customs Excise Tax
Singapore Goods and Services Tax GST
UK VAT UK VAT

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Key Concepts: Tax Jurisdiction

Key Concepts: Tax Jurisdiction
Tax Jurisdiction is a geographic area where a tax is levied by a specific tax authority. Some
examples of tax jurisdictions are:
Tax Geographic Zone Jurisdiction
-------------- ----------------------- --------------------------------
ICMS So Paulo Sao Paulo ICMS
IPI Brazil Brazil IPI
State Sales Tax California (State) California State Sales Tax
County Sales tax San Francisco (County) SFO County Sales Tax
GST Canada Canada GST
PST Ontario Ontario PST
Excise Tax India India Excise Tax
GST Singapore Singapore GST
UK VAT UK UK VAT

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E-Business Tax Key Concepts Configuration Components

E-Business Tax Key Concepts Configuration Components
Along with the basic tax configuration data of the regime-to-rate flow for each tax regime and
tax, your tax setup includes a number of other configuration components. Some of these
components are mandatory, some are optional, and some are conditionally mandatory,
depending on your tax requirements.
Party Tax Profiles (mandatory)
The party tax profile is the body of information that relates to a partys transaction tax
activities. Set up and maintain a party tax profile for each party involved in your taxable
transactions. Parties can include:
Legal entities, legal establishments, and operating units in your organization that have a
transaction tax requirement.
Your customers and suppliers and their locations (conditionally mandatory).
Tax authorities that administer tax regulations and rates.
Customer Tax Exemptions (conditionally mandatory)
A tax exemption applies either to a specific customer or to a combination of customer and
specific product. You define tax exemptions as part of the third party tax profile of the

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applicable customers and customer sites. The details of tax exemptions are normally supported
by tax exemption certificates from the relevant tax authority.
Product Tax Exceptions (conditionally mandatory)
Set up tax exceptions to define special rates for specific products, as determined by the tax
authority. This lets you define general rules for a wide classification of products, while
applying a separate rule to a subset of products. At transaction time, E-Business Tax
determines whether the tax exception applies to the transaction line for the product and, if so,
uses the applicable exception rate.
Tax Registrations (mandatory)
Set up tax registrations for your first party legal establishments and your third party
customers/customer sites and suppliers/supplier sites. A tax registration contains information
related to a partys transaction tax obligation with a tax authority for a tax jurisdiction where it
conducts business. E-Business Tax uses tax registrations in tax determination and tax
reporting. For each tax that you create, you must define either a default tax registration or a tax
rule for the rule type Determine Tax Registration.
Configuration Owners (mandatory)
The legal entities and operating units in your company are each subject to specific sets of tax
regulations as designated by the tax authorities where you do business. The configuration
owner determines, for each legal entity and operating unit, the ownership and use of each of
your tax setups.
E-Business Tax provides the concept of the Global Configuration Owner. The global
configuration owner represents ownership of all of your tax setups at the company level. In
most cases, legal entities and operating units can subscribe to the global configuration owner
and therefore share the tax content that is maintained at the company level. Where necessary,
an individual legal entity or operating unit can either override part of a tax setup or own its
own tax content.
Configuration Options (mandatory)
The regime-to-rate flows that you create identify the taxes and the set of regulations that make
up each tax requirement. Configuration options identify the relationships between the first
parties in your company and tax regimes to reflect the tax requirements of each party. You use
configuration options to associate legal entities and operating units with their applicable tax
regimes. You must set up a configuration option for each combination of first party and tax
regime, where the party is subject to any tax regulations belonging to a tax regime.
Service Provider (optional)
E-Business Tax lets you use the tax services of external service providers for tax calculation of
US Sales and Use Tax on Receivables transactions. E-Business Tax provides transparent
integration between the external provider tax service and Oracle Receivables.
In the first release of E-Business Tax, the third-party service providers for US Sales and Use
Tax calculation are Vertex Q-Series and Taxware Sales/Use Tax System.
Fiscal Classifications (conditionally mandatory)
E-Business Tax provides fiscal classifications to classify the parties, products, places, and
processes involved in your tax transactions. You use fiscal classifications as determining
factors in the creation of tax rules for tax determination. In some cases, fiscal classifications are

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necessary to identify specific tax regulations. In other cases, you can use fiscal classifications
as a flexible tool for building a set of tax rules for a specific tax regime and tax.
Country Default Controls (optional)
Use country default controls to maintain tax setup information at the country level that you can
default to the applicable E-Business Tax and legal entity pages. Country default controls let
you designate transaction tax-related values in the countries where you do business. You can
update any default values that you enter on the applicable pages.

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E-Business Tax Key Concepts Tax Rules Engine

E-Business Tax Key Concepts Tax Rules Engine
The tax rules engine uses your tax configuration setup and the details on the transaction to
determine which taxes apply to the transaction and how to calculate the tax amount for each
tax that applies to the transaction. You use the tax rule engine to create rules that reflect the
regulations of a tax authority for the taxes of a particular tax regime.
Tax Rules
Define a tax rule for a combination of a tax and rule type. Each tax rule applies to one tax
within a tax regime and belongs to one configuration owner. Tax rules let you create a tax
determination model to reflect the tax regulations of different tax regimes and the tax
requirements of your business.
Tax Determination Process
The tax determination process identifies the steps that the tax rules engine uses to determine
which taxes apply to a transaction and the tax amounts to calculate. Each step of the tax
determination process is represented by a rule type. You define one or more tax rules for each
rule type that you need.

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The steps in the tax determination process are:
Determine Place of Supply.
Determine Tax Applicability.
Determine Tax Registration.
Determine Tax Status.
Determine Tax Rate.
Determine Taxable Basis.
Calculate Tax Amounts.
Determine Recovery Rate (for applicable taxes).
Tax Rule Defaults
You can assign default values to each rule type in the tax determination process. E-Business
Tax uses the default values in tax determination when no rule provides a value that applies to
the transaction.
Tax Determining Factors
A tax determining factor is an attribute that contributes to the outcome of a tax determination
process. Tax determining factors include geographical locations, tax registration status, or one
or more fiscal classifications. E-Business Tax provides the tax determining factors that you use
to build tax rules.
Tax Determining Factor Sets
You use tax determining factor sets to group together related tax determining factors. You
create tax determining factor sets to reflect the kinds of determining factors that go into the
determination of a particular tax. For example, geographical location is often a determining
factor in assessing VAT, while a specific product type may be a determining factor in assessing
an excise duty. You must associate one tax determining factor set with each tax rule.
Tax Condition Sets
A tax condition is a determining factor plus the operator and value that you define for the
determining factor in order to specify a particular result. For example, you may create a tax
condition using the geography determining factor to identify sales within a state by specifying
that the Ship From state equals the Ship To state.
A tax condition set groups together all of the tax conditions that constitute a particular tax rule.
In this sense, the tax condition set is the logic of the tax rule. It specifies the factors to consider,
and the resulting value that must exist for each factor, in order for the result of the tax rule to
be true.
Tax Rules Engine Components
The components of the tax rules engine work together in the following way:
Each Tax Rule applies to one tax within a tax regime and belongs to one configuration
owner. You define a tax rule for a combination of a tax and a Rule Type.
The Determining Factor Set contains the list of determining factors to consider in
evaluating a tax rule.
You create Tax Condition Sets for the tax rule, using the determining factors of the
determining factor set assigned to the tax rule. Each tax condition of the tax condition set
contains a determining factor, an operator, and a value.

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Each tax condition set is assigned a priority within the tax rule. Each tax rule is assigned a
priority within a rule type.
At transaction time, the rule engine examines each tax condition until it finds a result that
makes the rule true and applicable to the transaction. If no tax condition is found, then the
tax rule does not apply to the transaction. The rule engine looks to the tax rule with the
next highest priority and repeats the process until a tax rule is found. If no tax rule is found
that evaluates as true, then either the tax rule uses the default value (if applicable) or the
tax does not apply to the transaction.

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Tax Determination Management

Tax Determination Management
Tax Determination Management is responsible for calculating the tax on transactions according
to the hierarchy of rule types in the tax determination process.
The tax determination process functions in this sequence:
Determine Place of Supply: Determines the location where a transaction is considered to
have taken place for a specific tax.
Determine Tax Applicability: Determines the taxes that apply to a given transaction.
Determine Tax Registration: Determines the tax registration status for the applicable taxes
of the parties involved in the transaction.
Determine Tax Status: Determines the tax status of each applicable tax to use on the
transaction.
Determine Tax Rate: Determines the tax rate for each applicable tax to use on the
transaction.
Determine Taxable Basis: Determines the amount to use upon which to calculate the tax
rate.

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Chapter 1 - Page 33
Calculate Tax Amounts: Calculates the tax and displays the calculation results.
Determine Recovery Rate: Where applicable, determines the recovery rate to apply to
each applicable tax on the transaction.
Determine Place of Supply
For example, in Europe the default for place of supply of goods is often Ship From. In the
United States, the default for place of supply of goods is often Ship To.
Determine Tax Applicability
You can include or exclude specific taxes if there are conditions which control when the tax is
applicable.
Determine Tax Registration
Normally, the default is Bill From Party, but there are cases, such as reverse charge or self
assessment, where the default is Bill To Party for specific transactions.
Determine Tax Status and Determine Tax Rate
For example, you can apply a zero rate to the sale of childrens clothes for United Kingdom
VAT. The system also looks for customer-specific tax exemptions and general exceptions that
may apply.
Determine Taxable Basis
In many cases, the taxable basis is the line amount, but this may or may not include certain
types of discounts. For example, in Brazil, there may be reductions in the taxable basis that
apply.
Calculate Tax Amounts
The normal calculation is taxable basis * rate. Defaults for both Taxable Basis and Tax
Calculation Formulae are delivered as part of seeded data.
Determine Recovery Rate
For example, for manufacturing companies, VAT on regular purchases used for company
business is 100% recoverable. However, if you are a financial institution which only makes
VAT exempt sales, you are not allowed to recover any taxes and the recovery rate would
therefore be 0% on all purchases.

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Chapter 1 - Page 34
Agenda

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Chapter 1 - Page 35
E-Business Tax Processing

E-Business Tax Processing
E-Business Tax, making use of its tax content repository, follows a series of tax determination
steps. Most of these steps behave according to their underlying tax rules.
Once all rule conditions and results are evaluated, the system calculates taxes and stores them
in the tax lines repository.
The tax line repository has all necessary information needed for tax reporting. You can extract
tax report information from the repository. You can display this data in several formats such as
PDF, HTML and RTF.
Oracle eBusiness Tax provides a single solution for tax for all Oracle eBusiness Suite
applications.

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Chapter 1 - Page 36
Receivables Transaction Example

This Receivables transaction example shows how E-Business Tax answers some basic business
questions during its Tax Determination process.
Tax regimes are identified based on the countries of the parties involved.
A default value or a Place of Supply rule indicates the place of supply.
This example illustrates the Tax Determination process. See: Oracle E-Business Tax: Part 1:
Setting Up Tax Rules for a detailed discussion on the Tax Determination process.

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Chapter 1 - Page 37

A default party type value or a tax registration rule determines from which party (first party or
third party) to evaluate tax registration status.
The party classification is derived from the parties available in the transaction (first and third
parties). That classification can be compared to the ones used as a tax determining factor in any
rule type.

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Chapter 1 - Page 38

In the Transaction Lines window, other types of information are relevant for tax calculation:
Quantity times Unit Price is the default seeded Taxable Basis formula, but other formulas
can be defined.
The item available in a given transaction line can potentially have one or more product
classifications, and these classifications can be used as a tax determining factor in any rule
type. The item itself or its classifications can also be used as part of Tax Exceptions
definition.

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Chapter 1 - Page 39

In the Detail Tax Lines window, the Tax Rate times Taxable Basis is the default seeded Tax
Amount formula, but other formulas can be defined.

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Chapter 1 - Page 40
Summary

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Part 1: Oracle E-Business Tax Basic Tax Configuration
Chapter 2 - Page 1
Part 1: Oracle E-Business
Tax Basic Tax Configuration
Chapter 2

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Chapter 2 - Page 2

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Chapter 2 - Page 3
Objectives

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Chapter 2 - Page 4
Agenda

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Chapter 2 - Page 5

The Tax Definition tier of the E-Business Tax Architecture comprises the tax data that you set
up for each tax regime and tax that your company or institution is subject to.
The tax authority designates the regulations and rates that apply to the tax regime. The main
components of the regime-to-rate flow provide the basic tax configuration for the tax regime
and the taxes, rates, and jurisdictions that it contains. These main components are:
Tax regime
Tax
Tax Status
Tax Rate
Tax Jurisdiction
This module discusses these components in detail.

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Chapter 2 - Page 6
E-Business Tax Home Page External Dependencies & Tax
Configuration

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Chapter 2 - Page 7
E-Business Tax Configuration Flow External Dependencies

E-Business Tax Configuration Flow External Dependencies
Responsibility: E-Business Tax Manager
(N) Tax Managers > Tax Managers > Home
Complete the setup tasks in the E-Business Suite applications that E-Business Tax uses for the
Regime-to-Rate tax-related processes. These setup tasks include:
Legal Entities and Establishments
Reporting and Collecting Tax Authorities
Lookup Codes
Party Class Categories and Codes

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Chapter 2 - Page 8
E-Business Tax Configuration Flow Tax Configuration

E-Business Tax Configuration Flow Tax Configuration
(N) Tax Managers > Tax Managers > Home
Tax Configuration
Complete the E-Business Tax setup tasks to create a basic tax configuration for each of your
tax regimes. The tax configuration setup tasks include:
Tax Authority Party Tax Profiles
First Party Legal Entity Party Tax Profiles
Tax Regimes
Taxes
Tax Status
Tax Jurisdictions
Tax Rates

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Chapter 2 - Page 9
Tax Users

Tax Users
Responsibility: System Administrator
(N) System Administrator > Security : User > Define
(N) System Administrator > Security : Responsibility > Define
Prior to creating a basic tax configuration, you need to set up your tax users and assign each
user a tax-related responsibility. E-Business Tax provides the following tax responsibilities:
Tax Manager
Tax Administrator
Oracle Tax Simulator
The Tax Manager responsibility is the responsibility with the highest level of access to E-
Business Tax functionality. Assign the Tax Administrator responsibility to users who provide
E-Business Tax technical setup and support services. Assign the Oracle Tax Simulator
responsibility to users who test tax setups with the Oracle Tax Simulator.
You can set up additional responsibilities according to your requirements.

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Chapter 2 - Page 10
Profile Option Values

Profile Option Values
Responsibility: System Administrator
(N) System Administrator > Profile > System
An optional implementation prerequisite task is to set values for E-Business Tax profile
options to control the availability of certain tax options and to maintain your Vertex or
Taxware installation.
You can specify default values for E-Business Tax profile options.
Tax profile options include:
The eBTax: Allow Ad Hoc Tax Changes profile option controls which users can make ad
hoc tax changes on the transaction line, such as selecting a different tax status or tax rate.
The changes that a user can make also depend upon the details of the applicable tax
setups.
The eBTax: Allow Manual Tax Lines profile option controls which users can enter manual
tax lines on the transaction for the tax setups that allow this update.

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Chapter 2 - Page 11
The eBTax: Allow Override of Customer Exemptions profile option controls the display of
the Tax Handling field on the transaction line. You use the Tax Handling field to apply
and update customer tax exemptions to transactions.
The eBTax: Allow Override of Tax Classification Code profile option controls whether
users can update the tax classification code that is defaulted to the transaction line.
The eBTax: Allow Override of Tax Recovery Rate profile option controls which users can
enter or update the calculated tax recovery rates on the transaction for the tax recovery
rate setups that allow this update.
The eBTax: Inventory Item for Freight profile option lets Order Management use an
Inventory item defined as Freight on Receivables transaction lines. You can use the freight
Inventory item to control the tax rate on taxable freight amounts.
The eBTax: Invoice Freight as Revenue profile option controls whether to consider freight
amounts as taxable line items (Oracle Order Management only) .
The eBTax: Read/Write Access to GCO Data profile option controls whether users can set
up tax configuration data for the global configuration owner.
The eBTax Taxware: Service Indicator profile option indicates whether taxes are
calculated on service or a rental transactions.
The eBTax Taxware: Tax Selection profile option indicates whether Taxware uses
jurisdiction-level jurisdiction codes to calculate taxes.
The eBTax Taxware: Use Nexpro profile option indicates whether Taxware uses the
Nexpro functionality. If you enable this option, additional configuration is required on the
Taxware side of the integration to achieve nexus-based taxation.
The eBTax Vertex: Case Sensitive profile option enables case-sensitive searches of Vertex
tax calculation data. The default value is Yes.

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Chapter 2 - Page 12
Legal Entity

Legal Entity
Responsibility: Legal Entity Manager
(N) Legal Entity Manager > Legal Entities > (B) Create Legal Entity
Setting up the legal entities that represent your company is a mandatory implementation
prerequisite task. Use the Legal Entity Configurator to set up the following entities:
First Party Legal Entity
First Party Legal Establishment
Legal Authorities
When you set up a legal entity or establishment, you can also set up party tax profile details,
including general information, rounding rule, and tax registrations. Steps include:
Setting up the legal entities that represent your company.
Setting up a legal establishment record for each office, service center, warehouse and any
other location within the company that requires a registration with a tax authority for one
or more taxes. You set up legal establishments under a parent legal entity.

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Chapter 2 - Page 13
Set up associations between each legal establishment and a business entity. E-Business
Tax uses associated business entities to derive the correct legal establishment for the
transaction.
Setting up a legal authority record for each tax authority that administers taxes in a tax
regime where you do business.

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Chapter 2 - Page 14
Lookup Codes

Lookup Codes
Responsibility: System Administration
(N) System Administration > System Administration > Lookup Types
In addition to the other implementation prerequisite tasks, you can maintain existing lookup
codes and define additional lookup codes for E-Business Tax lookup types using the
Application Object Library Lookups window. Tax lookup types include:
ZX_INPUT_CLASSIFICATIONS
ZX_OUTPUT_CLASSICATIONS
ZX_WEB_EXP_TAX_CLASSIFICATIONS
ZX_EXEMPTION_REASON_CODE
ZX_JEBE_VAT_TRANS_TYPE
ZX_REGISTRATIONS_REASON
ZX_REGISTRATIONS_TYPE
ZX_REGISTRATIONS_STATUS
ZX_TAX_TYPE_CATEGORY

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Chapter 2 - Page 15
Seeded Lookup Types
E-Business Tax provides these seeded ZX_REGISTRATIONS_TYPE lookup types: CNPJ;
CPF; CUIL; CUIT; DNI; NIT; OTHERS; VAT. The tax registration types CPF, CNPJ, and
OTHERS are used in tax registration number validation for Brazil. All other seeded tax
registration types, and the tax registration types that you define, are for tax reporting purposes
only.
E-Business Tax provides these seeded ZX_REGISTRATIONS_STATUS lookup types: Agent,
Registered, and Not Registered.
The ZX_TAX_TYPE_CATEGORY lookup type contained these seeded tax types: Sales,
VAT, Excise, Customs Duty, and Environmental.
11i Migrated Data
Release 11i tax codes and tax groups migrate to E-Business Tax as tax classification codes.
Oracle Payables and Purchasing tax codes migrate as tax classification codes under
ZX_INPUT_CLASSIFICATIONS. Oracle Receivables and Projects tax codes migrate as tax
classification codes under ZX_OUTPUT_CLASSICATIONS.

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Chapter 2 - Page 16
Regime-to-Rate Flow for US Sales Tax

Regime-to-Rate Flow for US Sales Tax
An example of the US Sales Tax illustrates the Regime-to-Rate setup flow. You can define:
The tax regime as US Sales Tax.
Taxes within the tax regime: State Sales Tax, County Sales Tax, City Sales Tax.
One or more tax jurisdictions for each tax. For example, you can define a tax jurisdiction
for each county in California.
A default Standard tax status for each tax.
A tax rate for each tax status or tax jurisdiction. You identify the effective period for each
tax rate. When the tax authority changes the rate, you can apply an end date to the last
period record and create a new record.
If multiple taxes apply to a transaction line, the system adds the tax rates and applies the
percentage to the transaction. For example, the sales tax rate for California State Sales Tax
is 7.25%, and the rate for San Mateo County Sales Tax is 1%. In San Mateo, California,
the system applies a total of 8.25% to transactions where both state and county sales tax
apply.
A tax accounts for each tax rate.

