Você está na página 1de 45

E-business Tax – A Purchasing

Perspective
An Oracle White Paper
Oct 2007

E-business Tax – A Purchasing Perspective


Purpose ...................................................................................................
............ 4
Overview..................................................................................................
........... 4
Prior Tax
Structure ........................................................................................... 5
Key
Concepts..................................................................................................
... 7
Integration With
Purchasing............................................................................ 9
Tax
Events.....................................................................................................
9
Configuration Owner Tax Options ...........................................................
9
Party Tax
Profile ......................................................................................... 10
Implementation Considerations ..........................................................
11
Country
Defaults ........................................................................................ 12
Tax
Defaulting.............................................................................................
13
Displaying Tax Information......................................................................
15
Modifying Tax Information ......................................................................
16
Overriding Tax .......................................................................................
16
Manually Adding Tax Information...................................................... 18
Application Tax Options - Tax Hierarchy..............................................
19
Supplier ...................................................................................................
. 20
Supplier Site ............................................................................................
20
Item..........................................................................................................
20
Tax
Rules......................................................................................................
21
Expert Rule .............................................................................................
22
Guided Rule ............................................................................................
23
Fiscal
Classification..................................................................................... 24
Party Fiscal Classification......................................................................
24
Product Fiscal Classification.................................................................
27
Transaction Fiscal Classification ..........................................................
35
Tax in
Interface........................................................................................... 36
Requisition Import.................................................................................
36
PDOI .......................................................................................................
36
Tax During AutoCreate.............................................................................
36
Quantity Based
Tax .................................................................................... 36
Tax
Setup........................................................................................................
.. 38
Upgrade
considerations.................................................................................. 43
Data
Flow.........................................................................................................
44
Troubleshooting ......................................................................................
........ 47
Tax Simulator..........................................................................................
47
Troubleshooting Tips ............................................................................
47
Tax Log and File Versions....................................................................
48
Appendix .................................................................................................
......... 50
References...............................................................................................
..... 50
Oracle Internal
References........................................................................ 50
Tax Determination Attributes ..................................................................
51

E-business Tax – A Purchasing Perspective


Ebusiness Tax provides a repository to store tax information and record tax events. Individual applications (for e.g. Purchasing)
avails the tax services provided by Ebusiness Tax to create/update/display tax information for its transactions.

PURPOSE
Purpose of creating this document is to review impact of Ebusiness Tax
introduced in R12 to Oracle Purchasing. This document will help you in
implementing tax solution in Purchasing using R12 Ebusiness Tax solutions. This
document will also help you in understanding the integration and troubleshooting
your tax setups in Oracle Purchasing.

OVERVIEW
In release 12 EBusiness Tax has been introduced to provide an improved Tax
solution to customers.

Ebusiness Tax provides a repository to store tax information and record tax
events. Individual applications (for e.g. Purchasing) avails the tax services
provided by Ebusiness Tax to create/update/display tax information for its
transactions. The tax services that can be availed from Ebusiness Tax are listed
below.

a. Define Tax Content


b. Determine Tax
c. Manage Tax
d. Record Tax
e. Report Tax
f. Reconcile Tax
Architecture has been built considering country specific tax requirements and
applicability of rules for determining taxes. Based on the tax laws of a specific
country, the transaction tax rates may vary by jurisdictions, products or product
category, how the product will be used, type of transacting parties, type of
transactions, the place of supply etc. Various rules are applicable for determining
the appropriate tax on a specific transaction.

The Tax Setups including rules are based on requirements used by the Tax Rules
Engine, which will create/update Tax Lines. These lines are later reported using
EBusiness Tax Reporting features. Figure below shows the e-business structure.

EBusiness Tax Reporting features. Figure below shows the e-business structure.
Figure 1: E-Business Tax Architecture

PRIOR TAX STRUCTURE

Prior to release 12, tax was defined in Accounts Payables module. Taxes were associated with rates, non-recoverable
ratio and recovery rules. Country Specific tax requirements could not be incorporated seamlessly into the application.

