12/22/2017 Document 602863.

R12: How to Setup Tax Exemption in Ebusiness Tax for Suppliers. (Doc ID 602863.1)
Modified: 27-Jan-2016 Type: HOWTO

In this Document

Goal
Solution

APPLIES TO:

Oracle E-Business Tax - Version 12.0 to 12.0.5 [Release 12.0]

Oracle Payables - Version 12.0.0 to 12.0.5 [Release 12.0]
Information in this document applies to any platform.

GOAL

How To Setup Tax Exemption In E-business Tax For Suppliers?

For certain Suppliers, the Tax Exempt classification should be set so that no tax is added to the AP invoice, during the
validation/calculation of tax process.

The following provides step-by-step instructions on how to accomplish this.

SOLUTION

1. Navigate to Trading Community Manager Responsibitly > Trading Community: Administration > Classifications
2. Click on "Create Class Category"
3. Enter values for
Class Category ::
Class Category Meaning ::
Class Category Description ::
Delimiter :: leave it default
4. Under "Assign Entities"
Ensure that you select the default
Select :: tick mark
Table Name :: HZ_PARTIES
Condition (Where Clause) :: WHERE PARTY_TYPE = 'ORGANIZATION'
5. Click on "Apply and Create Class Codes"
6. Enter values for the following
Class Code :: for example "NO TAX"
Meaning :: "NO TAX"
Description :: No Tax for party X
7. Click on Apply
8. Click on compile
9. Now Requery the class category ...
10. You should see the associated class codes
11. Navigate to Tax Managers Responsibility > Parties > Party Classification
12. Create
13. Provide the following values
Party Classification ::
Fiscal Classification Type Code ::
Name ::
Effective From ::
14. Under the "Associated Tax Regimes" region
Regime Code ::
Name ::
Effective From ::
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15. Apply & save

16. Navigate to Tax Managers Responsibility > Parties > Party Tax Profiles
17. Query for Party Type :: Third Party
Party Name :: X
Click on update tax profile
Ensure that the "Allow Tax Applicability" is not enabled
18. Click on Classifications Tab
For Fiscal Classification Type Code ::
Fiscal Classification Code :: NO TAX
Fiscal Classification Name :: NO TAX
Effective From ::
19. Click on Apply
20. Navigate to Tax Managers Responsibility > Advanced Setup Options > Tax Determining Factor Sets
21. Click on Create
22. Enter the following values
Tax Determining Factor Set ::
Name ::
Ledger ::
Regime Code ::
Determining Factor Class :: Party Fiscal Classification
Class Qualifier :: Ship from Party
Determining Factor Name ::
23. Click on Apply
24. Navigate to Tax Managers Responsibility > Advanced Setup Options > Tax Condition Sets
25. Click on Create
Enter values for
Tax Condition Set ::
Name ::
Determining Factor Set::
Country Name:: United States
26. Click on Continue
27. Enter value for
Value/From Range ::NO TAX
28. Click on Finish
29. Navigate to Tax Managers Responsibility >Tax Configuration > Tax Rules
30. Create a "Determine Tax Applicability" Rule using the previously created Tax Determining Factor Set & Tax Condition
Set
31. Ensure that when you create this rule set the applicability to "Not Applicable"
In order to have the "Not Applicable" value in the LOV, Determine Tax Applicability should have a default value of
"Applicable".
32. Save
33. Bounce the Apache Server
34. Create a new invoice to the supplier 'X'
35. Click "Calculate Tax" no tax gets calculated

Please note that ...the above steps are done so that system does not calculate tax on a particular party (supplier)
automatically....but still if user needs to have tax for this invoice...they can create a manual
tax line

Additionally please refer following notes for creation of TAX RULES, DETERMINE FACTOR SETS &
CONDITION SETS

Note.473066.1 How To Setup a Rule Using Expert Rule Entry in R12 E-Business Tax
Note 1111553.1 How To Setup Condition Sets and Determining Factor Sets for Tax Rules in R12 E-Business Tax
Note 1108463.1 How Tax Determining Factors Work in R12 E-Business Tax

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