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Chapter 2 - Page 17
Note: The above data examples were introduced just to illustrate the business flow and do not
represent the complete tax setup for the tax regime.
Defining Tax Regimes, Taxes and Tax Jurisdictions
E-Business Tax defines the term tax as a distinct charge imposed by a tax or legal authority
with its own rates and with the requirement to appear separately on invoices and/or in tax
reports. In terms of your actual tax configuration, E-Business Tax applies a still narrower
definition to the term tax, and introduces the more inclusive term tax regime.
The incidence of a tax on a specific geographical area is called a tax jurisdiction. A tax
jurisdiction is limited by a geographical boundary that encloses a contiguous political or
administrative area, most commonly the borders of a country or part of a country.
Defining Tax Statuses and Tax Rates
For each tax, a tax authority can specify one or more tax rates. In addition, tax authorities
usually revise their tax rates periodically. Along with the change in tax rates, tax authorities
typically divide the scope of what is taxed into categories, each of which carries a separate tax
rate. The tax status is used to define and maintain these categories. You define tax statuses
under the definition of a tax.
For each of the tax statuses that you define, you define one or more tax rates. For each tax rate,
you define one or more rate periods, which contain the actual percentage rates, based upon the
date ranges of their applicability. For each tax rate that you define, you can also specify a tax
jurisdiction, in which case the rate is only used if that tax jurisdiction applies to the transaction.

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Chapter 2 - Page 18
Regime-to-Rate Flow for UK VAT

Regime-to-Rate Flow for UK VAT
An example of UK VAT also illustrates the Regime-to-Rate setup flow. You can define:
The tax regime as UK VAT.
A single tax as UK VAT.
A single tax jurisdiction for the United Kingdom (UK VAT).
Multiple tax statuses for UK VAT, including Standard, Reduced, Zero Rated, and Exempt.
A tax rate for each tax status. For example, 17.5% is the tax rate for the Standard tax
status; 15% is the rate for Inter-EU transactions; 5% is the rate for Reduced tax status; and
0% is the rate applicable for Zero Rated and Exempt tax statuses.
Note: The above data examples were introduced just to illustrate the business flow and do not
represent the complete tax setup for the country.
How you define your Regime-to-Rate configuration depends on your tax requirements. The
flow of the configuration steps are essentially the same for defining a US Sales Tax and UK
VAT, with the exception of VAT recovery rates.

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Chapter 2 - Page 19
Defining Recovery Types and Recovery Rates
In VAT tax regimes, a tax that is paid by a registered establishment can claim back all or part
of taxes due from the tax authority. In E-Business Tax this is called tax recovery. There are
usually many regulations surrounding the details of tax recovery. Typically, only a portion of
the tax amount paid is recoverable. Tax authorities designate the tax recovery rates that
indicate the extent of recovery for a specific tax.

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Chapter 2 - Page 20
Agenda

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Chapter 2 - Page 21
Tax Regimes

Tax Regimes
(N) Tax Managers > Tax Configuration > Tax Regime > (B) Create
Use the Create Tax Regime page to set up tax regimes for the taxes in each country and
geographic region where you do business and where a separate tax applies.
A tax regime associates a common set of default information, regulations, fiscal classifications,
and registrations to one or more taxes with the same tax requirement. The tax regime provides
these functions:
Groups similar taxes together.
Designates the geography within which taxes apply.
Defaults the settings and values you define to each tax in the regime.
Contributes to the definition of configuration options and third party service subscriptions.
Optionally provides a single registration for all taxes associated with the regime.
Defines the use of fiscal classifications.

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Chapter 2 - Page 22
Tax Regime Setup

Tax Regime Setup
Before you can set up tax regimes, you may need to complete one or more of these tasks:
Prerequisites
Mandatory prerequisite steps include:
Set up legal entities and operating units Set up legal entities and operating units for all
divisions of your company that will act as configuration owners of tax data.
Enable currencies Enable the currencies that will be used in tax calculation.
Design TCA Geography Hierarchy Structures (if required by the country) Ensure that
the TCA geography hierarchy contains a representation of each geography where a tax
regime applies.
Set up party tax profiles Set up a party tax profile for each legal entity and operating unit
that will act as a configuration owner.

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Chapter 2 - Page 23
Optional prerequisite steps include:
Set up tax zones Set up tax zones for geographical regions governed by a tax regime that
do not conform to a standard geographical region.
Set up exchange rate types Set up exchange rate types, if necessary, to convert
transaction currencies to tax currencies.
Set up tax authorities Set up a party tax profile for each tax authority. You may want to
do this if you need to enter tax authorities in different tax configuration records.

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Chapter 2 - Page 24
Agenda

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Chapter 2 - Page 25
Taxes

Taxes
(N) Tax Managers > Tax Configuration > Taxes > (B) Create
Use the Create Tax page to set up details of the taxes within a tax regime.
Each separate tax in a tax regime includes:
Configuration owner, which determines the ownership and use of a tax and its associated
setup.
Default values from the tax regime.
Values specific to the tax, such as geography, currency, and the display of tax amounts.
Settings for tax accounts, tax exemptions, tax exceptions (where applicable).
Settings for tax recovery, where applicable.
E-Business Tax defaults tax information from the tax regime to each tax that you create under
a regime. You can modify this information at the tax level according to your needs, as well as
add additional defaults and overrides.

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Chapter 2 - Page 26
Tax Setup

Tax Setup
Before you can set up taxes, you may need to complete one or more prerequisite tasks.
Prerequisites
You must set up a tax regime prior to setting up a tax.
Set up ledgers and accounts Set up ledgers and accounts for your tax accounts.
Set up tax reporting codes Set up tax reporting codes to report on specific taxes.
Set up tax types Set up lookups for tax types.

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Chapter 2 - Page 27
Agenda

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Chapter 2 - Page 28
Tax Statuses

Tax Statuses
(N) Tax Managers > Tax Configuration > Tax Statuses > (B) Create
Use the Create Tax Status page to set up the tax statuses that you need for each tax that you
create for a combination of tax regime, tax, and configuration owner.
You define a tax status under a tax and a configuration owner, and define all applicable tax
rates and their effective periods under the tax status. The tax status controls the defaulting of
values to its tax rates.

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Chapter 2 - Page 29
Tax Status Setup

Tax Status Setup
Before you can set up tax Statuses, you may need to complete one or more prerequisite tasks.
Prerequisites
You must set up a tax prior to setting up a tax status.
Optionally, you need to set up tax reporting codes to report on specific tax statuses.

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Chapter 2 - Page 30
Agenda

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Chapter 2 - Page 31
Tax Rates

Tax Rates
(N) Tax Managers > Tax Configuration > Tax Rates > (B) Create
Use the Create Tax Rate and Tax Rate Details pages to set up tax rates for your tax statuses and
tax jurisdictions.
For tax statuses, set up a tax rate record for each applicable tax rate that a tax status identifies.
For tax jurisdictions, set up tax rate records to identify the tax rate variations for a specific tax
within different tax jurisdictions. For example, a city sales tax for a state or province may
contain separate city tax jurisdictions, each with a specific rate for the same tax. You can also
define tax recovery rates to claim full or partial recovery of taxes paid.

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Chapter 2 - Page 32
Tax Rate Setup

Tax Rate Setup
Before you can set up tax rates, you may need to complete one or more prerequisite tasks.
Prerequisites
Set up tax statuses.
Set up units of measure (for quantity rate types).
Set up tax transaction type lookup codes - Set up lookups for transaction types to define
local tax authority codes both for reporting purposes and for controlling which rates
appear on an invoice.
Set up an offset tax - If a tax has an associated offset tax, you must enter the offset rate
code in the applicable tax rate record. At transaction time, this rate is used as the offset
rate.
Set up tax recovery rates and recovery types Set up the recovery rates, tax recovery
types, and tax recovery rules that correspond to the tax rate record, if applicable for the
tax.

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Chapter 2 - Page 33
Set up tax jurisdictions Set up tax jurisdictions if you are setting up tax rates for a
specific tax jurisdiction.
Set up tax reporting types Set up tax reporting types to report on specific tax rates.

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Chapter 2 - Page 34
Agenda

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Chapter 2 - Page 35
Tax Jurisdictions

Tax Jurisdictions
(N) Tax Managers > Tax Configuration > Tax Jurisdictions > (B) Create
Use the Tax Jurisdiction page to set up a geographic region or tax zone where a specific tax
authority levies a tax.
At transaction time E-Business Tax derives the jurisdiction or jurisdictions that apply to a
transaction line based on the place of supply. E-Business Tax either uses a default place of
supply or derives a place of supply based on tax rules.

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Chapter 2 - Page 36
Tax Jurisdiction Setup

Tax Jurisdiction Setup
Before you can set up tax jurisdictions, you may need to complete one or more prerequisite
tasks.
Prerequisites
Set up taxes.
Set up tax statuses (for jurisdiction-based rates).
Verify or set up the TCA master geography (for jurisdictions below the country level).
An optional prerequisite step includes setting up applicable tax zones that correspond to a tax
jurisdiction.

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Chapter 2 - Page 37
Summary

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Chapter 2 - Page 38

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Chapter 3 - Page 1
Part 2: Oracle E-Business
Tax Basic Tax Configuration
Chapter 3

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Chapter 3 - Page 2

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Chapter 3 - Page 3
Objectives

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Chapter 3 - Page 4
Agenda

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Chapter 3 - Page 5

The Tax Definition tier of the E-Business Tax Architecture comprises the tax data that you set
up for each tax regime and tax that your company or institution is subject to.
Along with setting up records for the core regime-to-rate flow for each tax regime and tax,
there are additional records belonging to the Tax Definition tier. The use of these records is
optional or conditionally mandatory, depending on the details of your configuration and the tax
regulations of your tax regimes.
These additional records are:
Tax zones.
Tax accounts.
Tax reporting types.
Mass creation of tax jurisdictions.
Tax recovery rates.
This module discusses these additional records in detail.

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Chapter 3 - Page 6
E-Business Tax Home Page External Dependencies & Tax
Configuration

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Chapter 3 - Page 7
Basic Tax Configuration Additional Setup Options

Basic Tax Configuration Additional Setup Options
Depending on you tax requirements, you can define additional records as part of your basic tax
configuration setup. You use various pages to set up these additional options. You navigate to
these pages from within another page or to the page directly from the E-Business Tax
homepage. For example, you can access the Tax Accounts page from the Tax page to set up tax
account defaults for the tax, or from the Tax Jurisdiction page to set up tax account defaults for
the tax jurisdiction. You navigate directly to the Tax Recovery Rates page from the E-Business
Tax homepage.
Tax Zones
Set up tax zones to represent geographical regions from the point of view of a tax requirement.
Tax zones let you group together regions otherwise separated by geographical or political
boundaries where the tax treatment is identical throughout these regions.
Tax Accounts
Set up default tax accounts for the taxes in a tax regime to post the tax amounts derived from
your transactions. The tax accounts you define serve as default accounting information for
taxes, tax rates, tax jurisdictions, and tax recovery rates.

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Chapter 3 - Page 8
Tax Reporting Types
Use tax reporting types to capture additional tax information on transactions for your tax
reports. You can use tax reporting types for your internal reporting needs and to fulfill country-
specific reporting requirements.
Mass Create Tax Jurisdictions
You can create multiple tax jurisdictions at once using the mass create functionality, for taxes
that relate to specific Trading Community Architecture (TCA) geographic hierarchies. E-
Business Tax uses the parent geography type or tax zone associated with the tax regime and tax
to create a tax jurisdiction for each record within the parent geography or tax zone type.
Tax Recovery Rates
Set up tax recovery rate codes for the recovery types identified on the taxes within a tax
regime. A tax recovery rate code identifies the percentage of recovery designated by the tax
authority for a specific transaction.

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Chapter 3 - Page 9
Agenda

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Chapter 3 - Page 10
Tax Zones

Tax Zones
(N) Tax Managers > Advanced Setup Options > Tax Zone Types > (B) Create
Use the Create Tax Zone Type and Create Tax Zone pages to define tax zones. Tax zones
group existing geographical regions that share the same tax requirement.
The use of tax zones is optional and depends on your overall tax setup planning. For example,
if a separate economic community exists in part of a country only, you can set up a tax zone
and corresponding tax regime for the applicable geographic area.
The tax zone setup makes use of the Trading Community Architecture (TCA) master reference
geography hierarchy. The master reference geography hierarchy identifies the hierarchical
structure of a country. For example, the geography hierarchy in the United States is:
Country
State
County
City
Postal Code

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Chapter 3 - Page 11
The master reference geography hierarchy also identifies which levels are mandatory for the
tax zone. A tax zone type references a specific part of a master reference geography hierarchy.
You create tax zones within a tax zone type to uniquely identify tax requirements within the
area defined by the tax zone type.

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Chapter 3 - Page 12
TCA Geography Hierarchy

TCA Geography Hierarchy
Responsibility: Trading Community Architecture
(N) Trading Community > Administration > Geography Hierarchy
Set up and maintain the TCA geography hierarchy for each country where you have a tax
requirement.
Use the TCA geography hierarchy in these cases:
Taxes that are levied at a level lower than the country level, for example, state or
provincial taxes.
Tax characteristics, such as the tax rate, vary at a lower level than the country level.

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Chapter 3 - Page 13
Tax Zone Setup

Tax Zone Setup
Prerequisites
Before you can set up tax zones, verify that the TCA master geography contains the geographic
information that you need. TCA provides seeded geography types for many countries.
If necessary, you can update an existing geography type, or set up new a geography type in
accordance with the structure of a country that you need. For example, for Canada, Provinces
are validated as part of the Geography Hierarchy whenever a tax address is created or
maintained.

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Chapter 3 - Page 14
Agenda

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Chapter 3 - Page 15
Define Tax Accounts

Define Tax Accounts
(N) Tax Managers > Tax Configuration > Taxes > (B) Tax Accounts
(N) Tax Managers > Tax Configuration > Tax Rates > (B) Tax Accounts
(N) Tax Managers > Tax Configuration > Tax Jurisdictions > (B) Tax Accounts
Use the Create Tax Accounts page to set up tax accounts under a primary ledger and operating
unit. The system posts calculated tax amounts to the specified operating unit accounts at
transaction time. The actual account information that the system uses depends upon subledger
accounting rules.
You can define tax accounts for:
Taxes
Tax rates
Tax jurisdictions
Note: All tax accounts defined at the tax level default to the tax rates level for the same tax and
operating unit. You can update these default tax accounts in the tax rate setup.

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Chapter 3 - Page 16
See: Setting Up Tax Accounts, Oracle E-Business Tax User Guide for a description of each
account.

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Chapter 3 - Page 17
Tax Account Setup

Tax Account Setup
Before you can set up tax accounts, you may need to complete one or more prerequisite tasks.
Prerequisites
Set up primary ledgers and subledgers.
Set up operating units and assign them to primary ledgers.
Set up taxes.
You must set up and maintain accounting information before you can set up tax accounts for
the applicable primary ledgers and operating units.
Optional prerequisite steps include setting up records for the default accounts that you want to
create:
Set up tax rates.
Set up tax recovery rates.
Set up tax jurisdictions.

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Chapter 3 - Page 18
Accounts and Accounting Information
Responsibility: General Ledger
(N) General Ledger > Setup : Financials : Accounting Setup Manager > Accounting Setups
(N) General Ledger > Setup : Accounts > Chart of Accounts Mapping
Review and complete these accounting setup tasks according to your requirements:
Set up the chart of accounts, accounting calendar and currency for the primary ledger of
your legal entities and, if applicable, any secondary ledgers.
Define balancing segment values for the legal entities involved in tax transactions.
Create an accounting setup for each legal entity with the ledger or ledgers that you created,
and assign the applicable operating units to the primary ledger.
Complete the details of the accounting setups.

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Chapter 3 - Page 19
Agenda

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Chapter 3 - Page 20
Tax Reporting Types

Tax Reporting Types
(N) Tax Managers > Defaults and Controls > Tax Reporting Types > (B) Create
Use the Create Tax Reporting Type page to define tax reporting types. Tax reporting types
capture additional tax information on transactions. A tax reporting type identifies a specific
unit of information, such as a date or a text comment, to associate with a specific tax usage,
such as a fiscal classification or tax jurisdiction. You can also create a group of tax reporting
codes for a tax reporting type, to provide additional granularity for tax reporting. You can add
tax reporting codes to a tax reporting type at any time.

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Chapter 3 - Page 21
Tax Reporting Type Setup

Tax Reporting Type Setup
Before you can set up tax reporting types, you may need to complete one or more prerequisite
tasks.
Prerequisites
Conditionally mandatory prerequisite steps include:
Set up tax regimes (for regime-specific reporting).
Set up taxes (for tax-specific reporting).
If you associate a tax regime or tax with a tax reporting type, then this tax reporting type and
its associated tax reporting codes are only available to the tax regime or tax.
You must associate a tax regime with tax reporting types except for tax reporting types
associated with fiscal classifications, tax registrations, and party tax profiles.

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Chapter 3 - Page 22
Agenda

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Chapter 3 - Page 23

(N) Tax Managers > Tax Configuration > Tax Jurisdictions > (B) Mass Create
Use the Mass Create Tax Jurisdictions page to create a tax jurisdiction for each record within a
parent geography or tax zone type. Use the Update Mass Created Tax Jurisdictions page to
review the jurisdictions created and to modify information for individual tax jurisdictions.
For example, you can create a county jurisdiction for every county in the parent geography
type of State and parent geography name of California.

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Chapter 3 - Page 24
Mass Create Tax Jurisdictions Setup

Mass Create Tax Jurisdictions Setup
Before you can mass create tax jurisdictions, you may need to complete one or more
prerequisite tasks.
Prerequisites
Set up taxes.
Set the Allow Mass Creation of Jurisdictions option for the tax You must set this option
in the tax record in order to set up mass jurisdictions for a tax jurisdiction related to this
tax.
Set up tax statuses and tax rates (for jurisdiction-based rates) You must set up tax rate
records if you are using jurisdiction-based rates for the jurisdictions that you will create in
mass.
Enable multiple jurisdictions for the tax You set the Allow Multiple Jurisdictions option
in the tax record to be able to define tax jurisdictions for this tax in more than one
geographic region.
Set up TCA master geography for the applicable parent geography and child records.

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Chapter 3 - Page 25
An optional prerequisite step includes the set up of tax zones, if the tax jurisdictions relate to a
specific tax zone.

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Chapter 3 - Page 26
Agenda

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Chapter 3 - Page 27
Tax Recovery Rates

Tax Recovery Rates
(N) Tax Managers > Tax Configuration > Tax Recovery Rates > (B) Create
Use the Create Tax Recovery Rate page to set up recovery rates for a tax. You must set up tax
recovery rates for all of your recoverable taxes.
A recoverable tax is a tax that allows full or partial recovery of taxes paid on purchases, either
as a recoverable payment or as an offset against taxes owed. For example, most VAT-type
taxes allow for full recovery of taxes paid on goods and services that relate to taxable business
supplies. In cases where an organization purchases both taxable and exempt supplies, the tax
authority can designate a partial recovery rate to reflect the combination of taxable and exempt
statuses.

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Chapter 3 - Page 28
Summary

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Managing Party Tax Profiles
Chapter 4 - Page 1
Chapter 4

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Objectives

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Agenda

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Chapter 4 - Page 5

The Configuration tier identifies the factors that participate in determining the tax on an
Party - The parties involved in the transaction.
Product The products transacted.
Place - The places involved in the transaction, including the ship from and ship to
locations, and the bill from and bill to locations.
Process - The kind of transaction that takes place.
This module discusses the associations between the parties of a transaction and party-related
variables, such as party fiscal classifications, tax registrations, and tax exemptions.
Note: The setup of party fiscal classifications is discussed in detail in a subsequent module,
Oracle E-Business Tax: Fiscal Classifications.

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Chapter 4 - Page 6
E-Business Tax Home Page Party Tax Profiles

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Chapter 4 - Page 7
Using Party Tax Profiles

Using Party Tax Profiles
The Party Tax Profile is the central repository of tax-related information for all parties that
participate in your tax-related transactions. This includes first party legal entities and
establishments, operating units, tax authorities, and third party customers and suppliers.
Party Tax Profile
A party tax profile record is the body of information that relates to a partys transaction tax
activities. A tax profile can include tax registrations, tax exemptions, configuration options,
main and default information, party fiscal classifications, tax reporting codes, and account tax
details (for migrated data). You must set up a tax profile for each first and third party involved
in your tax transactions.
Party Tax Profile can be accessed uniformly within standard party flows or directly from the E-
Business Tax menu.
Party Tax Profile and Tax Registration components are supported in three flows:
Legal entity/establishment flows.
Supplier/supplier site flows.
Customer and customer account sites flows.

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Chapter 4 - Page 8
Configuration Options
Configuration options identify the relationship between each first party legal entity and
operating unit in your company and the tax regimes that each first party and legal entity is
subject to. You must set up a configuration option for each combination of configuration owner
(first party legal entity/operating unit) and tax regime, where the party or operating unit is
subject to any tax regulations belonging to a tax regime. The configuration options determine
which configuration owners can own and maintain the tax content of specific tax regimes.
Tax Registrations
A tax registration contains information related to a partys transaction tax obligation with a tax
authority for a tax jurisdiction where it conducts business. Set up tax registrations for your first
party legal establishments and your third party customers/customer sites and suppliers/supplier
sites.
Customer Tax Exemptions
A customer tax exemption is a discount/surcharge or replacement percentage from the base tax
rate that reduces the applicable tax on a Receivables transaction. Set up tax exemptions for
your third party customers and customer sites to reflect the eligibility of customers for tax
exemptions according to the tax authority.
Party Fiscal Classifications
A party fiscal classification determines, for example, when taxes apply to a party, how much
tax applies, and what percentage of the tax is recoverable. These tax requirements are usually
defined by the tax authority for the taxes of a given tax regime. Set up party fiscal
classifications for your first parties, customers and customer sites, and suppliers and supplier
sites.
Note: Party fiscal classifications are discussed in further detail in Oracle E-Business Tax:
Fiscal Classifications.