Prior to release 12, tax was defined in Accounts Payables module. A tax
component on the document total could be associated with the purchasing
documents for portion of the tax which was non recoverable. Purchasing would
default taxes based on hierarchy defined either in Oracle Payables (Setup >
Options > Payables > Tax code defaults) or in Oracle Purchasing (Setup >
Organization > Purchasing Options > Tax Default Alternate Region) if "Enforce
Tax From Purchase Order" box in Payable Options (Setup > Options > Payables >
Tax code defaults) was checked.

Taxes were associated with rates, non-recoverable ratio and recovery rules.
Taxes were then defined in at least one of the levels (also called the tax source)
for e.g. Item, Supplier, Supplier Site, and Location etc. The order of defaulting
was decided by the hierarchy defined in the Payables/Purchasing options
discussed previously.

Tax calculation was called on a Requisition/ Standard Purchase order or a Blanket


release based on the hierarchy, recovery rules and rates. Tax calculation is
performed using the AP Tax Engine, which was called from the distribution, or
PO/Requisition. Once the tax is defaulted and saved tax cannot be redefaulted
even on changing the tax source in the document.

It was possible to override the tax defaulted on Purchasing documents prior to


receipt or prior to reservation on funds on the document incase of encumbrance
accounting. To override tax we need to have the profile option Tax: Allow
Override of Tax Code set to Yes. Profile "Tax: Allow Override of Recovery Rate"
allows override of recovery rate if the value of this profile is set to "Yes". Due to
complexity of the tax specifications based on country/product, Oracle used to
provide certain country/product specific solutions for diverse tax related
requirements. (For e.g. Latin Tax Engine in GTE, Brazil AP/PO Tax Engine,
India R11i localizations) E-business tax design was completely new for release
12. Most of the features available in 11i have been accommodated in release 12
e-business tax. Following are some of the features that will not be available in
release 12 e-business tax as compared the 11i features:

1. Tax Code is removed from the ‘Enter Purchase Order’ form. Instead tax
classification field will be available in tax page available through ‘Manage
Tax’ link. Users can no longer make a purchase order shipment
nontaxable by removing the tax code from the PO shipment.
2. Recovery Rate field at the distributions level will no longer be defaulted
based on the Tax Code and will no longer display the default recovery rate
of the transaction. Override of recovery rate will be subject to controls
setup within e-business tax.
3. User updated Tax Code on the requisition lines will no longer be carried
over to the PO document during autocreate. The Tax Classification will
always be re-defaulted on the PO document.
4. Summarized tax information on purchase order has been eliminated. Only
detailed tax line can be viewed on the purchase order.
5. Tax Code cannot be populated through the purchase order Preferences
form.
6. Tax cannot be modified through AutoCreate requisition 'Modify' action, as
the tax is re-defaulted on the PO regardless of the tax in the requisition.
7. Detailed tax information based on tax classification will not be available in
the requisition. For requisitions, users will only be able to view the tax
amounts (total, recoverable and non-recoverable).
8. Tax code has been removed from RFQs and Quotations form. Tax will be
defaulted when a quotation is autocreated to a standard purchase order.
9. PO documents cannot be reserved or submitted for approval if tax
calculation error has occurred.
10. While importing documents in the interface with Authorization status
‘Approved’ using PDOI, a tax calculation error will result in creation of a
document with ‘Incomplete’ status or in updating of an already ‘Approved’
document to ‘Requires Reapproval’ status, if the ‘Initiate Approval’
parameter was set to ‘Yes’.
11. Tax calculation error in Requisition Import will create imported requisitions
with interface authorization status in ‘Approved’ status as ‘Incomplete’.
12. Withholding tax will no longer be supported. Withholding Tax does not
affect any taxes that organizations owe the tax authority, so there is no
significance to the organization’s accounts/budgeting. It serves more as a
way to direct payment of portion of the taxes already owed.

KEY CONCEPTS

Following are some of the key concepts in eBusiness tax as provided by this
product. This will be used further in this discussion.