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Chapter 4 - Page 9
Party Tax Profile

Party Tax Profile
(N) Tax Managers > Parties > Party Tax Profiles
Depending on the party type of the tax profile that you are creating, the system displays various
tabs on the Create Party Tax Profile page.
Main Information
Enter main information for all party types, according to your requirements. This information
controls certain default values and settings on invoices associated with the party.
Note: You can set some of these values at the tax registration level. If you do, then tax
registration settings override the values you set at the main information level. For third party
tax profiles, invoice controls defined at the tax registration level override invoice controls at
the account tax details level, if defined.
Party tax profile main information includes:
Self-assessment option. Set this option to self-assess taxes on Payables invoices
belonging to the party.

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Chapter 4 - Page 10
Tax classification code If applicable, enter a tax classification code to use as determining
factor in tax rules for this party or party site. You only enter a tax classification code if
you intend to use the Direct Tax Rate Determination tax rule on transactions belonging to
this party.
Rounding level/rounding rule Set the rounding level and rounding rule to use on
invoices belonging to this party. The rounding level indicates whether to apply rounding
to calculated tax amounts once for each tax rate per invoice (header level) or to the
calculated tax amount on each invoice line (line level). The rounding rule is the method to
use to round off calculates tax amounts to the minimum accountable unit (Up, Down,
Nearest).
Note: If you updated the rounding precedence hierarchy for a specific configuration owner
and event class, then the related transactions look instead for rounding level information
according to the configuration owner and event class settings.
Tax inclusive option Select the Set Invoice Values as Tax Inclusive check box if the
party intends to send or receive invoices with invoice line amounts inclusive of tax.
Use Subscription of the Legal Entity (operating unit) Release 11i tax data in Payables,
Receivables, and other applications migrates to E-Business Tax as operating units
containing their own tax content. Set this option if you want the operating unit to use the
tax content of the associated legal entity at transaction time.
Note: This is an irreversible setting. Once you associate the operating unit with its legal
entity, you cannot update the operating unit tax profile or maintain separate tax content for
this operating unit.
Allow Tax Applicability (third party) - Set this option to automatically calculate taxes for
this party whenever the party acts as a supplier. You can set this option, for example, for
customers that also act as suppliers on transactions.
Note: For third parties without a tax profile record, the default is to allow tax applicability.
Allow Offset Taxes (third party) - Set this option to define whether the system considers
offset taxes for transactions from this party.
Tax Registrations
The tax registration contains information related to a partys transaction tax obligation with a
tax authority for a tax jurisdiction where it conducts business. The Tax Registrations page is
available to first party legal establishments and third parties.
Classifications
There are two types of classifications:
Party fiscal classification
Legal classification.
The party fiscal classifications optionally assigned to a party are used as determining factors in
tax rules. The Classifications page is available to the:
First Party Legal Entity.
First Party Legal Establishment.
Third Party.
Third Party Site.

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Chapter 4 - Page 11
Legal classifications are assigned to legal entities. You assign these classifications using the
Legal Entity module.
Tax Reporting Codes
The tax reporting codes optionally assigned to a party capture tax information from party
transactions for both internal and tax authority reporting requirements. The Tax Reporting
Codes page is available to the:
First Party Legal Establishment.
Third Party.
Third Party Site.
The configuration options identify the tax regimes associated with a first party legal
entity/operating unit acting as a configuration owner of tax content. The Configuration Options
page is available to the:
Operating Unit owning Tax Content.
Account Tax Details
The account tax details maintain Release 11i migrated tax information for customer and
supplier accounts. The Account Tax Details page is available to the:
Third Party.
Third Party Site.
The account details overrides the details at the third party and third party site level, if
applicable.

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Chapter 4 - Page 12
First Party Legal Entity Tax Profile

First Party Legal Entity Tax Profile
Once you select a first party legal entity on the Party Tax Profiles page, navigate to the Create
Tax Profile page to set up tax profiles for your first party legal entities and legal
establishments.
You set up legal entities and establishments using the Oracle Legal Entity Manager. You can
also enter party tax profile and tax jurisdiction information when you create and update legal
entities, as well as tax-related information for associated business entities. Legal classifications
appear as read-only data in the party tax profile.
First Party Legal Entity
First party legal entities identify your organization to the relevant legal authorities, for
example, a national or international headquarters. When you create a legal entity, the system
automatically creates a legal entity establishment.

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Chapter 4 - Page 13
To set up a party tax profile for a first party legal entity:
Enter main and default information, such as set for self assessment / reverse charge, tax
classification, and rounding levels and rules.
Optionally enter the party fiscal classifications, such as associated legal and fiscal
classifications.
Optionally enter tax reporting codes.
Enter tax configuration options to associate tax regimes with the party.
Note: You can set up this tax information as part of the Legal Entity maintenance flow.

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Chapter 4 - Page 14
First Party Legal Establishment Tax Profile

First Party Legal Establishment Tax Profile
Select a first party legal establishment as a party type on the Party Tax Profiles page to create
and update the tax profile.
First Party Legal Establishments
First party legal establishments identify each office, service center, warehouse and any other
location within the organization that has a tax requirement. The system automatically creates a
legal entity establishment when you create a legal entity. However, you can create additional
legal establishments according to your needs. For each legal establishment there are one or
more tax registrations, depending upon the tax requirements of the applicable tax authority.
To set up a party tax profile for a first party legal establishment:
Enter main and default information.
Enter the tax registrations required for this party.
Optionally enter the party fiscal classifications.

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Chapter 4 - Page 15
Note: You can set up this tax information as part of the Legal Entity Establishment
maintenance flow.

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Chapter 4 - Page 16
First Party Tax Profile Setup

First Party Tax Profile Setup
Before you can set up first party tax profiles, you may need to complete one or more
prerequisite tasks.
Prerequisites
Set up legal entities and legal establishments.
Set up tax regimes.
Set up legal entity secondary establishments.
Set up taxes.
Set up lookup codes.
Set up party fiscal classifications.
Set up tax reporting types.

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Chapter 4 - Page 17
Operating Unit Tax Profile

Operating Unit Tax Profile
Once you select an operating unit owing tax data on the Party Tax Profiles page, navigate to
the Update Party Tax Profile page to modify the tax profile for your operating unit.
Release 11i tax data in Oracle Payables, Receivables, and other applications migrates to E-
Business Tax as operating units containing their own tax content. To help you manage the tax
content of operating units, you can use the operating unit tax profile in either of two ways:
Indicate that tax setup is used and maintained by a specific operating unit.
Indicate that operating unit tax setup is used and maintained based on the configuration of
the associated legal entity at transaction time. The tax setup of the associated legal entity
setup is either specific to the legal entity or shared across legal entities using the Global
Configuration Owner setup.
This concept is also discussed in Oracle E-Business Tax: Appendix A: Managing Migrated Tax
Data.

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Chapter 4 - Page 18
Tax Authority Tax Profile

Tax Authority Tax Profile
Responsibility: Legal Entity Manager
(N) Legal Entity Manager > (T) Legal Entities > (B) Create Legal Entity
Use the Oracle Legal Entity Manager to set up each tax authority as a legal authority for
transaction tax. After you create the tax authority, you can select a Tax Authority as a party
type and update the tax profile on the Party Tax Profiles page.
The tax authority party tax profile identifies a tax authority party as a collecting authority
and/or a reporting authority. A collecting tax authority manages the administration of tax
remittances. A reporting tax authority receives and processes all company transaction tax
reports.
To set up a party tax profile for a tax authority:
If applicable, designate the tax authority as a collecting and/or reporting authority.
Enter any applicable tax reporting codes. Tax registration is not available for a tax
authority, they utilize tax reporting codes.

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Chapter 4 - Page 19
Third Party Tax Profile

Third Party Tax Profile
Once you select a third party or third party site on the Party Tax Profiles page, navigate to the
Create Tax Profile page to set up tax profiles for your customers, customer sites, suppliers, and
supplier sites.
To set up a party tax profile for a third party or third party site:
Enter main and default information, such as allow for tax applicability, allow offset taxes,
set for self assessment / reverse charge, and rounding levels and rules.
Enter the tax registrations required for this party.
Optionally enter the party fiscal classifications, such as associated legal and fiscal
classifications.
Update migrated account tax details.
Note: You can set up this tax information as part of the relevant third party maintenance flow
(for example, customer and supplier maintenance).

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Chapter 4 - Page 20
Account Tax Details
Use the Account Tax Details region to maintain migrated account tax information. Use the
third party site Supplier Site Tax Details region to maintain operating unit supplier site tax
information. Use the third party site Customer Account Site Business Purpose Tax Details
region to maintain operating unit customer account ship-to site and bill-to site tax information.
This concept is discussed in detail in Oracle E-Business Tax: Appendix A: Managing Migrated
Tax Data.

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Chapter 4 - Page 21
Third Party Tax Profile Setup

Third Party Tax Profile Setup
Before you can set up third party tax profiles, you may need to complete one or more
prerequisite tasks.
Prerequisites
A mandatory prerequisite step includes set up parties.
Set up tax regimes.
Set up taxes.
Set up lookup codes.
Set up party fiscal classifications.
Set up tax reporting types.
Set up customer and supplier accounts.

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Chapter 4 - Page 22
Agenda

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Chapter 4 - Page 23
Self-Assessment Setup

Self-Assessment Setup
A self-assessed tax is a tax calculated and remitted for a transaction, where tax was not levied
by the supplier but is deemed as due (and therefore needs to be paid by the purchaser). In such
cases the purchaser is responsible for calculating and remitting the tax. Self-assessment is also
known as reverse charge or use tax in certain tax regimes.
You can let a first party self-assess the taxes calculated on the Payables invoices it receives.
Self-Assessment Options
You can set the self-assessment option:
At the tax profile level to default to the tax registrations that you create for this party.
At the tax registration level.
On an individual tax line.
E-Business Tax applies self-assessment to Payables invoices received by the first party
according to the tax registration setting of the Set for Self Assessment/Reverse Charge option.
The specific tax registration record that E-Business Tax uses is derived either from Determine
Tax Registration rules or from the default tax registration.

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Chapter 4 - Page 24
Self-Assessment Application
Depending on the level at which this first party establishment tax registration is created, the
self-assessment will apply to:
All taxes of the tax regime, if the tax registration is defined for the tax regime only.
All tax jurisdictions of the tax, if the tax registration is defined for the tax regime and tax.
A specific tax jurisdiction of the tax, if the tax registration is defined for the tax regime,
tax, and tax jurisdiction.

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Agenda

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Chapter 4 - Page 26
Offset Taxes

Offset Taxes
An offset tax calculates and records third party Payables tax liabilities for reverse charges, self-
assessments, and Consumer's Use tax (US). An offset tax record is a matching, duplicate
record with negative amounts that reduces or completely offsets the tax liability recorded in the
tax transaction.
Use offset taxes when the tax requirement includes creating offset general ledger postings.
Tax Recovery
You cannot update the recovery rate on an offset tax line. The recovery rate is always 100% in
order to create credit entries that match the original tax amounts. When you create an offset
tax, you enter a primary recovery type with a recoverable rate of 100% and a 100% recovery
rate.

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Chapter 4 - Page 27
Offset Taxes Setup

Offset Taxes Setup
To set up for offset taxes, you must perform these tasks;
Enable offset tax calculations for each applicable transaction event and party.
Set up the offset tax, tax status, and tax rate.
Set up the original tax and assign the offset tax rate code to the original tax rate.
Enable Offset Tax Calculations
Perform these tasks to enable offset tax calculations:
1. Review the offset tax setting for Payables transaction events.
a. Allow Offset Tax Calculation option enables the calculation of offset taxes for a
transaction event.
b. Offset Tax Basis indicates the party whose transactions are involved in offset tax
creation.
2. Update the offset tax basis for the combinations of configuration owners and transaction
events that you want, if applicable.
3. Set the Allow Offset Taxes option for the applicable third parties. Set this option for each
third party involved in offset tax transactions.

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Chapter 4 - Page 28
Agenda

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Chapter 4 - Page 29
Tax Exemptions

Tax Exemptions
Create Tax Exemptions page to set up tax exemptions for your third party customers and
customer sites.
Tax exemptions can apply to a specific tax, tax status, tax jurisdiction, or product. You can set
up a tax exemption at regime, tax, status, or rate level, for a specific jurisdiction or for all
jurisdictions, for a specific product or for all products. Tax exemptions are defined as a
discount/surcharge or a new rate.
Exemption Setup Tasks
Use the third party tax exemption record to maintain information about a customer or customer
site tax exemption.

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Chapter 4 - Page 30
In addition to the third party tax exemption record, you must also complete the appropriate
setups in order for E-Business Tax to calculate tax exemptions. These setups are:
Set the eBTax: Allow Override of Customer Exemptions profile option to control the
display of the Tax Handling field on the transaction line. You use the Tax Handling field
to select the applicable tax exemption value for the transaction line. E-Business Tax
processes tax exemptions in different ways depending upon the value you choose.
Set the Allow Tax Exemptions option at the levels that correspond to the tax exemption.
Indicate whether you are creating tax exemptions for the tax, or using tax exemptions
previously created for an existing tax for each applicable tax.
Verify that the applicable event class allows tax exemptions. If it does not, then set up
configuration owner tax options for the applicable configuration owner and event class to
include tax exemptions.

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Chapter 4 - Page 31
Tax Exemptions Setup

Tax Exemptions Setup
Before you can set up tax exemptions, you may need to complete one or more prerequisite
tasks.
Prerequisites
Set up customer third parties.
Set up tax regimes.
Set up taxes (for exemptions for a specific tax).
Set up tax statuses (for exemptions for a specific tax status).
Set up tax rates (for exemptions for a specific tax rate).
Set up tax jurisdictions (for exemptions for a specific tax jurisdiction).
Set up inventory organizations (for product exemptions).
Set up inventory items (for product exemptions).
An optional prerequisite step includes set up exempt reason lookup codes.

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Chapter 4 - Page 32
Agenda

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Chapter 4 - Page 33
Tax Registrations

Tax Registrations
Once you select a first party legal establishment, or a third party or third party site, on the Party
Tax Profiles page, navigate to the Create Tax Registration Details page to set up tax
registrations. In some cases you may need to create multiple tax registrations for a single
location.
E-Business Tax uses tax registrations in tax determination and tax reporting. For each tax that
you create, you must define either a default tax registration or a tax rule for the rule type
Determine Tax Registration. This rule determines which tax registration is stamped on a
transaction.
Tax Registration Setup Tasks
You must set up a separate tax registration to represent each distinct registration requirement
for a first party, including
Each legal establishment that is required to file tax documents.
Each tax regime, where the registration is used for all taxes within the regime.

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Chapter 4 - Page 34
Each tax within a tax regime that has a separate tax requirement, where the registration is
used for all jurisdictions where the tax is applicable.
Each tax jurisdiction that has a separate tax requirement for a tax registration.
Each tax for which the party is not registered, if the not registered tax registration status is
used as a tax condition in tax rules.
If a party has more than one tax registration under the same tax regime, then E-Business Tax
considers the tax registrations in the order: jurisdiction; tax; tax regime.
You optionally set up tax registrations for your customers and suppliers, as necessary, to
support specific tax regulations or reporting requirements.

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Chapter 4 - Page 35
Tax Registrations Setup

Tax Registrations Setup
Before you can set up tax registrations, you may need to complete one or more of these tasks.
Prerequisites
Set up tax regimes.
Set up parties.
Set up taxes.
Set up party tax accounts.
Set up bank accounts.
Set up lookup codes for registration type, status, and reason.
Set up tax authorities.

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Summary

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Configuration Owners and Service Providers
Chapter 5 - Page 1
Configuration Owners and
Service Providers
Chapter 5

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Chapter 5 - Page 2

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Chapter 5 - Page 3
Objectives

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Chapter 5 - Page 4
Agenda

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Chapter 5 - Page 5

Party - The parties involved in the transaction.
Product The products transacted.
locations, and the bill from and bill to locations.
Process - The kind of transaction that takes place.
This module discusses how to manage the ownership of tax configuration data, or tax content,
by the first parties of a transaction. First parties include both legal entities and operating units.
You manage first party ownership of tax content by means of configuration options. The tax
regimes that you create in the tax definition phase identify the taxes and the set of regulations
that make up each tax requirement. Configuration options identify the relationships between
first parties and tax regimes to reflect the tax requirements of each party.

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Chapter 5 - Page 6
The first party legal entities in your organization can share the same tax content by using the
seeded global configuration owner. An individual legal entity or operating unit can also own
and maintain its own tax content. You can also assign a tax service provider to a configuration
option to provide tax calculation services for transactions involving US Sales and Use tax.

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Chapter 5 - Page 7
E-Business Tax Home Page Configuration Owner & Options

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Chapter 5 - Page 8
Tax Configuration Ownership

Tax Configuration Ownership
You can apply the tax content that you create to the entire organization using the global
configuration owner, or you can let individual parties within the organization either create and
maintain their own tax content, or override parts of the shared tax content of the global
configuration owner to fulfill specific requirements. When a party overrides tax content, or
creates and maintains tax content, it becomes a configuration owner of this tax content. Tax
configuration ownership includes:
Legal entities and operating units (by independent party) owning their tax content.
Legal entities and operating units using the shared tax content of the global configuration
owner.
Note. Release 11i tax data in Payables, Receivables, and other applications migrates to E-
Business Tax as operating units containing their own tax content. For each operating unit, you
can either continue to let the operating unit maintain its own tax content or set the operating
unit to use the tax configuration of its associated legal entity at transaction time. To set the
operating unit to use the tax configuration of its associated legal entity, you enable the Use

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Chapter 5 - Page 9
Subscription of the Legal Entity option in the party tax profile of the operating unit. Note that
this is an irreversible setting--once you associate the operating unit with its legal entity, you
cannot update the operating unit tax profile or maintain separate tax content for this operating
unit.

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Chapter 5 - Page 10
Tax Configuration Options

Tax Configuration Options
Use configuration options to associate legal entities and operating units with their applicable
tax regimes. The association between a party and a tax regime includes these definitions:
Configuration for Taxes and Rules - The setup that the party uses for taxes, tax statuses,
tax rates, tax recovery rates, and tax rules.
Configuration for Product Exceptions - The setup that the party uses for product tax
exceptions.
Service Subscriptions - The external service providers that the party uses in place of
Oracle E-Business Tax to provide tax calculation services for US Sales and Use tax.

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Chapter 5 - Page 11
Configuration for Taxes and Rules

Configuration for Taxes and Rules
E-Business Tax provides the global configuration owner to represent ownership of all tax
setups at the company level. The configuration options that you set for each party/regime
combination are in relation to the global configuration owner. These options are:
Common Configuration - The party uses the company tax setups for the applicable
regimes. All parties with a Common Configuration option share the same tax setup. When
setting up taxes, tax details, and configuration owner tax options, the global configuration
owner represents any party with a Common Configuration. Authorized updates to the tax
setup affect all users of the Common Configuration.
Common Configuration with Party Overrides - The party uses the company tax setups for
the applicable regimes, but with the ability to override portions of the company tax setup
with tax setup specific to the party's requirements.
Party-Specific Configuration - A legal entity or operating unit party does not share the
company tax setup, but instead creates and maintains its own tax setup for the applicable
regimes. In this case, only this party can use the tax setup it creates.

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Chapter 5 - Page 12
Configuration for Product Exceptions

Configuration for Product Exceptions
The configuration option setting for product exceptions determines whether the product tax
exceptions defined for this tax regime are shared with other parties or remain specific to one
party:
If the configuration option for taxes and rules is Common Configuration or Party-Specific
Configuration, then E-Business Tax assigns the same setting to the configuration option
for product exceptions.
If the configuration option for taxes and rules is Common Configuration with Party
Overrides, you can set the configuration option for product exceptions to Common
Configuration to let the party use the product tax exceptions of the global configuration
owner; or Party-Specific Configuration to let the party set up its own product tax
exceptions that are not shared with any other party.

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Chapter 5 - Page 13
Legal Entity and Operating Unit Configuration Options

Legal Entity and Operating Unit Configuration Options
You can define relationships between parties and tax requirements that reflect the specific
taxation needs of your company and the way it is organized. These configuration options
include:
One legal entity owns and maintains its tax configuration.
Multiple operating units of one legal entity share the legal entity tax configuration.
Multiple legal entities share the same tax configuration.
Multiple legal entities share the same tax configuration, with individual legal entities able
to override the shared tax configuration for requirements specific to the legal entity,
including tax, tax status, tax rate, and tax rules and formulas.
One or more operating units of one legal entity own and maintain a separate tax
configuration.
A legal entity, or an operating unit that owns and maintains a separate tax configuration,
uses third party tax services for specific transaction events.

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Chapter 5 - Page 14
Agenda

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Chapter 5 - Page 15

(N) Tax Managers > Tax Configuration > Tax Regimes > (B) Continue
(N) Tax Managers > Parties > Party Tax Profile > (I) Create/Update Tax Profile > (T)
Use the Configuration Options page to set up configuration options to associate tax regimes
with the parties in your company that have a tax requirement under these tax regimes. You can
set up tax configuration options when you create a tax regime or when you create a party tax
profile for a first party legal entity or operating unit. Both setup flows display and maintain the
same party/regime definitions.
Configuration options only apply to tax regimes directly linked to taxes and not to tax regimes
that are used to group other tax regimes.
Any authorized user can maintain the common tax setup associated with the global
configuration owner.

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Chapter 5 - Page 16
Configuration Options Setup

Configuration Options Setup
Before you can set up configuration options, you may need to complete one or more of these
tasks.
Prerequisites
Set the eBTax: Read/Write Access to GCO Data profile option to identify users that can
maintain tax configuration content for the Global Configuration Owner.
Set up tax regimes.
Set up party tax profiles.

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Chapter 5 - Page 17
Agenda

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Chapter 5 - Page 18
Service Subscriptions

Service Subscriptions
(N) Tax Managers > Parties > Party Tax Profile > (I) Create/Update Tax Profile > (T)
Configuration Options > (I) Service Subscriptions
The setup for provider services is called a service subscription. A service subscription applies
to the transactions of one configuration option setup for a combination of tax regime and legal
entity/operating unit.
Use the Subscription Options page to assign an external service provider to a configuration
option. When assigned, E-Business Tax uses the external service provider tax services to
calculate US Sales and Use tax on Receivables transactions and the external service provider
tax data for reporting.
E-Business Tax provides transparent integration between the external service provider and
Oracle Receivables. Both E-Business Tax and the external service provider execute and
complete the tax services without any interruption to the application business flow.

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Chapter 5 - Page 19
You can use the tax services of these external service providers:
Taxware, LP - A First Data Company
Vertex, Inc.

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Chapter 5 - Page 20
Service Subscriptions Setup

Service Subscriptions Setup
Before you can set up service subscriptions, you may need to complete one or more of these
tasks.
Prerequisites
Set up tax regimes.
Set up party tax profiles.
Set up configuration options.

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Chapter 5 - Page 21
Agenda

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Chapter 5 - Page 22
Event Classes

Event Classes
(N) Tax Managers > Transactions > Event Class Settings > (I) Event Class Mappings
(N) Tax Managers > Transactions > Event Class Settings > (I) Event Class Options
Use the Event Class Mapping page to review the mappings between event types and tax event
types. You can use event class mapping information when setting up tax rules. You can set up
tax rules that refer to application event classes and/or tax event classes.
Use the Event Class Options page to review the default tax settings for each application event
class. E-Business Tax provides predefined event class settings for each combination of
application and event class.
Event class settings provide a means of standardizing the interaction between E-Business Tax
and other applications. E-Business Tax responds to specific application transaction events,
such as a Payables invoice or a Receivables credit memo, according to the predefined settings
of each application event class. In this way, E-Business Tax can determine and calculate taxes
without requiring access to each product. By default, the event class option settings of an event
class apply to all configuration owners.

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Chapter 5 - Page 23
You can update event class options belonging to an application event class for a selected
configuration owner in this way: if the event class option is enabled, you can deselect the
option to exclude it from tax calculation. If an event class option is not enabled for a particular
application event class, you cannot enable this option.
Event Classes Applicable to E-Business Tax
These event classes are applicable to E-Business Tax:
Payables
- Standard invoices
- Prepaid invoices
- Expense reports
Purchasing
- Requisitions
- Purchase orders and agreements
- Releases
Receivables
- Invoices
- Credit memos
- Debit memos
Trade Management (source application)
- Tax Event for Claims Interfacing to AP
- Tax Event for Claims Interfacing to AR

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Chapter 5 - Page 24
Configuration Owner Tax Options

(N) Tax Managers > Defaults and Controls > Configuration Owner Tax Options > (B) Create
Use the Create Configuration Owner Tax Options page to set up configuration owner tax
options for a combination of configuration owner and application event class. You can update
some of the E-Business Tax predefined event class settings for a particular configuration
owner.
Configuration owner tax options let a configuration owner update default tax options on
transactions that belong to a specific application event class. At transaction time, E-Business
Tax uses the tax option settings of the configuration owner and application event class instead
of the default settings.
These are the tax options you can update for each application and its event classes:
Payables Standard Invoice, Prepaid Invoice, Expense Report
Rounding Precedence Hierarchy
Regime Determination Set
Perform Additional Applicability for Imported Documents

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Chapter 5 - Page 25
Offset Tax Basis
Allow Tax Applicability
Allow Entry of Manual Tax Lines
Allow Recalculation for Manual Tax Lines
Allow Override for Calculated Tax Lines
Tax Tolerance
Purchasing - Requisition, Purchase Order and Agreement, Release
Offset Tax Basis
Receivables Invoice, Credit Memo, Debit Memo
Allow Exemptions
Regime Determination Set
Offset Tax Basis
Allow Entry of Manual Tax Lines
Allow Recalculation for Manual Tax Lines
Allow Override for Calculated Tax Lines

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Chapter 5 - Page 26
Summary

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Fiscal Classifications
Chapter 6 - Page 1
Chapter 6

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Chapter 6 - Page 2

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Chapter 6 - Page 3
Objectives

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Chapter 6 - Page 4
Agenda

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Chapter 6 - Page 5

Party - The parties involved in the transaction. This can include first party legal entities;
ship from/ship to parties; bill from/bill to parties; tax registrations and registration statuses
of each party; type or classification of a party.
Product The products transacted. This includes the designation of physical goods or
services, and in some cases the type or classification of the good or service.
locations, and the bill from and bill to locations. Other placessuch as point of origin or
point of acceptancemay also be factors, depending on the applicable tax regulations.
Process - The kind of transaction that takes place. This can include: Procure to Pay
transactions, such as purchases, prepayments, and requisitions; Order to Cash transactions,
such as sales, credit memos, and debit memos; the type of sale or purchase, for example,
retail goods, manufactured goods, intellectual property, resales.

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Chapter 6 - Page 6
Each of these factors can become determining factors in the creation of tax rules.
This module discusses the setup and usage of fiscal classifications. You use fiscal
classifications in tax rules to classify the taxability factors of a transaction for use in tax
determination. This includes the parties and locations involved in your transactions, the
products you buy and sell, and the nature of your transactions.

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Chapter 6 - Page 7
E-Business Tax Home Page Fiscal Classifications

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Chapter 6 - Page 8

Fiscal classifications provide tax determination values for situations where the party, product,
or transaction are factors in tax determination. You set up a fiscal classification type to identify
a category of fiscal classification that has a potential tax implication; you assign fiscal
classification types to tax regimes and taxation countries. You set up fiscal classification codes
under a fiscal classification type to provide additional granularity to a particular fiscal
classification category. When creating tax rules, you use fiscal classification types as
determining factors and fiscal classification codes as condition set values. See: Oracle E-
Business Tax: Part 2: Setting Up Tax Rules for information about determining factors and tax
conditions.
The use of fiscal classifications is optional, and depends upon your overall scheme for
managing tax determination and tax calculation requirements. At transaction time E-Business
Tax determines, according to the tax rules you create, which fiscal classifications apply to the
transaction line.
You set up fiscal classifications under these general categories:
Party fiscal classifications - Classify your first partiesthe various parts of your
organizationand your third partiesyour customers and suppliers and their locationsfor

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Chapter 6 - Page 9
use in tax determination. In some countries, the tax authority provides the specific party fiscal
classification to use.
For example, set up different party fiscal classifications for wholesale suppliers and retail
suppliers.
Product fiscal classifications - Classify the products and services that you buy and sell for use
in defining rules for tax determination. In some countries, the tax authority provides the
specific product fiscal classification to use.
For example, set up a product fiscal classification type in the United Kingdom for supplies that
are zero-rated for VAT, and then set up fiscal classification codes for specific supplies, such as
food, cleaning supplies, and printed matter.
Transaction fiscal classifications - Classify the nature of a transaction itself, and the details
that must accompany a transaction, according to its tax requirements.
For example, set up a transaction fiscal classification for retail sales, then set up fiscal
classification codes for sales of manufactured goods, sales of imported items, and sales
giveaways.

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Chapter 6 - Page 10
Agenda

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Chapter 6 - Page 11

(N) Tax Managers > Parties > Party Classification > (B) Create
Use the Create Party Fiscal Classification Type page to create party fiscal classification types
and codes. The party fiscal classifications that you create are used as tax determining factors in
tax rules. A party fiscal classification determines, for example, when taxes apply to a party,
how much tax applies, and what percentage of the tax is recoverable.
Set up party fiscal classifications for:
First parties.
Customers and customer sites.
Suppliers and supplier sites.
Once you set up your party fiscal classifications types and codes, you can associate a party
fiscal classification with a party tax profile for each party that requires a party fiscal
classifications for tax determination and/or tax reporting purposes. For example, you may want
to classify parties according to tax handling requirements, such as End Consumer, Distributor,
Non-Profit Organization, Government Agency, and so on.

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Chapter 6 - Page 12
Party Fiscal Classifications Setup

Party Fiscal Classification Setup
Before you can set up party fiscal classifications, you may need to complete one or more
prerequisite tasks.
Prerequisites
Set up TCA class categories and class codes.
Set up tax regimes.
Set up tax reporting types (optional).
TCA Class Category
You create a party fiscal classification by assigning a Trading Community Architecture (TCA)
class category and its related class codes to party fiscal classification types and codes. Existing
TCA class categories include, for example, SIC (Standard Industry Classification) and NAICS
(North American Industry Classification System). You can also create TCA class categories
and codes according to your requirements in order to classify parties and other business entities
into user-definable categories.
If you plan to assign tax reporting types to party fiscal classifications, then set up the tax
reporting types and codes that you need.

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Chapter 6 - Page 13
Legal Party Fiscal Classifications

Legal Party Fiscal Classifications
(N) Tax Managers > Parties > Legal Classification Tax Usage
Some countries use a set of codes to identify legal classifications that have a tax requirement.
E-Business Tax provides seeded fiscal classification type codes for each set of country-specific
legal activity codes.
Use the Legal Classification Tax Usage page to use legal activity codes in tax determination
and tax reporting. You can assign these legal activity codes to the tax regimes within the
applicable country.

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Chapter 6 - Page 14
Agenda

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Chapter 6 - Page 15
Product Fiscal Classifications

Product Fiscal Classifications
(N) Tax Managers > Products > Product Classifications > (B) Create
(N) Tax Managers > Products > Intended Use Classifications
Use the Product Fiscal Classification Type pages and Product Intended Use Fiscal
Classification Type page to classify goods and services for tax purposes. You use product
fiscal classifications as tax determining factors in tax rules.
You can set up product fiscal classifications for:
Inventory-based products and services Product fiscal classifications that correspond to
Oracle Inventory items.
Non-Inventory based products and services An E-Business Tax generic product category
for non-Inventory based items.
Product intended use fiscal classification - One classification for either Inventory-based or
non-Inventory based products and services to identify situations where the intended use of
the product is a factor in tax determination.

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Chapter 6 - Page 16
You associate the product fiscal classification type codes that you create with the
corresponding tax regimes that require product fiscal classifications. These product fiscal
classification type codes become available to transactions belonging to the tax regime for use
in tax determination.
An Inventory-based product fiscal classification corresponds to the related setup for items
belonging to Oracle Inventory. The Inventory category set corresponds to the product fiscal
classification type, and the Inventory category segment values correspond to the product fiscal
classification codes. When an item belonging to the Inventory category set is entered on the
transaction line, the corresponding product fiscal classification code defaults to the transaction.
A non-Inventory based product fiscal classification lets you define product fiscal
classification codes for goods and services that are not associated with Oracle Inventory items.
The non-Inventory based product fiscal classification uses a generic product fiscal
classification type called PRODUCT_CATEGORY. You create product fiscal classification
codes under PRODUCT_CATEGORY according to categories that you define. You can create
both individual codes and a hierarchy of codes to represent lines of goods and services that
have a tax requirement. You can also optionally assign non-Inventory based product fiscal
classifications to a particular country.
You can use non-Inventory based product fiscal classifications to:
Classify products for taxes if you do not use Oracle Inventory.
Create country-specific product fiscal classifications.
Create product fiscal classifications for items that are not a good.
Create ad hoc product fiscal classifications without reference to an inventory item, for
example, if you are making product purchases that are not a part of your standard business
processes.
A product intended use fiscal classification is used to classify goods and services where the
intended use of the product is a factor either in tax determination or the tax recovery rate. For
example, a company may purchase promotional items that it intends to give away free, or offer
special services at a reduced charge.
You can only set up product intended use fiscal classifications for either an Inventory category
set or the non-Inventory based PRODUCT_CATEGORY, but not both. When you first set up
product intended use fiscal classifications, you decide which one becomes the basis for this
classification (this is an irreversible setting). If applicable, the data migration process may also
create either Inventory-based or non-Inventory based product intended use fiscal
classifications.
Note. Because non-Inventory based and product intended use fiscal classification codes are not
assigned to a particular Inventory item or tax regime, E-Business Tax makes these fiscal
classification codes available to all transactions (except for non-Inventory based product fiscal
classification codes assigned to a particular country).

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Chapter 6 - Page 17
Product Fiscal Classifications Setup

Product Fiscal Classifications Setup
Before you can set up product fiscal classifications, you may need to complete one or more
prerequisite tasks.
Prerequisites
Set up Inventory items and categories for product fiscal classifications (for Oracle
Inventory).
Set up tax regimes.
Set up tax reporting types (optional).
Oracle Inventory Setup
The Inventory setup tasks to model product fiscal classifications are:
Define Inventory Value Set
Define Inventory Item Category Structure
Define Category Set
Define Inventory Categories
Associate Inventory Items to Category Sets

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Chapter 6 - Page 18
You complete this setup task flow for each Inventory-based product fiscal classification type
that you plan to define.
See: Setting Up Oracle Inventory, Oracle E-Business Tax Implementation Guide and Defining
Categories, Oracle Inventory Users Guide for more information.
If you plan to assign tax reporting types to product fiscal classifications, then set up the tax
reporting types and codes that you need.

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Chapter 6 - Page 19
Agenda

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Chapter 6 - Page 20
Product Tax Exceptions

Product Tax Exceptions
(N) Tax Managers > Products > Tax Exceptions > (B) Create
Use the Create Tax Exceptions page to set up tax exceptions to apply special tax rates to
products. To set up tax exceptions, you must enable the Allow Tax Exceptions option at all
applicable levels in the regime-to-rate flow, including tax regime, tax, tax status, and tax rate.
At transaction time, E-Business Tax determines whether the tax exception applies to the
transaction line for the product and, if so, uses the applicable exception rate. Only one product
tax exception can apply to a transaction line for a specific tax.
You can set up these product tax exceptions:
Discount - A reduction of the base tax rate.
Surcharge - An increase to the base tax rate.
Special Rate - A rate that replaces the base tax rate.
You must assign a product tax exception to a combination of tax regime, configuration owner,
and tax. You can also optionally assign product tax exceptions to a tax status or tax rate
belonging to the tax or to a tax jurisdiction.

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Chapter 6 - Page 21
You can, for example, use product tax exceptions to determine the tax rate for a particular
product, instead of using tax rules. You can also define Inventory organization tax exceptions
for items, or you can define tax exceptions for Inventory-based or non-Inventory-based product
fiscal classifications. The product fiscal classification must have the same tax regime
assignment as the tax exception.

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Chapter 6 - Page 22
Product Tax Exceptions Setup

Product Tax Exceptions Setup
Before you can set up product tax exceptions, you may need to complete one or more
prerequisite tasks.
Prerequisites
Set up taxes.
Set up tax jurisdictions (for jurisdiction-specific exceptions).
Set up Inventory organizations (for item exception types).
Set up Inventory items (for item exception types).
Set up product fiscal classification types (for product fiscal classification exception types).
Set up product fiscal classification codes (for product fiscal classification exception
types).
Set up exception reason lookup codes (optional).
Set up tax statuses (optional).
Set up tax rates (optional).

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Chapter 6 - Page 23
Note. Setting up Inventory and product fiscal classifications are conditionally mandatory. For
example, you can create an exception for Inventory items, in which case product fiscal
classification types are not mandatory.

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Chapter 6 - Page 24
Agenda

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Chapter 6 - Page 25
Transaction Fiscal Classifications

Transaction Fiscal Classifications
(N) Tax Managers > Transactions > Transaction Business Categories
(N) Tax Managers > Transactions > Transaction Fiscal Classifications > (B) Create
(N) Tax Managers > Transactions > Document Classifications
(N) Tax Managers > Transactions > User Defined Transaction Classifications
Use the Transaction Business Category Codes, Create Transaction Fiscal Classification Type,
Update Document Fiscal Classification, and Update User Defined Fiscal Classification pages
to create transaction fiscal classifications. E-Business Tax uses transaction fiscal classifications
as tax determining factors in tax rules. You use transaction fiscal classifications when the tax
authority requires you to classify the nature of the transaction itself for tax purposes in order to
determine the tax rate.
You can set up these types of transaction fiscal classifications:
Transaction business categories.
Transaction fiscal classification codes.

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Chapter 6 - Page 26
Document fiscal classifications.
User defined fiscal classifications.
Transaction Business Categories
E-Business Tax provides the following transaction business categories that you can use to
identify and classify your business transactions:
Expense report.
Purchase pre-payment transaction.
Purchase transaction.
Sales transaction.
Sales transaction adjustment.
Intercompany transaction.
Transaction Fiscal Classification Codes
You can create a hierarchy of transaction fiscal classification codes for use with a transaction
business category to identify specific transaction events, such as employee expense reports vs.
contractor expense reports or retail sales vs. product demonstrations, and, if applicable,
designate codes for specific countries.
Document Fiscal Classifications
Set up document fiscal classifications to classify transactions that require special
documentation to accompany the transaction. For example, international transactions often
require proof of export documentation to support the sale or transfer of goods; you can create a
document fiscal classification code to confirm receipt of export documents.
User Defined Fiscal Classifications
Set up user defined transaction fiscal classification codes to classify any tax requirement that
you cannot define using existing fiscal classification types.

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Chapter 6 - Page 27
Summary

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Chapter 6 - Page 28

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Part 1: Setting Up Tax Rules
Chapter 7 - Page 1
Chapter 7

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Chapter 7 - Page 2

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Chapter 7 - Page 3
Objectives

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Chapter 7 - Page 4
Agenda

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Chapter 7 - Page 5

The Rule Engine tier comprises the set of tax rules that are used to determine and calculate tax
on a transaction. You define tax rules for each combination of tax regime, tax and
configuration owner. You create tax rules by translating the tax regulations of a tax authority
into determining factors and tax conditions that the E-Business Tax tax rules engine uses to
evaluate the applicability of a tax on each transaction line. Tax rules determine: the
applicability of a tax; the place of supply and tax jurisdiction of the transaction; the tax
registration; the tax status and tax rate; the recovery rate (if applicable); and the taxable basis
and tax formula to use in calculation.
This module discusses basic principles concerning tax rules and tax calculations, and how to
set up a tax rule using default values and the guided rule entry.

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Chapter 7 - Page 6
E-Business Tax Homepage Tax Rules

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Chapter 7 - Page 7
Rule Engine

Rule Engine
Oracle E-Business applications pass the necessary information to E-Business Tax about the
transaction regarding Party, Product, Place, and Process (4Ps). The E-Business Tax tax
determination process then uses the tax configuration setup and the details on the transaction to
determine:
Which taxes apply to the transaction.
How to calculate the tax amount for each tax that applies to the transaction.

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Chapter 7 - Page 8
Rule Engine Rule Types

Rule Engine - Rule Types
The E-Business Tax tax rules engine uses the Tax Determination process to identify the taxes
that apply to a transaction and to calculate the tax.
The E-Business Tax tax determination process is organized into rule types. Each rule type
identifies a particular step in the determination and calculation of taxes on transactions. You
must either set up tax rules or provide a default value for each rule type in order for the tax
rules engine to determine and calculate taxes.
The steps in the Tax Determination process are:
1 Determine Applicable Tax Regimes and Candidate Taxes: This is a preliminary step
used by E-Business Tax to determine tax regimes and candidate taxes within each tax regime.
This step identifies the first party of the transaction and the countries associated with the
transaction. For each country identified, the process selects the tax regimes that are associated
with the first party and defined for the country as candidate tax regimes. The process then
selects the taxes defined for each candidate tax regime as candidate taxes.
2 Determine Place of Supply and Tax Jurisdiction: Determines the location where a
transaction is considered to have taken place for a specific tax, and the associated tax
jurisdiction for each candidate tax. This step uses the Determine Place of Supply rule type.