• Tax Regime: A Tax Regime contains the set of tax rules that determine the
treatment of one or more taxes that have been grouped together for
administration or other purposes. For e.g. VAT Regime in Argentina that
sets the rules for Standard VAT, Additional VAT, and Perception VAT and
US Sales Tax Regime in US with State, County and City/District taxes.
• Tax: A classification of a charge imposed by a government through a fiscal
or tax authority. For e.g.: Standard VAT, Additional VAT, and Perception
VAT in Argentina and State, County and City/District sales/use taxes in US
• Tax Status: Tax Status is the taxable nature of a product or service in the
context of a transaction for a tax. For e.g. Zero Rated, Standard Rated
etc.
• Tax Rate: The rate specified for a tax status in effect for a period of time;
the tax rate can be expressed as a percentage or as a value per unit
quantity. For e.g. Sweden Standard Rate VAT is 25% or US California
State Sales/Use Tax Standard Rate is 7.25%
• Tax Jurisdiction: A geographic area where a tax is levied by a specific tax
authority. For e.g. The Jurisdiction for the US California County Sales Tax
for Imperial County is Imperial County.
• Party Tax Profile: Holds all party tax related information. For e.g. Party
Profile for Establishments, Party Profile for Suppliers and Sites or Party
Profile for Customers and Sites.
• Registrations: The registration of a party with a tax authority that confers
tax rights and imposes certain obligations. For e.g. ESA78211646 (VAT -
Spain), SE123456789012 (VAT - Sweden) etc.
• Fiscal Classifications : Provides for the definition of tax fiscal
classifications. A fiscal classification is a way that a tax authority classifies
each part of a transaction. Party Fiscal Classifications: A classification
used by a tax authority to categorize a party for a tax. For e.g. Brazil
Establishment Type (e.g. Commercial, Industrial, Manufacturing)
• Product Fiscal Classifications: A classification used by a tax authority to
categorize a product for a tax. For e.g. Brazil Product Nature (e.g.
electronic goods, dairy goods, professional fees, non-professional fees)
• Intended Use Fiscal Classifications: The purpose for which a product may
be used. For e.g. Brazil Intended Use (e.g. Commercialization,
Consumption, Industrialization) User defined Fiscal Classifications: A user
defined Transaction Fiscal Classification Type.
• Document Fiscal Classifications: A classification used by a tax authority to
categorize the documents associated with a transaction for a tax.
• Fiscal Classifications: Transaction Business Category: A business
classification used by Oracle to identify and categorize an external
transaction into a Tax transaction.

INTEGRATION WITH PURCHASING

There are a few fields on purchasing documents, which determine application of


a tax. These 'Tax determination attributes' on purchasing documents are used to
calculate the applicable taxes on the transaction. These attributes, along with
‘Additional Tax Attributes’ for e.g. Intended Use, Product Fiscal Classification
(Seen on the ‘Additional Tax Information’ Page) and other internal factors
determine the calculation of tax. Tax calculation is initiated on creation
(saving/importing) of the purchasing document. Tax is recalculated if there are
any changes that affect the tax calculation. Tax will be calculated by calling tax
services available through ebusiness tax at the following events:
1. Document creation and update (Requisitions, POs, Releases)
2. Receipt transactions (Charges)

Tax recalculation will be supported on a PO shipment line has been


received/accrued or matched to invoice provided retroactive pricing is enabled.
In Purchase Orders/Releases, tax is calculated at the PO shipment level and
distributed to recoverable and non-recoverable components that determine tax
amount at the PO distribution level. In requisitions, tax will be defaulted based on
the tax setups in eTax and cannot be overridden. The requisition line and
distribution will have the summary tax amount(total, recoverable and
nonrecoverable). The tax is calculated in e-business tax by calling e-business
Tax services and stored in e-business tax repository as mentioned in the
'Overview of EBusiness Tax Architecture in R12' section in this article.

Tax Events

Based on similarity in handling tax information and tax determination tax events are classified based on purchasing document
types.