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Chapter 7 - Page 9
For example, in Europe the default place of supply of goods for VAT is often Ship From,
meaning the place of supply of a sale or purchase within a European country is the country
itself. In the US, the default place of supply for US Sales and Use is often Ship To, meaning
the state that is purchasing/receiving the goods.
3 Determine Tax Applicability: Determines the tax applicability of each candidate tax
derived from the Determine Place of Supply and Tax Jurisdiction process, and eliminates taxes
that are found to be not applicable. This step uses the Determine Tax Applicability rule type.
4 Determine Tax Registration: Determines the party whose tax registration is used for each
tax on the transaction, and, if available, derives the tax registration number. This step uses the
Determine Tax Registration rule type.
Generally, the registration default is Bill From Party, but there are cases, like Reverse Charge
or Self Assessment, where the default becomes Bill To Party for specific transactions.
5 Determine Tax Status: Determines the tax status of each applicable tax on the transaction.
This step uses the Determine Tax Status rule type.
6 Determine Tax Rate: Determines the tax rate for each tax and tax status derived from the
previous process. This step uses the Determine Tax Rate rule type.
If applicable, the tax rate is modified by any exception rate and/or tax exemption that applies.
The result of this process is a tax rate for each applicable tax. The rate or rates are applied to
the taxable basis in Step 8, Calculate Taxes.
7 Determine Taxable Basis: Determines the taxable base amount or quantity upon which to
apply the tax rate for each applicable tax. This step uses the Determine Taxable Basis rule type.
The taxable basis is typically the transaction line amount. E-Business Tax provides the default
taxable basis formula taxable basis = line amount. In some cases, the taxable basis either can
include another tax or is based on the tax amount of another tax. You can set up special taxable
basis formulas to manage these requirements.
8 Calculate Taxes: Calculates the tax amount for each applicable tax on the transaction. This
step uses the Calculate Tax Amounts rule type.
The tax is typically determined by applying the tax rate to the line amount. E-Business Tax
provides the default tax calculation formula tax amount = taxable basis * tax rate. In some
exceptional cases, the tax amount is altered by adding or subtracting another tax. You can set
up special tax calculation formulas to manage these requirements.
Tax Recovery Rate: Determines the recovery rate on Procure to Pay transactions to apply to
each recovery type for each applicable tax on the transaction (Determine Recovery Rate rule
type).
Tax recovery is a separate process with its own set of steps, for taxes that allow for full or
partial recovery of the tax amount. See: Oracle E-Business Tax: Tax Recovery for more
information.
Direct Tax Rate Determination: This is a special tax rule type that lets you specify the results
of tax applicability, tax status, and tax rate for a given tax. You use this rule type with migrated
tax data and the Release 11i tax model in E-Business Tax. See: Oracle E-Business Tax:
Appendix A: Managing Migrated Tax Data for more information.

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Chapter 7 - Page 10
Rule Engine Tax Regimes

Rule Engine Tax Regimes
The Tax Regime process determines tax regimes and candidate taxes. The result of the process
is a list of taxes that are eligible for consideration on the transaction.
The activities include:
Determine the first party of the transaction.
Identify location types to derive candidate tax regimes.
Identify tax regimes.
Identify taxes using subscriber configuration option.
The components used include:
Party Tax Profile.
Regime Determination Set.
Configuration Options.

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Chapter 7 - Page 11
Rule Engine Place of Supply / Taxation

Rule Engine Place of Supply / Taxation
The Place of Supply / Taxation process identifies the applicable place of supply and associated
tax jurisdiction for each candidate tax. The place of supply, or sites in the United States, is the
location type where the supply of goods or services is deemed to have taken place for a specific
tax.
If E-Business Tax cannot find a tax jurisdiction for the location that corresponds to the place of
supply location type, then the tax does not apply and it is removed as a candidate tax for the
transaction.
Identify location type.
Identify jurisdiction.
The components used and corresponding rule type include:
Tax Rule: Determine Place of Supply, or the default value for Place of Supply for the tax.
Tax Jurisdictions.

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Chapter 7 - Page 12
Rule Engine Applicability & Registration

Rule Engine Applicability & Registration
Applicability Process
The Applicability process determines the tax applicability of each candidate tax derived from
the Determine Place of Supply and Tax Jurisdiction process, and eliminates taxes that are
found to be not applicable.
The process first attempts to derive the applicability of each candidate tax based on the rule
conditions of the Determine Tax Applicability rules for the tax. If no rule applies, the process
uses the default value of Applicable or Not Applicable that was assigned to the rule type for the
tax. If the tax does not apply, it is removed from the list of candidate taxes.
The Applicability activities include:
Consider candidate taxes from the previous process.
Eliminate taxes based on tax applicability rule for each tax.
The component used in these activities and corresponding rule type include Tax Rule:
Determine Tax Applicability and the default value for applicability for the tax.

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Chapter 7 - Page 13
Registration Process
The Registration process determines the party whose tax registration is used for each tax on the
transaction, and, if available, derives the tax registration number.
During the Registration process, E-Business Tax also considers these details of the derived tax
registration for each tax:
Tax inclusive handling.
Self-assessment/reverse charge setting.
Rounding rule.
The Registration activity includes determine the party type to use to derive the tax registration
for each applicable tax.
The component used in this activity and corresponding rule type includes:
Tax Rule: Determine Tax Registration, or the default value for the tax.
Party Tax Profile.
Tax Registration.

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Rule Engine Status & Rates

Rule Engine Status & Rates
Status Process
The Status process determines the tax status of each applicable tax on the transaction. E-
Business Tax attempts to derive the tax status using either tax rules belonging to the Determine
Tax Status rule type, or the default value assigned to this rule type.
The Status activities include:
Consider tax statuses of applicable taxes.
Consider tax status rules or use default tax status.
Rates Process
The Rates process determines the tax rate of the tax status derived from the previous process to
use on the transaction line for each applicable tax. If applicable, the tax rate is then modified by
any exception rate and/or tax exemption that applies.
The Rates activities include:
Determine the tax rate code to use for the tax status, for each applicable tax.
Determine the tax rate percentage or per-unit tax amount for a quantity based tax.

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If a tax exception applies, update the tax rate for each applicable tax.
If a tax exemption applies, update the tax rate.
The components used in these activities and corresponding rule type include:
Tax Rule: Determine Tax Rate, or the default value defined for the tax status derived in
the previous process.
Tax Rates.
Product Tax Exceptions.
Customer Tax Exemptions.
Defaulting Logic
If defined, E-Business Tax uses the tax rate assigned to the tax jurisdiction for the applicable
tax and tax status; otherwise, E-Business Tax uses the default tax rate.

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Rule Engine Taxable Basis

Rule Engine Taxable Basis
The Taxable Basis process determines the taxable base amount or quantity for each tax. This is
typically the transaction line amount. In some cases, the taxable basis either can include
another tax or is based on the tax amount of another tax. E-Business lets you define taxable
basis formulas to manage these requirements.
The result of this process is the taxable basis on which the tax rate for each tax is applied. If the
process cannot find a taxable basis formula for an applicable tax, then E-Business raises an
error.
Identify the taxable basis formula for each applicable tax.
Determine the taxable basis and compounding details based on the taxable basis formula.
Consider the Tax Inclusive settings of the applicable taxes.
Tax Rule: Determine Taxable Basis, or the default value for the tax.
Taxable Basis formula.
Tax Inclusive settings at the tax rate level.

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Rule Engine Tax Calculation

Rule Engine Tax Calculation
The Tax Calculation process calculates the tax amount on the transaction. In most cases, the
tax amount is computed by applying the derived tax rate to the derived taxable basis. In some
exceptional cases, the tax amount is altered by adding or subtracting another tax. E-Business
lets you define tax calculation formulas to manage these requirements.
The result of this process is the tax amount for each tax. If the process cannot find a tax
calculation formula for an applicable tax, then E-Business raises an error.
Identify the tax calculation formula.
Calculate taxes using the tax calculation formula.
Perform applicable tax rounding.
Tax Rule: Calculate Tax Amounts.
Calculate Tax formula, if applicable.
Tax Rounding Rule from registration, account site, party tax profile, or tax.
Configuration Owner Tax Options.

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Rule Engine Recovery Rate

A recoverable tax is a tax that allows full or partial recovery of taxes paid on purchases, either
as a recoverable payment or as an offset against taxes owed. The Recovery Rate process is an
optional process that determines the recovery rate to use on Procure to Pay transactions, when
the tax allows for full or partial recovery of the tax amount.
Allocate tax amount per item distributions.
Determine recovery types.
Determine recovery rates.
Determine the recoverable amounts.
Determine the non-recoverable amount.
See: Oracle E-Business Tax: Tax Recovery for complete information about the tax recovery
process.

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Agenda

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Tax Rule Defaults

Tax Rule Defaults
You can set a default value for each rule type. E-Business Tax uses the default value if no rule
belonging to the rule type provides a value that applies to the transaction.
For certain tax regimes, you may be able to use default values exclusively, without the need to
set up tax rules. As a general rule of thumb, if you find in setting up tax rules that the tax
condition results and rule results always equal the default values, then you do not need a tax
rule. You only need to define a tax rule for a result that is different from the default value.
Default Values for Rule Types
Determine Place of Supply
Bill From
Bill To
Point of Acceptance (Receivables transactions only)
Point of Origin (Receivables transactions only)
Point of Payment

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Ship From
Ship To
Use Bill To as Ship To, if Ship To is not found
In Europe, the default for place of supply of goods is usually Ship From. In the United States,
the default for place of supply of goods is usually Ship To.
Determine Tax Applicability
Applicable
Not Applicable
Determine Tax Registration
Bill From Party
Bill To Party
Ship From Party
Ship To Party
Use Bill To, if Ship To is not available
The default is usually Bill From Party, but there are cases, such as reverse charge and self-
assessment, where the default is Bill To Party for specific transactions.
Determine Tax Status You specify the default value when you set up the tax status. This
default can be overridden.
Determine Tax Rate You specify the default value when you set up the tax rate. This default
can be overridden.
Determine Taxable Basis The seeded formula STANDARD_TB (Taxable Basis = Line
Amount).
Calculate Tax Amounts The seeded formula STANDARD_TC (Tax Amount = (Taxable
Basis) * (Tax Rate)).

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Agenda

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Chapter 7 - Page 23
Make Tax Available on Transactions

Make Tax Available on Transactions
(N) Tax Managers > Tax Configuration > Taxes > (I) Update
Use the Update Tax page to make each tax available on transactions. You must enable the
Make Tax Available for Transactions option before E-Business Tax can use this tax setup to
calculate taxes on transactions. When you enable the Make Tax Available for Transactions
option, E-Business Tax runs a series of checks to ensure that all of the definitions related to the
tax have been defined. E-Business Tax displays an error message if you have not set up the
definitions properly.
Prior to making a tax available on transactions, you must:
Define either a default place of supply or a tax rule for the rule type Determine Place of
Supply.
Define either a default tax registration or a tax rule for the rule type Determine Tax
Registration.
Define either a default tax status and default tax rate, or tax rules for the rule types
Determine Tax Status and Determine Tax Rate, or the rule type Direct Tax Rate
Determination.

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Define either a default tax formula or a tax rule for the rule type Determine Taxable Basis.
Define either a default tax formula or a tax rule for the rule type Calculate Tax Amounts.
Define a primary tax recovery rate, if you set the allow recovery option for the tax.
Define at least one tax jurisdiction for the tax.
Define an exchange rate type, if the tax is used in cross-border transactions.

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Agenda

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Chapter 7 - Page 26

Responsibility: E-Business Oracle Tax Simulator
(N) Oracle Tax Simulator > Tax Simulator
Use the Oracle Tax Simulator to enter transactions in order to simulate the tax determination
process without creating live data.
With the Oracle Tax Simulator, you can:
Enter Payables and Receivables transactions to simulate tax calculation based on various
scenarios.
View the tax rules that were applied to a tax calculation and the processed result for each
rule type.
Simulate the characteristics of the Payables, Purchasing, and Receivables workbenches
and create the tax line for each type of operation.
View the summarized tax lines for each transaction and the tax lines generated for each
transaction line.
Use the associated tax windows to view and/or override tax lines.

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The Oracle Tax Simulator provides these verifications:
How the tax rules that you have defined for one or more taxes work in conjunction with
the defaults you have set for them.
Whether a tax rule that you expected to have a successful evaluation for a given set of
transaction conditions achieved the desired result.
How the options that you have set at various levels are reflected in the results of tax
determination processing. If a certain transaction does not processes taxes as you
predicted, then you can use the simulated result to troubleshoot the cause.

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Chapter 7 - Page 28
Troubleshooting the Tax Configuration

Troubleshooting the Tax Configuration
Responsibility: Oracle Tax Simulator
If a certain transaction does not process taxes as you predicted, then you can use the simulated
result to troubleshoot the cause. For example:
You defined product tax exceptions, but they were not used on a transaction as expected.
You then discover that the Allow Tax Exceptions option was not enabled on the
applicable tax rate record.
Your supplier record has the option enabled to use offset taxes, but the offset taxes do not
appear. You then discover that the tax rate record does not have an offset tax rate
associated with it.
Tax Simulator Tools
Use the Tax Simulator tools to analyze the tax calculations for your transaction:
View Tax Log - Use the View Tax Log option on the Tools menu to generate a log file of
transaction activity. The log file provides details of all processing done on a transaction,
including a list of tax rules that were not evaluated successfully.

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Detail Tax Lines window - Use the Detail Tax Lines window to view the calculated tax
lines for the transaction. The window displays, for each transaction line, the applicable tax
with the corresponding tax configuration details, including tax regime, tax, tax
jurisdiction, tax status, tax rate code, tax rate, and tax amount.
Rules window - Use the Rules window to view the tax rules that were applied to each tax
line for each tax calculation process. For each rule type, you can view the processed result
and verify whether the result was determined by a tax rule or the default value. If a tax
rule was applied, you can also determine the associated tax rule and tax condition set.
Summary Tax Lines window - Use the Summary Tax Lines window to view the summary
tax lines for your Payables transactions. For each applicable tax, you can view the total tax
amount across all transaction lines, with the corresponding tax configuration details,
including tax regime, tax, tax jurisdiction, tax status, tax rate code, and tax rate.
Tax Distributions window - Use the Tax Distributions window to view the resulting
distributions information and any associated recovery details for your Payables
transactions.

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Agenda

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Chapter 7 - Page 31
Tax Rules Entry

Tax Rules Entry
E-Business Tax provides two entry flows for setting up your tax rules:
Guided Tax Rule Entry - The guided tax rule entry provides a five-step flow that lets you
build determining factors and tax conditions as you create the tax rule. Setting up tax rules
using the Guided Tax Rule Entry is discussed in this module.
Expert Tax Rule Entry - The expert tax rule entry provides a concise, three-step entry flow
that makes use of determining factor sets and tax condition sets that you have previously
defined. Setting up tax rules using the Expert Tax Rule Entry is discussed in Oracle E-
Business Tax: Part 3: Setting Up Tax Rules.

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Chapter 7 - Page 32
Tax Rules Guided Rule Entry

(N) Tax Managers > Tax Rules > (I) Guided Rule Entry
Use the following page flow to set up tax rules using the guided rule entry:
Tax Rules
Create Tax Rule: General Information
Create Tax Rule: Determining Factors and Conditions
Create Tax Rule: Condition Results
Create Tax Rule: Rule Order
Create Tax Rule: Rule Templates

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Chapter 7 - Page 33

A tax rule is defined by:
Ownership information - Identifies the tax rule configuration owner. If the configuration
owner is a legal entity or operating unit, then the rule only applies to the transactions of this
legal entity or operating unit. If the configuration owner is the Global Configuration Owner,
then the rule applies to the transactions of all legal entities and operating units with a
configuration option setting for the tax regime of either Common Configuration or Common
Configuration with Party Overrides.
Context information - Identifies the tax regime, tax, and rule type for which a rule is defined.
Rule order - Identifies the order in which a rule is evaluated. You cannot repeat a rule order
for the same tax regime, tax, and rule type for the same configuration owner. If the
configuration option setting is Common Configuration with Party Overrides, you cannot repeat
a rule order for the same tax regime, tax, and rule type for either the same configuration owner
or the Global Configuration Owner.

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Chapter 7 - Page 34
Additional context information - Applies further restrictions to a rule:
Transactions belonging to a specific application event class.
Transactions belonging to a specific application tax event class.
Transactions belonging to a specific location.
Determining factor set - Identifies the factors to consider when evaluating the tax rule.
Tax condition set - Identifies the conditions (from one or more of the determining factors
belonging to the determining factor set) to satisfy in order evaluate a tax condition set
successfully.
Result - The value that results when the tax conditions are satisfied. For the direct tax rate
determination rule type, multiple results may apply to the successful evaluation of a tax
condition set.

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Chapter 7 - Page 35
Tax Rules Guided Rule Entry Setup

Tax Rules Guided Rule Entry Setup
Before you can set up a tax rule, you may need to complete one or more of these tasks.
Prerequisites
Set up tax regimes.
Set up taxes.
Set up tax statuses.
Set up tax rates and enable the Allow Tax Rate Rules option.
Set up tax jurisdictions (to optionally use with the Determine Place of Supply rule).
Set up TCA geography hierarchy structures (if required by the tax rule).
Set up tax zones (if required by the tax rule).
Set up fiscal classifications (if required by the tax rule).

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Chapter 7 - Page 36
Set up taxable basis tax formulas (for the rule type Determine Taxable Basis, if you need a
formula other than the default formula STANDARD_TB).
Set up tax calculation tax formulas (for the rule type Calculate Tax Amounts, if you need a
formula other than the default formula STANDARD_TC).
Set up tax recovery rates (for the rule type Determine Recovery Rate).

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Summary

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Chapter 7 - Page 38

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Chapter 8 - Page 1
Chapter 8

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Chapter 8 - Page 2

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Chapter 8 - Page 3
Objectives

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Chapter 8 - Page 4
Agenda

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Chapter 8 - Page 5

This module discusses the major components of a tax ruleregime determination set, tax
determining factor set, tax formula, tax condition setand how to use these components to
build tax rules.

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Chapter 8 - Page 6

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Chapter 8 - Page 7
Determining Factors

Determining Factors
Determining factors are the key building blocks of your tax rules. They are the variables that
are passed at transaction time or derived from information on the transaction. Determining
factors fall into four groups, namely:
Party
Product
Place
Process
A determining factor is an attribute that contributes to the outcome of a tax determination
process, such as a geographical location (place) or tax registration status (party). Determining
factors can be used in tax rules, taxable basis formula, and tax regime determination.
Determining Factor Classes
Tax determining factors are categorized into logical groupings called determining factor
classes, such as Accounting or Geography. The grouping of determining factors into
determining factor classes is done to simplify searches, by grouping similar determining factors
together. A determining factor is automatically created under the appropriate determining

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Chapter 8 - Page 8
factor class whenever you create a new element, such as a new fiscal product classification
code.
Class Qualifiers
You use a class qualifier with a determining factor class when it is possible to associate a
determining factor class with more than one value on the transaction. For example, for the
determining factor class Geography and the determining factor Country, you need to specify
which party location to use by means of a class qualifier such as ship from party or ship to
party location.

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Chapter 8 - Page 9
Determining Factor Party

Determining Factor - Party
The Party determining factor includes the following determining factor classes and their class
qualifiers:
Legal party fiscal classification
- First party
Registration
- Bill From Party
- Bill To Party
- Ship From Party
- Ship To Party
Party fiscal classification
- Bill From Party
- Bill To Party
- Point of Acceptance Party (AR transactions)
- Point of Origin Party (AR transactions)

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- Ship From Party
- Ship To Party
Transaction input factor
- Not applicable
The transaction input factor determining factor class groups together additional factors entered
on the transaction line that can influence tax determination. Transaction input factors can apply
to the parties, products, or processes involved in a transaction.
See: Oracle E-Business Tax: Fiscal Classifications for a discussion of legal party and party
fiscal classifications.
See: Oracle E-Business Tax: Tax Profiles and Registrations for a discussion of registration
information.

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Chapter 8 - Page 11
Determining Factor Product

Determining Factor Product
The Product determining factor includes the following determining factor classes and their
class qualifiers:
Product Inventory linked
- Not applicable
Product Non-Inventory linked
- Product fiscal classification level (Levels 1-5)
Transaction input factor (intended use, product override)
- Not applicable
See: Oracle E-Business Tax: Fiscal Classifications for a discussion of Product Inventory
linked and Product Non-Inventory linked product fiscal classifications.

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Chapter 8 - Page 12
Determining Factor Place

Determining Factor - Place
The Place determining factor includes the following determining factor classes and their class
qualifiers:
Geography
- Bill From
- Bill To
- Point of Acceptance (AR transactions)
- Point of Origin (AR transactions)
- Ship From
- Ship To
Tax Zones
- Bill From
- Bill To
- Point of Acceptance
- Point of Origin

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Chapter 8 - Page 13
- Ship From
- Ship To
See: Oracle E-Business Tax: Part 1: Oracle E-Business Tax Basic Tax Configuration for a
discussion of geography types and tax zones.

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Chapter 8 - Page 14
Determining Factor Process

Determining Factor - Process
The Process determining factor includes the following determining factor classes and their
class qualifiers:
Document
- Document fiscal classification level (Levels 1-5)
Transaction fiscal classification
- Not applicable
Transaction generic classification
- Classification level (Levels 1-5)
Accounting event
- Accounting segments of the selected ledger
Transaction input factor
- Not applicable
The transaction generic classification determining factor class references fiscal classification
codes belonging to the designated level in the corresponding fiscal classification type.

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Chapter 8 - Page 15
See: Oracle E-Business Tax: Fiscal Classifications for a discussion of document and
transaction fiscal classifications.
See: Oracle E-Business Tax: Part 2: Oracle E-Business Tax Basic Tax Configuration for a
discussion of tax accounts.

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Chapter 8 - Page 16
Agenda

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Chapter 8 - Page 17
Tax Determining Factor Set

Tax Determining Factor Set
(N) Tax Managers > Advanced Setup Options > Tax Determining Factor Sets > (B) Create
Use the Create Tax Determining Factor Set page to set up a tax determining factor set. The tax
determining factor set groups together related tax determining factors for use in tax rules
determination and tax regime determination.
Tax Rules
Associate a tax determining factor set with a rule type to use in the creation of tax rules for the
rule type. Tax determining factors are the building blocks in the creation of tax conditions for
each tax rule.
You associate one determining factor set with each tax rule to create the tax condition sets for
the tax rule. You can maintain and reuse a tax determining factor set that you create for one
rule with another rule for a different tax or a different rule type, where requirements are
identical. You can also reuse a tax determining factor set within the same rule type for a
different condition set. You can set up determining factor sets in advance to use with tax rules,
or set up a determining factor set during the creation of a tax rule.

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Chapter 8 - Page 18
Regime Determination
Associate a regime determination set with a combination of configuration owner and
application event class to identify tax regimes and candidate taxes on transactions belong to
this configuration owner and application event class.
Tax regime determination is the first step in the tax determination process. A regime
determination set differs from tax rule determining factor sets in that the determining factors
are location types only. E-Business Tax compares the location types in the active regime
determination set to the locations specified on the transaction to identify the countries
associated with each location and the tax regimes associated with each country.
Note: By default, E-Business Tax provides a seeded regime determination set for all Payables
and Receivables transactions for all configuration owners. This regime determination set
considers all location types (except Paying Location) to look for applicable tax regimes on a
transaction. In most cases, you create alternative regime determination sets for specific
configuration owners and application event class combinations in order to narrow the number
of location types that E-Business Tax evaluates to derive eligible tax regimes. This increases
regime determination efficiency for the related transactions.

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Chapter 8 - Page 19
Tax Determination Set Setup for Tax Rules

Tax Determination Set Setup for Tax Rules
Before you can set up determining factor sets for tax rules, you may need to complete one or
more of these tasks.
Prerequisites
Set up tax regimes, if you intend to create a determining factor set for use with a specific
tax regime, or if you intend to use a fiscal classification determining factor class that
requires a tax regime assignment.
Set up ledgers, if you intend to use the Accounting determining factor class. The ledger
accounting segments become available for use as tax condition values.
Set up TCA geography hierarchy structures, if you intend to use the Geography
determining factor class.
Set up TCA party classifications, if you intend to use the Party Fiscal Classification or
Legal Party Fiscal Classification determining factor class.
Set up party tax profiles, if you intend to use the Registration determining factor class.
Set up fiscal classifications, if you intend to use a determining factor class related to fiscal
classifications.

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Chapter 8 - Page 20
Set up tax classification codes, if you intend to use the Transaction Input Factor
determining factor class for tax classification codes.
Set up tax zones types and tax zones, if you intend to use the User Defined Geography
determining factor class.

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Chapter 8 - Page 21
Regime Determination Set Setup

Regime Determination Set Setup
Before you can set up determining factor sets for regime determination, you may need to
complete one or more of these tasks.
Prerequisites
Set up tax regimes.
Optionally set up tax zone types and tax zones, if you want regime determination to take
place at the tax zone level for a location type.

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Chapter 8 - Page 22
Agenda

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Chapter 8 - Page 23
Tax Formulas

Tax Formulas
(N) Tax Managers > Advanced Setup Options > Tax Formulas > (B) Create
Use the Create Tax Formula page to set up tax formulas for use in the tax rules Determine
Taxable Basis and Calculate Tax Amounts.
Determine Taxable Basis
The Determine Taxable Basis tax rule derives the amount or quantity on the transaction line
that E-Business Tax uses to apply the tax rate. The standard taxable basis formulas are:
Taxable Basis = Line Amount.
Taxable Basis = Quantity.
If the tax requires the calculation of a taxable basis other than the line amount or line quantity
(for example, assessable value or prior tax), then create a taxable basis tax formula and either
associate it with a Determine Taxable Basis tax rule for the applicable tax regime and tax or set
it as the default taxable basis for a tax.

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Chapter 8 - Page 24
Calculate Tax Amounts
The Calculate Tax Amounts tax rule determines the formula that E-Business Tax uses to
calculate the tax amount on the transaction line. The standard tax calculation formula is Tax
Amount = (Taxable Basis) * (Tax Rate). If the tax amount is to be altered by adding or
subtracting the tax amount of another tax , then create a tax calculation tax formula and either
associate it with a Calculate Tax Amounts tax rule for the applicable tax regime and tax or set
it as the default tax calculation formula for a tax.

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Chapter 8 - Page 25
Tax Formula Setup

Tax Formula Setup
Before you can set up tax formulas, you must set up tax regimes and taxes for taxable basis tax
formulas and for tax calculation tax formulas that you intend to assign to specific tax regimes
and taxes. If you do not assign a tax calculation tax formula to a specific tax regime, then it
becomes available to all tax regimes.
You must also enable cross-regime compounding and compounding precedence for the tax
regimes and taxes that will use tax formulas with compounding details.

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Chapter 8 - Page 26
Agenda

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Chapter 8 - Page 27
Tax Condition Sets

Tax Condition Sets
(N) Tax Managers > Advanced Setup Options > Tax Condition Sets > (B) Create
Use the Create Tax Condition Set and Create Tax Conditions pages to set up tax condition sets.
The tax conditions belonging to an individual tax condition set constitute the conditions to
consider in order to determine if the result of the condition is true for the applicable
transaction. The tax condition set or sets belonging to an individual tax rule constitute the logic
of the tax ruleif any tax condition set belonging to a tax rule arrives at a true result, then the
tax rule applies to the transaction.
You can set up tax condition sets in advance and apply them to a tax rule, or you can set up tax
condition sets during tax rule creation.
The tax condition set specifies the factors to consider, and the resulting value that must exist
for each factor, in order for the result of the tax rule to be true. Each tax condition in a tax
condition set consists of a tax determining factor (determining factor class/class
qualifier/determining factor name), an operator, and a value.
When the elements of the transaction meet all of the tax regulations, then the rule result is true
and the rule applies to the transaction.

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Chapter 8 - Page 28
Tax Condition Sets Setup

Tax Condition Sets Setup
Before you can set up tax condition sets, you may need to complete one or more of these tasks.
Prerequisites
Set up determining factor sets.
Set up values for the applicable determining factor classes. You should ensure that all of
the values that you need have been defined for the determining factor classes that you
intend to use in a tax condition set. For example, define all of the fiscal classification
codes that you need for each applicable fiscal classification determining factor class.

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Chapter 8 - Page 29
Summary

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Chapter 8 - Page 30

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Chapter 9 - Page 1
Chapter 9

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Chapter 9 - Page 2

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Chapter 9 - Page 3
Objectives

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Chapter 9 - Page 4
Agenda

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Chapter 9 - Page 5

This module discusses how to create a tax rule using the Expert Rule Entry.

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Chapter 9 - Page 6

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Chapter 9 - Page 7
Rules in Detail Example UK Rules Setup (Intra EU Sales)

Rules in Detail Example UK Rules Setup (Intra EU Sales)
An example of how tax rules can be modeled in E-Business Tax includes the following
scenario:
You purchase goods from a VAT-registered business in another EU country.
The goods are moved to the UK.
You are required to account for VAT in the UK on the acquisition of the goods.

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Chapter 9 - Page 8
UK Rules Setup - Intra EU Sales

UK Rules Setup Intra EU Sales
You determine the tax rule components based on the applicable tax regulations. As indicated in
this example, you set up your determining factor and tax condition sets as follows:
Process The tax rule is limited to purchases.
Party The supplier must be registered in another EC country.
Place The goods must be delivered from an EC country into the UK.
Product The product type must be goods.
Your tax rule attributes are:
Determine Place of Supply - The place of supply is the Ship To location.
Determine Tax Registration - The ship to party must self-assess the tax.
Determine Recovery Rate - The recovery rate rule is the default rate.
The source of the tax regulations for this example is the HM Revenue and Customs VAT
Guide All Sections.

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Chapter 9 - Page 9

Note that the tax regulation that limits this tax requirement to Purchases is modelled as a rule
restriction rather than a determining factor, to increase efficiency during tax processing.
However, the same principle applies.

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Chapter 9 - Page 10

The assumption in this example is that regular intra EU suppliers have already been validated
to ensure that they have a registration in another EU country. The exception should be that they
do not have a registration and you set up this exception, if needed, as a registration status, party
classification, or as a specific tax classification and additional rule to prevent intra-EU
processing.
Note. This is a condition that requires additional supplier/supplier site setup. The assumption
used is that most suppliers/supplier sites have been validated as part of the manual setup
procedure.

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Chapter 9 - Page 11

This tax regulation applies to goods only. Therefore, set up the product type equal to goods.

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Chapter 9 - Page 12

In order to indicate that this tax regulation refers to goods shipped from another EU country to
the UK, you set up your determining factor and tax condition sets as:
Country of Ship To equal to UK.
Economic region of Ship From equal to EEC.
Country of Ship From is not equal to UK.

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Chapter 9 - Page 13

Bringing these concepts together, if the conditions are true, then the result of the Tax
Registration rule is Bill To Party (for example, the customer must self-assess the tax and
charge themselves VAT based against their own registration number).

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Chapter 9 - Page 14

Bringing these concepts together, if the conditions are true, then the result of the Place of
Supply rule is Ship To Location (for example, the customer must self-assess the tax and charge
themselves VAT using the tax of the country where the goods have been sent to).

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Chapter 9 - Page 15
Agenda

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Chapter 9 - Page 16
Rules in Detail Example Summary UK Rules Setup (Intra EU
Sales)

Rules in Detail Example Summary UK Rules Setup (Intra EU Sales)
Based on the example, you set up determining factor and tax condition sets as follows:
Process The tax rule is limited to purchases.
Party The supplier must be registered in another EU country.
Place The goods must be delivered from an EU country into the UK.
Product The product type must be goods.
Results associated with the tax condition set:
Determine Applicable Tax Regimes and Candidate Taxes - The tax is UK VAT in the tax
regime UK VAT.
Determine Place of Supply - The place of supply is the Ship To party and the tax
jurisdiction is the UK.
Determine Tax Registration - The registration party type is the Ship To party, and the ship
to party must self-assess the tax.
Determine Tax Status and Tax Rate - The applicable status and rate for UK VAT.

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Chapter 9 - Page 17
Note. The first three columns (Determining Factor, Determining Factor Class, and Class
Qualifier) represent tax determining factors and the elements of a tax determining factor set.
Each line represents a tax condition (Determining Factor + Operator + Resulting Condition).
One or more tax conditions comprise a tax condition set, with the determining factors of the tax
conditions drawn from the one determining factor set assigned to the tax rule.

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Chapter 9 - Page 18
Agenda

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Chapter 9 - Page 19
Tax Rules

Tax Rules
E-Business Tax provides two entry flows for setting up your tax rules:
Guided Tax Rule Entry - The guided tax rule entry provides a five-step flow that lets you
build determining factors and tax conditions as you create the tax rule. See: E-Business
Tax: Part 1: Setting Up Tax Rules for a description of the guided tax rule entry.
Expert Tax Rule Entry - The expert tax rule entry provides a concise, three-step entry flow
that makes use of determining factor sets and tax condition sets that you have previously
defined. Setting up tax rules using the Expert Tax Rule Entry is discussed in this module.

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Chapter 9 - Page 20
Tax Rules Expert Rule Entry

Tax Rules Expert Rule Entry
(N) Tax Managers > Tax Rules > (I) Expert Rule Entry
Set up tax rules using the expert rule entry when you are more familiar with the concepts of tax
rules and tax determination. To use the expert rule entry, you must set up tax determining
factor sets and tax condition sets for use with the rules that you intend to create. You can
optionally set up a tax determining factor set during tax rule entry. Use the following pages to
set up tax rules:
Tax Rules
Create Tax Rule: General Information
Create Tax Rule: Condition Results
Create Tax Rule: Rule Order
See: Oracle E-Business Tax: Part 1: Setting Up Tax Rules for general information about
setting up tax rules.
See: Oracle E-Business Tax: Part 2: Setting Up Tax Rules for an explanation of tax
determining factor sets and tax condition sets.

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Chapter 9 - Page 21
Summary

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Chapter 9 - Page 22

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Tax Recovery
Chapter 10 - Page 1
Tax Recovery
Chapter 10

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Tax Recovery
Chapter 10 - Page 2
Tax Recovery

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Chapter 10 - Page 3
Objectives

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Tax Recovery
Chapter 10 - Page 4
Agenda

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Tax Recovery
Chapter 10 - Page 5

Tax recovery processing makes use of the five tiers of the E-Business Tax architecture in this
way:
The Tax Definition tier maintains the recovery rate details of the basic tax configuration.
The Configuration tier identifies the factors that participate in determining the recovery
rate on an individual transaction, such as product intended use.
The Rule Engine tier maintains the tax rules defined for the Determine Recovery Rate
rule type.
The Services tier manages the calculation of the tax recovery amounts.
The Tax Management tier maintains all of the tax information pertaining to tax recovery
for each transaction, for use in tax reporting
This module discusses tax recovery in detail.

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Tax Recovery
Chapter 10 - Page 6
E-Business Tax Homepage Tax Recovery

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Tax Recovery
Chapter 10 - Page 7
Tax Recovery

Tax Recovery
In many parts of the world, some or all of the taxes on Procure-to-Pay business transactions for
registered companies are recoverable taxes. A recoverable tax is a tax that allows full or partial
recovery of taxes paid on purchases, either as a recoverable payment or as an offset against
taxes owed.
For example, most VAT-type taxes allow for full recovery of taxes paid on goods and services
that relate to taxable business supplies. In some cases, partial recovery can be used for specific
purchases. For example, in Belgium the Input VAT on the leasing of company cars for
company use can only be 50% recoverable.
In some cases, where a taxpayer has taxable and exempt sales (for example, Output Tax), the
ratio of these two values may be used to set an estimated Input Tax Recovery Rate for normal
purchases for the subsequent year. You make any necessary adjustments at the tax year end.
You can implement this by setting up a default recovery rate as this partial recovery rate.

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Tax Recovery
Chapter 10 - Page 8
Value Added Tax Overview

Value Added Tax Overview
Value Added Tax (VAT) is imposed on the supply of goods and services paid for by the
consumer, but collected at each stage of the production and distribution chain (for example,
original manufacturer, wholesaler, retailer, and final consumer). The VAT charged on a
customer invoice is called Output Tax. Any VAT paid on a vender invoice is called Input Tax.
The amount due each period can be described as follows: Amount Due = Output Tax Input
Tax.
At each stage, the organization purchasing supplies can recover all or part of the tax from their
purchases. For example, organizations that only produce VAT applicable goods and services
can use 100% recovery rate on most purchases. Organizations that produce VAT exempt goods
and services, for example, financial institutions, have a 0% recovery rate.

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Tax Recovery
Chapter 10 - Page 9
Regime-to-Rate Flow with UK VAT

Regime-to-Rate Flow with UK VAT
An example of UK VAT illustrates a tax configuration with a full recovery of the tax (100%
recovery rate) defined.
In most tax regimes, a tax that is paid by a registered establishment can claim back 100% of
taxes due from the tax authority, except for specific designated purchases. Depending upon the
details of a companys business purchases and tax authority regulations, a number of exception
regulations may accompany the details of tax recovery.

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Tax Recovery
Chapter 10 - Page 10
Agenda

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Tax Recovery
Tax Recovery Rates

Tax Recovery Rates
(N) Tax Managers > Tax Configuration > Tax Recovery Rates > (B) Create
Use the Create Tax Recovery Rate page to set up tax recovery rate codes for the recovery types
identified on the taxes within a tax regime. A tax recovery rate code identifies the percentage
of recovery designated by the tax authority for a specific transaction. In Canada, where more
than one type of recovery is possible for a given tax, you must set up the applicable tax
recovery rate codes for both the primary and secondary recovery types that can apply to a
transaction.
If you set the Allow Tax Recovery option for the tax regime and tax, then you must set up at
least one recovery rate for the tax in order to make the tax available on transactions. If the
recovery rate can vary based on one or more factors, including the parties, locations, product or
product purpose, then set up tax rules to determine the appropriate recovery rate to use on
specific transactions.

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Tax Recovery
At transaction time:
E-Business Tax first determines if there is an applicable Tax Recovery Rate rule.
If no applicable Tax Recovery Rate rule is found, the system determines if there is a
default recovery rate code defined for the applicable rate.
If no recovery rate is found, then the system uses the default recovery rate defined on the
tax.
In many cases, E-Business Tax uses either the recovery rate associated with the tax rate or the
default recovery rate defined for the tax.
Prerequisite
Before you can set up tax recovery rates, you must set up taxes.

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Tax Recovery
Agenda

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Tax Recovery

The Recovery Rate process determines the recovery rate to use on Procure-to-Pay transactions,
when the tax allows for full or partial recovery of the tax amount. In many cases, E-Business
Tax uses either the recovery rate associated with the tax rate or the default recovery rate
defined for the tax. However, if the tax recovery rate can vary according to determining
factors, such as intended use, then use a Determine Recovery Rate tax rule to derive the
recovery rate.
You can only set up a Determine Recovery Rate tax rule for taxes that have the Allow Primary
Recovery Rate Determination Rules option and, if applicable, the Allow Secondary Recovery
Rate Determination Rules option enabled.
E-Business Tax creates one recoverable distribution for the primary recovery type and
secondary recovery type for each tax line, for each of the item distributions into which the item
or expense line is distributed.

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Tax Recovery
Agenda

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Tax Recovery
Tax Recovery Processing

Tax Recovery Processing
After E-Business Tax determines the recovery rate for each recovery type, it then determines
the recoverable amounts against each recovery type for each tax line. The remaining tax
amount becomes the non-recoverable tax amount for the tax line. E-Business Tax stores both
the recoverable and non-recoverable amounts of reportable documents, such as Payables
invoices, to include in your tax reporting.
Activity Steps
The activity steps include:
1. Allocate tax amount per item distributions E-Business Tax apportions the tax amount to
each item distribution. While taxes are determined at the transaction line level, tax
recovery is determined at the transaction line distribution, or item distribution, level.
2. Determine recovery types E-Business Tax determines, for each tax and item distribution,
whether the primary and, if defined, secondary recovery types apply. The result of this
process is a tax distribution for each recovery type for each tax and item distribution. If
recovery types are not defined, the system goes to step 5.

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Tax Recovery
3. Determine recovery rates E-Business Tax determines the recovery rate for each tax
distribution:
a. E-Business Tax considers the Determine Recovery Rate tax rule for the first
recoverable tax distribution.
b. E-Business Tax uses the tax recovery rate derived from the tax rule.
c. If E-Business Tax cannot derive a tax rule based on the transaction values, then it
uses the tax recovery rate associated with the tax rate for the tax line.
d. If there is no tax recovery rate associated with the tax rate, E-Business Tax uses the
default tax recovery rate defined for the tax.
e. Repeat steps 1 to 4 for each recoverable tax distribution.
4. Determine the recoverable amounts E-Business Tax applies the recovery rates to the
apportioned tax amounts to determine the recoverable tax amounts. The result of this
process is a recoverable tax amount for each recoverable tax distribution.
5. Determine the non-recoverable amount E-Business Tax calculates the difference
between the apportioned tax amount of every tax line per item distribution and the sum of
the recoverable tax distribution to arrive at the non-recoverable tax amount, and then
creates a non-recoverable tax distribution for this amount. If a primary recovery type was
not defined for a tax, E-Business Tax designates the entire apportioned amount for the
item distribution as the non-recoverable tax amount.
In each case, E-Business Tax creates two distribution lines: one for the recoverable
amount and one for the non-recoverable amount. If the tax is fully recoverable, then the
recoverable distribution amount is equal to the tax amount and the non-recoverable
distribution amount is equal to zero. If the tax is recoverable and the recovery rate is zero,
then the non-recoverable distribution amount is equal to the tax amount and the
recoverable distribution amount is equal to zero. Users with the appropriate authorization
can update these distributions.

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Tax Recovery
Summary

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Managing Taxes on Transactions
Chapter 11 - Page 1
Managing Taxes on
Transactions
Chapter 11

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Chapter 11 - Page 2

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Chapter 11 - Page 3
Objectives

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Chapter 11 - Page 4
Agenda

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Chapter 11 - Page 5

The Services tier manages the calculation of the tax amounts, and tax recovery amounts (if
applicable). E-Business Tax calculates the tax on a transaction based on the legal
entity/operating unit setup, the tax configuration, and tax rules setup. The entire calculation
process is transparent to the user.
This module discusses tax handling on transactions in detail.

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Chapter 11 - Page 6
E-Business Tax Homepage Oracle Tax Simulator

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Chapter 11 - Page 7
Services

Services
E-Business Tax calculates tax on Procure to Pay transactions from Purchasing and Payables.
Oracle E-Business Suite Applications
Procure to Pay Applications
- Purchasing
- iProcurement
- Consigned Inventory
- Internet Expenses
- Payables

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Chapter 11 - Page 8
Services

Services
E-Business Tax calculates tax on Order to Cash transactions from Receivables, and on Project
invoices created in Receivables.
For intercompany transactions, E-Business Tax accounts for tax on both the Receivables (sale)
side and Payables (purchase) side.
For General Ledger, you can use E-Business Tax to set up automatic tax calculation on taxable
journal entry lines. You can define a tax rate code at the ledger level to default to all taxable
journal lines entered in the ledger, or you can define a tax rate code for a natural account
segment to default to related taxable journal entry lines.
E-Business Tax also calculates tax on transactions from applications that feed data into
Payables or Receivables. These applications are called source applications. The tax
determination process only takes place after these applications interface data into Payables or
Receivables.
Example 1: A source application can feed a Receivables invoice into Payables to use as
the source document for an intercompany Payables transaction.

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Chapter 11 - Page 9
Example 2: A source application can feed Trade Management transaction information into
Receivables to ensure consistency in the tax calculation between the Trade Management
source and Receivables and Payables transactions.

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Payables Transactions

Payables Transactions
E-Business Tax provides tax services for the following Payables event classes:
Standard invoices.
Prepayment invoices.
Expense reports.
With the invoice line introduction by Payables in Release 12, tax calculation is now also
supported at both invoice lines and distribution level.
Additional attributes are captured by Payables for tax purposes as displayed on the Payables
Invoice Workbench. Additional attributes include:
Taxation country.
Document subtype.
Transaction business category.
Product fiscal classification.
Product category.
Product type.

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Line intended use.
User defined fiscal classification.
Assessable value.
You can enter and update detail and summary tax lines according to the requirements of your
transactions. You can perform these operations on tax lines:
Enter a manual tax line.
Change existing tax line information.
Cancel a tax line.
Self-assessed taxes are also handled in Payables transactions.
Examples of tax handling on Payables transactions are discussed in the following slides:
Invoices matched to purchase orders.
Prepayment invoices.
Payables price corrections.

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Payables Transactions Invoices Matched to POs

Payables Transactions - Invoices Matched to POs
When you create an invoice in Payables by matching it to a purchase order, Payables copies the
purchase order tax lines and tax-related information to the invoice and recalculates the tax. The
tax rate that is used in tax calculation is always derived from the invoice date.
If the tax rate has not changed between the purchase order date and the invoice date, then the
tax calculation results in the same tax lines on the invoice as on the purchase order shipment
line. If the tax rate has changed between the purchase order date and the invoice date, then the
tax calculation results in the same tax lines but using the tax rate that corresponds to the
invoice date.
E-Business Tax manages the updates to tax-related information in this way:
1. Tax applies to the purchase order but not to the invoice - The tax line appears with a zero
amount.
2. Tax applies to both the purchase order and the invoice but with different tax rate codes
and tax rates - The tax line appears with the tax amount as calculated by the invoice. The
tax line is created with the tax rate code and tax rate effective on the invoice date.
Payables displays the tax rate variance at the distribution level.
If the Enforce Tax From Reference Document tax option is enabled for the applicable

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configuration owner and event class, the tax line for the invoice inherits the corresponding
tax rate code and recovery rate code (if applicable) from the purchase order, but the actual
tax rate and recovery rate used in the tax calculation are the rates defined for the rate
period that corresponds to the invoice date.

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Payables Transactions Prepayment Invoices

Payables Transactions - Prepayment Invoices
When you apply a prepayment to an invoice, the tax rate at the time of prepayment may differ
from the tax rate at the time the prepayment is applied to an invoice. E-Business Tax considers
the tax calculated on the prepayment according to the value assigned to the Applied Amount
Handling option in the tax record. The values are Recalculated and Prorated.
For example, you apply a prepayment amount of $5000 to an invoice with a total amount of
$10,000. At the time of prepayment the applicable tax rate was 5% ($250 tax on the
prepayment); at the time of invoice creation the applicable tax rate is 10%. E-Business Tax
calculates the tax in this way:
Recalculated - E-Business Tax recalculates the tax on the prepayment using the invoice
tax rate, and applies the same tax rate to the invoice line amount. The tax calculation
creates two tax lines, one for the invoice line amount and one for the prepayment with a
negative amount. In the invoice example, the calculation creates an invoice line amount
tax line of $1000 (10% * $10,000) and a prepayment tax line of -$500 (10% * -$5000).
The total tax is $500.

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Prorated - E-Business Tax retains the original tax rate on the prepayment and applies the
new tax rate to the invoice line amount. The tax calculation creates two tax lines, one for
the invoice line amount and one for the prepayment with a negative amount. In the invoice
example, the calculation creates an invoice line amount tax line of $1000 (10% * $10,000)
and a prepayment tax line of -$250 (5% * -$5000). The total tax is $750.

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Payables Transactions Price Corrections

Payables Transactions - Price Corrections
In Payables, you can create a new invoice to correct the quantity or amount of an existing
invoice. The correction results in a change in line amount, either positive or negative. E-
Business Tax calculates the tax on the new invoice created as a result of the price correction in
proportion to the taxes on the original corrected invoice.
For example, an original invoice has a line amount of $100, and two tax lines one of $5 and
$10. If the price correction reduces the line amount by $20, then the new invoice creates two
tax lines of -$1 and -$2.

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Receivables Transactions

Receivables Transactions
E-Business Tax provides tax services for the following Receivables event classes:
Invoices
Debit memos
Credit memos
Receivables has integrated with Oracle E-Business Tax windows to capture additional
attributes and also to enter, view, or modify tax lines.
You can set up Receivables tax accounts to record tax amounts that you can and cannot claim
as deductions against overall tax liability.
Credit memo processing no longer allows different percentage of line amount and tax amount
crediting.
Examples of tax handling on Receivables debit and credit memo transactions are discussed in
the following slide.

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Receivables Transactions Debit and Credit Memos

Receivables Transactions Debit and Credit Memos
There are two types of debit/credit memos: On Account and Applied. E-Business Tax uses a
different tax calculation method for each type:
On Account Credit Memos - E-Business Tax calculates tax on On Account credit memos
in a similar way to normal invoices. The only difference is that if the line amount is
negative, the tax calculated is also negative.
Applied Debit/Credit Memos - E-Business Tax calculates tax on Applied debit/credit
memos in direct proportion to the line amounts on the invoice to which the debit/credit
memo is applied. For example, if you create an invoice with one line item of $100 and tax
of $10, then if the line item is credited $10 with an Applied credit memo the tax line is
credited $1.
Receivables Credit Transactions
You can create Applied credit memos at the header level or the line level.
Header level - There are three options available for credit allocation:
- Line Only - Tax is not credited.

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- Line and Tax - You enter the amount or percentage to be credited on the line amount.
The amount you enter is credited proportionately to each line in the invoice. Each tax
line is credited by the same percentage as the corresponding line amount.
- Tax Only - You enter the amount or percentage to be credited on the tax amount.
Each tax line is credited by the same percentage in proportion to the tax amount for
the line.
Line level - You can credit individual lines. The tax line is credited in proportion to the
line amount credit.

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Intercompany Transactions

Intercompany Transactions
Intercompany transactions must account for tax on both the Receivables (sale) side and
Payables (purchase) side. If the transaction is between legal entities in different tax regimes,
then you may need to account for the tax charged on the sale in a different manner from the
purchase.
E-Business Tax accounts for intercompany transactions in this way:
If a tax is charged on the Receivables sale with a tax amount greater than zero, then E-
Business Tax charges the same amount of tax on the Payables purchase side. E-Business
Tax looks for and applies a Payables tax rate code to match the Receivables tax rate code
in order to reconcile the transaction tax.
If you are using migrated tax data, then E-Business Tax uses the matching Receivables
and Payables tax rate codes. If you are using an E-Business Tax configuration with the
legal entities sharing the tax configuration of the Global Configuration Owner, then E-
Business Tax applies the same tax rate to the Receivables and Payables transactions.

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If a zero tax amount is charged on the Receivables sale, then E-Business Tax reconciles
the Payables purchase in one of two ways:
- If the Payables side also uses a zero-rated tax rate for goods and services, then E-
Business Tax applies the zero-rated tax rate code.
- If there is no zero-rated tax rate, then E-Business Tax self-assesses the tax using the
applicable self-assessment setup: offset taxes; self-assessment/reverse charge; or
reporting purposes only tax. This applies, for example, to intercompany Intra-EU
sales, where the sale is to another legal entity of the same company in a different EU
country.
If any special implications apply to intercompany transactions, you can use the transaction
business category Intercompany Transaction to identify these transactions.

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Managing Detail Tax Lines

Managing Detail Tax Lines
Responsibility: Payables and Receivables
(N) Payables > Invoices : Entry > Invoices > (B) Tax Details > (B) Detail Tax Lines
(N) Receivables > Transactions > Transactions > (B) Tax
Use the Detail Tax Lines window in the applicable application to review and manage Payables
and Receivables detail tax lines. Depending on the available settings, you can:
View tax line information.
Enter a manual detail tax line.
Enter tax-only invoices and tax only tax lines.
Change existing detail tax line information.
Cancel a Payables detail tax line.
The operations that you can perform depend upon the related application and tax settings.
Entering Additional Determining Factor Information on Receivables Tax Lines
Responsibility: Receivables
(N) Receivables > Transactions > Transactions > (B) Tax Information

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Use the Additional Tax Determining Factors window to review and enter additional tax
information on Receivables transaction lines. E-Business Tax calculates tax on the transaction
based on the tax configuration and tax rules setup, as well as any additional tax information
that you enter.
You can only enter additional tax information for imported lines. You cannot enter and apply
additional tax information to manually entered lines.
Updates apply to the transaction of the legal entity and taxation country displayed in the header
region. If you enter or update any fields in the Additional Tax Determining Factors window,
you must update the Receivables transaction in order to recalculate the tax.

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Managing Summary Tax Lines

Managing Summary Tax Lines
Responsibility: Payables
(N) Payables > Invoices : Entry > Invoices > (B) Tax Details
Use the Tax Lines Summary window to review and manage Payables summary tax lines.
Depending on the available settings, you can:
View summary tax lines.
Enter a manual summary tax line.
Allocate a manual summary tax line to specific transaction lines.
Change existing summary tax line information.
Cancel a summary tax line.
The operations that you can perform depend upon the tax settings. If you enter or change a
summary tax line, you cannot update detail tax lines.
Viewing Inclusive Tax Lines
If an invoice is inclusive of tax, the Inclusive option is enabled on both the detail and summary
tax lines. If an invoice with multiple tax lines has a mixture of both inclusive and exclusive
taxes with the same rate, then the Tax Lines Summary window displays two tax lines, one with

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the Inclusive option enabled and one with the option disabled. If the Allow Override and Entry
of Inclusive Tax Lines at the tax or tax rate level, you can update the applicable Inclusive
option.
Viewing Self-Assessed Tax Lines
Because self-assessed taxes are not present on a supplier invoice, Payables does not include
self-assessed tax lines on the Tax Lines Summary window. After the tax on the invoice is
calculated, you can navigate to the Tax Details windows to view your self-assessed/reverse
charges, or in the United States the calculation of Use tax.
Allocating Summary Tax Lines
Responsibility: Payables
(N) Payables > Invoices : Entry > Invoices > (B) Tax Details > (B) Allocate
After you create summary tax lines, you can use the Allocate Summary Tax Lines page to
review and allocate your manual summary tax lines to specific transaction lines. You can view
the transaction line number, description, line amount, and transaction date of each transaction
line. These conditions apply to allocating summary tax lines:
You must select at least one transaction line for allocation.
You cannot allocate a tax only summary tax line.
You cannot update or delete a transaction line that is to be allocated.

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Managing Tax Distributions

Managing Tax Distributions
Responsibility: Payables and Receivables
(N) Payables > Invoices : Entry > Invoices > (B) All Distributions > (B) Tax Distributions
(N) Receivables > Transactions > Transactions > (B) Distributions
Use the Distributions window to review and update tax distributions. You can review tax
distributions and, if applicable, update the tax recovery rate on a tax distribution.
E-Business Tax creates recoverable distributions and calculates tax recovery rates when you
save the line distribution, according to the Determine Recovery Rate tax rule process or the
default recovery rate. If self-assessment is enabled for the applicable party, E-Business Tax
creates two distributions for each tax, one with a positive amount and the other with a negative
amount.

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E-Business Tax displays tax distributions as follows:
If the tax is non-recoverable, E-Business Tax displays one non-recoverable tax
distribution line for the tax, with the non-recoverable amount equal to the tax amount. You
cannot update a non-recoverable tax distribution nor create a manual recoverable
distribution.
If the tax is recoverable, E-Business Tax displays two distribution lines, one for the
recoverable amount and another for the non-recoverable amount.

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Managing Tax Exemptions

Managing Tax Exemptions
(N) Receivables > Transactions > Transactions > (T) Tax Exemption
Use the Tax Exemption region of the Lines window to enter and update tax exemptions on
Receivables transactions according to your requirements. A tax exemption applies a discount
or a replacement percentage that reduces the tax on a transaction. Tax exemptions apply to a
specific customer or to a combination of customer and specific product.
Processing Tax Exemptions
E-Business Tax processes tax exemptions in different ways depending upon the value you
choose in the Tax Handling field on the Tax Exemption region of the Lines window:
Require - The customer is required to pay the tax. Tax exemptions do not apply to this
transaction line, even if defined.
Exempt - Enter the exemption certificate number and the customer exemption reason. E-
Business Tax processes the tax exemption in this way:
- Consider tax exemptions with a status of Primary, Manual or Unapproved.
- Verify that the transaction date is within the tax exemption effective date range.

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- Verify that the transaction exemption reason and exemption certificate number match
the tax exemption reason and certificate number. If you do not enter a certificate
number, E-Business Tax still looks for a matching tax exemption.
- If E-Business Tax does not find an exemption matching these conditions, it creates an
exemption with the status Unapproved and a 100% discount.
Standard - This tax handling is for exemptions of the Primary status only (applies to all
transactions of the customer or customer site). You do not have to enter the exemption
certificate number or customer exemption reason. E-Business Tax looks for a tax
exemption with the Primary status and an effective date range that includes the transaction
date. If more than one tax exemption applies, E-Business Tax uses the most specific tax
exemption.
Calculating the Tax Rate
After applying the tax exemption to the transaction line, E-Business Tax calculates the tax rate
as follows:
If the exemption type is a discount/surcharge, then Tax Rate = Tax Rate *
Discount/Surcharge percentage.
If the exemption type is a special rate, then Tax Rate = Special Rate.
If both a tax exemption and tax exception apply to the same transaction line, E-Business
Tax calculates the tax rate in this way:
- If the exemption type is a special rate, then E-Business Tax only applies the tax
exemption special rate (Tax Rate = Special Rate).
- If the exemption type is a discount/surcharge and the exception type is a special rate,
then Tax Rate = Tax Exception Special Rate * Tax Exemption Discount/Surcharge
percentage.
- If both the exemption type and exception type are discount/surcharge, then Tax Rate
= Tax Rate derived from tax rules * Tax Exception Discount/Surcharge percentage *
Tax Exemption Discount/Surcharge percentage.

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Using the Oracle Tax Simulator to Enter Transactions

Using the Oracle Tax Simulator to Enter Transactions
Responsibility: Oracle Tax Simulator
Use the Tax Simulator to enter transaction information for tax analysis purposes. Oracle Tax
Simulator displays the Transaction Lines window for the entry of detailed transaction and tax
information. The Transaction Lines window contains a Header region for entering application,
party and general transaction information, and a Lines region for entering detailed information
for each transaction line.
The Tax Simulator:
Allows a standard interface for all applications, so you are not required to learn a lot of
applications.
Does not create real transactions, so it is safe to use.
Provides a repository of transactions which can be reused to test a new tax setup.
Provides user access to detailed information about which rules and defaults have been
used for each rule type.

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See: Oracle E-Business Tax: Part 1: Setting Up Tax Rules for additional information on the
Tax Simulator.

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Summary

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Tax Reporting Ledger
Chapter 12 - Page 1
Chapter 12

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Chapter 12 - Page 2

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Chapter 12 - Page 3
Objectives

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Chapter 12 - Page 4
Agenda

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Chapter 12 - Page 5

The Tax Management tier maintains all of the tax information pertaining to each transaction,
for use in tax reporting.
This module discusses tax reporting in detail.

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Chapter 12 - Page 6
E-Business Tax Home Page Requests

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Chapter 12 - Page 7
Tax Reporting

Tax Reporting
E-Business Tax provides a single reporting solution for complex global tax requirements on
sales and purchases. E-Business Tax lets you summarize tax information from Receivables,
Payables, and General Ledger transactions.
Features
The reporting features for E-Business Tax include:
Tax Reporting Ledger - Most information for all tax reports come from the Tax Reporting
Ledger, a common tax repository, which guarantees data consistency and reporting
performance.
Extensible XML Publisher You can design and control the report presentation using
report templates. When you generate a report, XML Publisher merges report data with the
report template to create a document that supports numerous formatting options, including
color, images, font styles, headers, and footers.
Current reports The vast majority of existing tax reports are preserved and converted
into a corresponding XML Publisher, RXi, or Oracle Reports template.
Templates XML and RXi tax reporting templates can be easily customized by you.

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Chapter 12 - Page 8
Benefits
The reporting benefits include:
Improved quality of tax information.
Extensibility of the tax reports.
Easy to integrate tax information with external tax returns.

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Chapter 12 - Page 9

The Tax Reporting Ledger provides a single reporting solution for the complex global tax
requirements on sales and purchases and enables you to summarize tax information from
Receivables, Payables, and General Ledger transaction. Taxable transactions are accounted for
in the base products according to your tax configuration and tax rules setup in E-Business Tax.
The Tax Reporting Ledger consists of the tax information recorded in each of these and related
products.
The tax extract copies the accounting information from each application and stores it in an
interface table. Output from the tax extract is designed to look as close to a simple tax report as
possible. You can use the available reporting tools, including:
RXi Reports Administration Tool For printing RXi reports. You can modify an attribute
set and print information according to your tax reporting needs.
Oracle Reports - For printing flat files and country-specific reports.
XML Publisher - For printing custom-formatted standard tax reports using the available
templates.
Use these tools to specify which fields of the Tax Reporting Ledger to include and to print the
report in a format that meets your needs.

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The Tax Reporting Ledger supports the following reports:
Deferred Output Tax Register
Recoverable and Non-Recoverable Tax Registers
Single Cross Product Tax Register
Standard Input and Output Tax Registers

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XML Publisher

XML Publisher
Oracle XML Publisher simplifies the whole customization process. The traditional approach of
combining the data definition, format, and translation in a single entity is now replaced by
breaking the three components apart. With the three pieces now separated the whole model is
simplified.
Data Definition - The data definition exists as a single entity, an Oracle report, PL/SQL
package, Service Bean, etc. It now just becomes an XML Data Engine that can service a
reporting need, along with fulfilling other requirements (for example, business-to-business
communication).
Report Templates The technology behind XML Publisher is a W3C standard, XSL-FO.
There are many XSL editors currently in the market that can be used to create report
formats. XML Publisher also allows the user to create layouts using Microsoft Word,
Microsoft Excel, and Adobe Acrobat. These familiar desktop tools make report template
design easier for users.
Translation XML Publisher is able to extract the report boilerplate to an XLIFF format.
These files can then be translated by 3rd party translation companies.

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At runtime the three components are brought together by XML Publisher to generate the
required output.
Reports
E-Business Tax provides XML Publisher templates for these standard reports:
Intra-EU Audit Trail Report
Tax Audit Trail Report
Tax Received Report
Tax Reconciliation Report
Tax Reconciliation by Taxable Account Report
Tax Register

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E-Business Tax Reports

E-Business Tax Reports
E-Business tax reports make use of the tax data extract to retrieve tax transaction information
based on your tax configuration and tax rules setup. You can use E-Business tax reporting to
organize tax report data according to the requirements of your company and the tax authority.
Reports that make use of the E-Business Tax data extract include:
Customers with Invoices at 0 VAT and No VAT Registration Number
E-Business Tax Transactions Upgrade On Demand
Financial Tax Register
Intra-EU Audit Trail Report
Tax Partner Services Plug-In
Tax Received Report
Tax Reconciliation Report
Tax Reconciliation by Taxable Account Report
Tax Register Report
Tax Audit Trail Report

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Tax-Only Open Invoices Report
VAT Exception Report
For complete details on E-Business Tax reports, see: Oracle E-Business Tax Reporting Guide.

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EMEA VAT Reports
The EMEA VAT Reporting feature in Oracle Financials for Europe lets EMEA countries
manage their VAT reporting requirements. The EMEA VAT reports make use of the E-
Business tax data extract to retrieve VAT transaction information based on your tax
configuration and tax rules setup. You can use EMEA VAT Reporting to organize tax report
data according to the requirements of your company and the tax authority.
EMEA VAT reports are XML reports that let you control the report presentation using report
templates and XML Publisher.
For complete details on EMEA VAT reporting, see: Oracle Financials for Europe User Guide.

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Latin American Tax Reports

Latin American Tax Reports
Oracle Financials for the Americas provides tax reports for Payables and Receivables
transaction taxes to meet country-specific tax reporting requirements. These reports make use
of the E-Business tax data extract to retrieve transaction tax information based on your tax
configuration and tax rules setup. This includes transaction tax data generated by the Latin Tax
Engine.
Some of the Oracle Financials for the Americas tax reports are XML reports that let you
control the report presentation using report templates and XML Publisher.
Argentine Receivables Income Tax Self Withholding Report
Argentine Receivables CITI Flat File
Argentine Receivables Perceptions Flat File
Argentine Receivables Other Perceptions Flat File
Argentine Receivables Sales Flat File
Argentine Receivables Sales Documents Duplicates Flat File

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Colombian Receivables Income Tax Self Withholding Report
Colombian Receivables Sales Fiscal Book Report
For complete details on Latin American tax reporting, see: Oracle Financials for the Americas
User Guide.

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Asia/Pacific Tax Reports

Asia/Pacific Tax Reports
Oracle Financials for Asia/Pacific provides tax reports for Payables and Receivables
transaction taxes to meet country-specific tax reporting requirements. These requirements
include:
Korean VAT
Singaporean GST
Taiwanese Government Uniform Invoice (GUI)
Some of the Oracle Financials for Asia/Pacific tax reports are XML reports that let you control
the report presentation using report templates and XML Publisher.
Korean VAT Tax Report
Singaporean GST F5 Report
Singaporean Input Taxes Gain/Loss Report
Taiwanese Input VAT Report
Taiwanese Payables Sales/Purchase Return and Discount Certificate
Taiwanese Pro Forma 401 Report

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Taiwanese Purchase Return and Discount Report
Taiwanese Output VAT Report
Taiwanese Receivables Government Uniform Invoice Report
Taiwanese Receivables Zero-Rate Tax Report
Taiwanese Sales Return and Discount Report
For complete details on Asia/Pacific tax reporting, see: Oracle Financials for Asia/Pacific
User Guide.

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Summary

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Appendix A: Managing Migrated Tax Data
Chapter 13 - Page 1
Appendix A: Managing
Migrated Tax Data
Chapter 13

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Chapter 13 - Page 2

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Chapter 13 - Page 3
Objectives

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Chapter 13 - Page 4
Agenda

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Chapter 13 - Page 5
Commitment To Continuity Direct Path From 11i

Commitment to Continuity Direct Path From 11i
Oracle E-Business Tax provides a common model for setting up and using existing Release 11i
tax data for tax determination and tax calculation. This includes tax data that was originally set
up in Payables, Purchasing, Receivables, and Projects.
E-Business Tax can calculate taxes on transactions in Release 12 using tax data migrated
directly from Release 11i. The system gives the same tax result after migration for the same
transactions, with no manual setup or modification required.

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Chapter 13 - Page 6
Tax Definition Upgrade Flow

Tax Definition Upgrade Flow
The E-Business Tax solution for Release 11i migrated data includes these features:
Migration of application-specific ownership of tax setup to the E-Business Tax shared
ownership model for all Procure-to-Pay and Order-to-Cash transactions. By default,
Payables and Receivables tax data migrates to E-Business Tax as operating units owning
tax content. You can continue to maintain operating unit ownership of tax content, and
then gradually move this tax content into the shared ownership model (see next slide).
Migration of setups belonging to tax codes and rates (Payables tax codes and Receivables
VAT taxes) to the E-Business Tax Regime-to-Rate flow.
Migration of existing tax codes to E-Business Tax as tax classification codes.
Migration of existing tax groups to E-Business Tax as Direct Tax Rate Determination
rules.
Migration of existing tax code defaulting hierarchies to tax classification code defaulting
hierarchies.
Tax determination and tax calculation based on the tax classification code and the Direct
Tax Rate Determination rule type.

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Chapter 13 - Page 7
Release 11i Architecture

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Chapter 13 - Page 8
Tax Code Migration

Tax Code Migration
In Release 11i, the application-specific tax code performed many tax-related functions. These
included the tax type, tax rate, offset taxes, recovery rules, taxable basis determination, tax
calculation, and maintenance of related tax accounts. In addition, the Receivables tax group let
you combine tax codes to calculate multiple taxes on single taxable items.
In E-Business Tax, the five-tier architecture manages the setup, determination, calculation, and
recording of taxes and tax-related data. Each tier maintains data specific to its functions and
interacts with the other tiers as necessary to complete a tax transaction.
In keeping with the E-Business Tax setup, the functions of Payables and Receivables tax codes
migrate to E-Business Tax records according to the E-Business Tax Regime-to-Rate model, or
Tax Definition tier. The Configuration tier manages the use of tax classification codes while
the Rule Engine tier uses the Direct Tax Rate Determination rule to manage tax determination
for transactions that use tax classification codes. The Services and Tax Management tiers
perform their related functions for tax calculation and tax information recording.
The major features of tax code migration from Release 11i to Release 12 include:
Operating unit (OU) as the configuration owner of the tax regime.
Tax type to tax regime code.

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Chapter 13 - Page 9
Tax code name to tax code and tax rate code (minus numeric identifiers).
All tax codes to tax status with the value of Standard.
Tax rate details, such as percentage rate, effective date range, default recovery rate, and
offset tax code, to tax rate code record.
Location-based tax rates to TCA geographies (locations), tax jurisdictions, and tax rates.
Tax account details, such as set of books and tax code combination, to tax rate tax account
record, including the ledger and recoverable/non-recoverable code combinations (if
applicable).
Tax calculation details to tax classification code.
Tax group with tax compounding to tax regime, tax, and taxable basis formula.
Tax group rules to direct tax rate determination rules.
Financial System Options, such as rounding rule precision and minimum accountable unit,
to tax regime and tax.
Payables System Options, such as tax inclusive handling, to tax.

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Data Ownership

Data Ownership
In Release 11i, each application owned and maintained its own tax codes and rates for use with
its application-specific transactions. Because E-Business Tax provides a single source for all
transactions for tax determination and tax calculation services, the ownership of the tax setup
moves to the E-Business Tax shared ownership model. In this model, all legal entities and
operating units of the company can share the same tax setup, while individual operating units
and legal entities may need to own tax setup for specific requirements as defined by the tax
authority.
Existing operating units that have Release 11i tax setup migrate to E-Business Tax as party-
specific configuration owners, with the operating unit owning the tax setup. If a Receivables or
Projects tax setup contains location-based tax codes, then these tax codes migrate as part of the
common configuration, with the global configuration owner owning the location-based tax
setup.

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Operating Unit Tax Profiles

Operating Unit Tax Profiles
Set up party tax profiles for the operating units owning tax content that migrated from Release
11i. You can use the operating unit party tax profile in either of two ways:
Operating Unit maintains tax content In cases where you need to maintain tax content
for an operating unit, enter and maintain the operating unit tax configuration options for
the applicable tax regimes. You can also set up tax reporting codes for the operating unit.
Operating Unit uses associated Legal Entity Indicate that the tax content belonging to
the operating unit is used and maintained based on the configuration of the associated
legal entity at transaction time. You do this by enabling the Use Subscription of the Legal
Entity option. In this case, the operating unit tax content is either maintained by the legal
entity alone, or it is shared across all legal entities that use the Global Configuration
Owner setup.
Note. If you enable the Use Subscription of the Legal Entity option to have the operating unit
use the configuration of the associated legal entity, you cannot revert back to the operating unit
owning the tax content.

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If an operating unit uses the application tax options defaulting hierarchy for tax classification
codes, E-Business Tax continues to use this hierarchy to default a tax classification code on
transactions even if the operating unit uses the subscription of the legal entity.

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Agenda

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Tax Classification Codes

Tax Classification Codes
The migration of Release 11i tax codes and related tax setup to E-Business Tax is designed
such that after migration you can arrive at the same tax result for the same transactions.
Release 11i tax codes migrate to E-Business Tax as tax classification codes.
The tax classification code is a tax determining factor under the Transaction Input Factor
determining factor class. You can use tax classification codes and the Direct Tax Rate
Determination rule type to set up a tax determination model similar to Release 11i.
At transaction time, E-Business Tax uses the tax classification code that is defaulted to the
transaction line to determine the tax status and tax rate for applicable taxes according to the
Direct Tax Rate Determination rule defined for the configuration owner and tax. You can also
manually enter a tax classification code on the transaction line.
The use of tax classification codes in tax determination includes these elements:
Tax classification code setup - Payables and Purchasing tax codes migrate as input tax
classification codes under the ZX_INPUT_CLASSIFICATIONS lookup type. Receivables
and Projects tax codes migrate as output tax classification codes under the
ZX_OUTPUT_CLASSICATIONS lookup type. You can use these lookup types to define
additional tax classification codes according to your requirements.

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Tax classification code assignments - E-Business Tax replaces the Release 11i tax code
assignments to products, parties, and application system options with tax classification
code assignments. You can update these tax classification code assignments for the
customers, suppliers, and other entities involved in your transactions.
Defaulting hierarchy - Set up a defaulting hierarchy for tax classification codes similar to
the Release 11i Payables and Receivables tax code defaulting hierarchies. You can update
existing migrated tax classification code hierarchy assignments and create new
assignments.
Tax conditions - Set up tax condition sets using the TAX_CLASSIFICATION_CODE
determining factor and condition values equal to the tax rate codes that you need.
Direct Tax Rate Determination rules - Set up tax rules under the Direct Tax Rate
Determination rule type to determine tax applicability, tax status, and tax rate.

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Application Tax Options

Application Tax Options
(N) Tax Managers > Defaults and Controls > Application Tax Options
E-Business Tax maintains Release 11i migrated data by combination of operating unit and
application. This combination is called application tax options. Application tax options reflect
the Release 11i tax setup as originally defined in Payables, Purchasing, Receivables, and
Projects.
Application tax options include:
Tax classification code assignments within the applications setup.
Defaulting hierarchy, if defined, of tax classification codes to the transaction line.
For migrated Receivables transaction tax data:
- Customer tax exemption override
- Service provider override
- Latin Tax Engine options
You can use the Create Application Tax Options page to update migrated tax setup or to create
new tax setup based on the Release 11i model. When you use the Release 11i model to default

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a tax classification code to a transaction line and to use the tax classification code in tax
determination, E-Business Tax uses the tax classification code as the determining factor for the
tax status and tax rate of the tax or taxes associated with the transaction, according to the
details of the appropriate direct tax rate determination rule.
Application tax options always apply to a combination of operating unit and application, even
if the operating unit uses the subscription of the legal entity.
After you create or update the application tax options that you want, you must enable migrated
direct tax rate determination tax rules or set up new direct tax rate determination tax rules that
use tax classification codes as determining factors.
Inactivating a Defaulting Order
You can inactivate the tax classification defaulting order for a specific operating unit and
application. Enable this option when you no longer want to use tax classification codes in tax
determination and tax calculation for transactions belonging to an operating unit and
application combination.
Note. Inactivating a defaulting order is an irreversible process. Once an operating unit and
application defaulting order is inactivated, you cannot reactivate the same defaulting order nor
can you create a new defaulting order for this combination of operating unit and application.
See: Using Application Tax Options, Oracle E-Business Tax User Guide for a for a listing of
each application where you can update/enter tax classification codes.

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Tax Defaulting Hierarchy Upgrade Flow

Tax Defaulting Hierarchy Upgrade Flow
The migrated entities associated with defaulting hierarchies for operating unit/application
combinations retain the tax code that was originally assigned in the Release 11i application as a
tax classification code. In some cases, you can update the tax classification code assignment or
create a new assignment.
The upgrade logic for the defaulting hierarchy is:
Upgrade Logic #1 Release 11i tax codes become Release 12 tax classification codes.
Upgrade Logic #2 The tax defaulting hierarchy from Payables, Receivables, and
Purchasing Release 11i applications become application tax option defaulting hierarchies
for the combination of operating unit and application.
Upgrade Logic #3 You can either use the original tax codes assigned to the Release 11i
transactions (migrated as tax classification codes), or you can update the details of the
defaulting hierarchy according to your requirements.
A defaulting hierarchy specifies both the sources to use for tax classification codes and the
order in which E-Business Tax searches these sources to find a valid tax classification code at
transaction time. If E-Business Tax cannot find a valid tax classification code within the
hierarchy, or if a defaulting hierarchy is not defined for the applicable operating

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unit/application, then you can optionally enter a tax classification code on the transaction line.
If you do not enter a tax classification code on the transaction line, then the direct tax rate
determination rule that is based on tax classification does not apply.

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(N) Tax Managers > Defaults and Controls > Configuration Owner Tax Options
Set up configuration owner tax options for a combination of configuration owner and
application event class. You use configuration owner tax options to update the default tax
options of transactions belonging to a specific configuration owner and application event class
combination. At transaction time, E-Business Tax uses the tax option settings of the
configuration owner and application event class instead of the default settings.
You can make these updates for Release 11i migrated data:
Assign the STCC regime determination set to the applicable configuration owner and
event class, if you intend to use Direct Tax Rate Determination with tax classification
codes to calculate taxes on transactions. This is a mandatory step.
Update migrated tax option settings for an operating unit and event class.

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Note. If you want to move from STCC processing to standard regime determination
processing, apply an end date to the applicable configuration owner tax options and create new
configuration owner tax options using a location-based regime determination set. In this way
you can gradually transition operating units to the E-Business Tax tax processing model
according to your requirements.

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Tax Account Information

Tax Account Information
(N) Tax Managers > Parties > Party Tax Profiles > Party Type: Third Party > (I) Update Party
Tax Profile > (T) Account Tax Details
Create Tax Profile page to set up tax profiles for your customers, customer sites, suppliers, and
supplier sites.
Account Tax Details
Use the Account Tax Details region to maintain migrated account tax information. Use the
third party site Supplier Site Tax Details region to maintain operating unit supplier site tax
information. Use the third party site Customer Account Site Business Purpose Tax Details
region to maintain operating unit customer account ship-to site and bill-to site tax information.

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Direct Tax Rate Determination Rule

Direct Tax Rate Determination Rule
(N) Tax Managers > Tax Configuration > Tax Rules > Direct Tax Rate Determination rule
type
You can use the Direct Tax Rate Determination rule type to create a tax model similar to
Release 11i, or you can use it to build new tax rules for tax regimes with simple tax
regulations.
Release 11i Tax Determination Model
You can use tax classification codes and the Direct Tax Rate Determination rule type to set up
a tax determination model similar to Release 11i. This tax determination model has these
characteristics:
Regime Determination and Candidate Taxes E-Business Tax uses the STCC regime
determination set with the single determining factor Tax Classification Code, instead of
location types, to derive a list of candidate taxes in this way:
- Matches the tax classification code on the transaction line to Direct Tax Rate
Determination rules defined for the applicable configuration owner that have tax
conditions with the same tax classification code.

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- Looks for a tax with a tax rate code that matches the tax classification code on the
transaction line. If one exists, then this tax is added to the list of candidate taxes.
Tax Applicability If a Direct Tax Rate Determination rule is evaluated successfully, then
the tax is applicable. This is unlike the Determine Tax Applicability rule type, where a
successful evaluation of the rule may conclude that a tax is not applicable.
Tax Status If the rule is evaluated successfully, E-Business Tax retrieves the tax status
from the rule.
Tax Rate If the rule is evaluated successfully, E-Business Tax retrieves the tax rate from
the rule, if defined. If a rate is not defined for the rule, then E-Business Tax derives the
rate using the standard execution.
E-Business Tax then derives the taxable basis and calculates the tax.
Tax Determination for Simple Tax Regulations
You can use the Direct Tax Rate Determination rule type to set up a tax determination model
for situations where you do not need to create separate rules for tax applicability, tax status,
and tax rate. This model has these characteristics:
Regime Determination and Candidate Taxes The rule uses the standard execution, but
tax applicability depends on rule evaluation.
Tax Applicability If the rule evaluates successfully, the tax is applicable and E-Business
Tax derives the tax status and tax rate. If the rule does not evaluate successfully, then the
tax is not applicable and the tax determination process ends. This is true even if the place
of supply identifies a valid tax jurisdiction.
Place of Supply and Tax Registration If the rule evaluates successfully, E-Business Tax
attempts to derive a tax jurisdiction and the tax registration associated with it. If a tax
jurisdiction is not found, then the tax is eliminated and the process ends.
E-Business Tax then derives the taxable basis and calculates the tax.

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Stages of Implementation - From 11i to R12

Stages of implementation from Release 11i to Release 12
E-Business Tax lets you use Release 11i tax setup to calculate taxes on transactions without
modification. Over time, you can update existing tax setup in line with E-Business Tax, and
gradually learn to set up taxes and tax-related content using the full power of E-Business Tax.
The stages outlined below provide a general guideline for moving from a Release 11i tax
implementation to an E-Business Tax tax implementation:
Point A The fully automated standard migration. The morning after the completion of
the upgrade, you can just carry on running transactions with the same results as in Release
11i Payables and Receivables.
Point B A few minimum setup changes allow you to take advantage of enhanced E-
Business Tax functionality. For example, create a new regime-to-rate configuration for
one tax regime, in place of tax classification codes.
Point C Full use of E-Business Tax functionality and features.

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Tax Configuration Migration Path

Tax Configuration Migration Path
The automated migration process converts Release 11i tax data to E-Business Tax tax
configuration data. Once the automated migration process is complete, you can begin using
your migrated tax data in E-Business Tax without any additional modifications or updates.
Over time, you can apply incremental updates and modifications to migrated tax data in order
to gradually move from the Release 11i tax code model to the E-Business Tax regime-to-rate
and tax rules model. This gradual change can include:
Replace tax classification codes with tax statuses and tax rates, and inactivate the
corresponding defaulting hierarchy.
Use tax rules, for example, for status and rate determination and tax recovery.
Use the TCA geography hierarchy.
Create tax setup data under the Global Configuration Owner, to allow future sharing of tax
content.
As you become familiar with E-Business Tax setup tasks, you can create new tax data directly
in E-Business Tax, according to your requirements.

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See: Tax Configuration Migration Path, Oracle E-Business Tax Implementation Guide for
guidelines for using Release 11i tax data in E-Business Tax and ways to increase your use of
E-Business Tax features for your tax determination needs.

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Point A Scenario VAT Upgrade Mapping

Point A Scenario Upgrade Mapping
An example of VAT setup in Release 11i and the migration to Release 12 illustrates the tax
configuration in Release 12. For this Point A scenario, your Release 11i tax functionality is
supported in Release 12 with no manual updates required.

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Point B Scenario VAT Upgrade Mapping

Point B Scenario Upgrade Mapping
An example of VAT setup in Release 11i and the migration to Release 12 illustrates the tax
configuration in Release 12. For this Point B scenario, your Release 11i tax functionality is
supported in Release 12 with minimal updates required.
Scenario B assumptions:
Only the UK purchasing part of the organization wants to move to Point B.
There is a single OU for all of UK business.
Changes should not affect Sales (AR) side of business.
Must avoid complex/repetitive manual processes (for example, they do not want to
perform mass changes to suppliers/supplier sites).
Scenario B requirements:
Begin to use new E-Business Tax functionality.
Increased use of tax rules:
- Recovery Rules
- Import/Export Rules

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- Reduced Status/Rate Rules
- Exempt Status/Rate Rules
Use Reverse Charge instead of Offset processing for Intra EU purchases.
Use other features, such as geography, for more specific rules.
Use Product Type to identify goods and service transactions.
Note. New Tax setup should be created as Global Configuration Owner to allow more
flexibility for future use and sharing.
Scenario B setup steps:
Define Configuration Owner Tax options to allow AP to use new tax functionality.
Set up specific rules for AP for:
- Registration Rule to trigger Reverse Charge
- Status Rules (for example, Export/Import, Intra EU self Assessment, Reduced and
Exempt handling)
- Recovery Rules

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Summary

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R12 Oracle E-Business Tax Fundamentals SG

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