Tax events are classified in purchasing based on the purchasing document types.
Following are the event classes in purchasing.
• Purchase and Internal Requisition (REQUISITION)
• Purchase Orders and Agreements (PO_PA)
• Blanket and Scheduled Release (RELEASE)

The above event classes are based on the consideration of whether any tax
determination is necessary and the similarity in the handling of the tax
information.

Configuration Owner Tax Options

The event class is associated with a first party legal entity/operating unit owning
tax content. Tax configurations can subscribe to the event class and additional
options available based on each application using the ‘Configuration Owner Tax
Options’. At transaction time, e-business Tax uses the tax option settings of the
configuration owner and application event class instead of the default settings.
Therefore it is necessary that the available options (for update) through
configuration owner tax options and defaulting rule should both be set with the
same value for the option to take effect. For purchasing application only the
following option is available for updating.
1. Allow Tax Applicability
2. Offset Tax Basis
Figure 2: Configuration Tax Owner Option

Other options are not updatable for purchasing application and will not available.

This will be the standard behavior in release 12.

By default the ‘Regime Determination Set’ is ‘Determine Applicable Regimes’


which uses the location based taxes. For migrated tax, using ‘Direct Tax Rate
Determination’ with tax classification codes, configuration owner tax options
must be setup to use STCC as the regime determination set.

Party Tax Profile

This is a centralized repository that holds information related to parties involved


in tax transaction. It is important for the party definitions to exist in party tax
profile so that it can be used in the tax transactions with e-business tax. A parties
involved in e-business tax is classified into four types:
1. First Party Legal Entity: An entity identified though registration with a legal
authority within a jurisdiction. This entity has rights to enter into
transactions with other parties, own property and incur debt. One of the
responsibilities of this entity is to pay and report tax liabilities to the legal
authority.
2. First Party Legal Establishment: Legal establishments (also called branch,
division, inventory organization or physical location) are building blocks of
a legal entity. A legal entity is made up of at least one legal establishment.
When a legal entity is created, an establishment is automatically linked to
it. This is called the main establishment of the legal entity. You may need
to create additional establishments based on registrations required within
local level jurisdiction. Local level jurisdictions can have separate tax
requirements for the establishments registered under it. E-business tax
rules identify tax registration status of legal establishments involved in a
transaction and through Party Tax Profile.
3. Operating Unit Owning Tax Content: This option allows you to enter and
maintain tax content for an operating unit. In releases prior to R12, the tax
content was owned by Payables, Receivables and other applications that
had data stripped by operating unit. Upon upgrade the tax is migrated to
e-business tax as operating unit owning tax content.
4. Third Party: External parties involved in a transaction are third party to tax
configuration owners for e.g. supplier for purchasing business
transactions.
5. Third Party Site: For e.g. supplier site for purchasing business transactions.
Third party can operate from multiple sites. Tax calculation can differ
based on the location of the site.
6. Tax Authority: A government entity that regulates tax law, administers,
and/or audits one or more taxes. A tax authority promulgates a set of tax
rules and regulations, for taxes under a given tax regime. 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.

Implementation Considerations

1. It is necessary to associate a first party legal entity and its main legal
establishment in party tax profiles. In case they have not been associated
a tax calculation error will result while saving the transaction. To create a
new first party legal entity / legal establishment, query the legal entity and
choose the party type as first party legal entity or first party legal
establishment for legal entity and legal establish respectively. Click on the
icon under the label titled ‘Create Tax Profile’. Now follow the instructions
under chapter ‘Managing Tax Profiles and Registrations’ in Oracle E-
Business Tax User Guide to create a new tax profile for both the legal
entity and its main legal establishment.
2. If you had been using tax configurations defined under the ‘Operating Unit
Owning Tax Content’, then tax content defined under the ‘First Party Legal
Entity’ will not be applicable. You may choose to use the tax content of its
associated legal entity. To start using tax defined for the legal entity,
navigate to party tax profile page and choose the party type as ‘Operating
Unit Owning Tax Content’ and query the operating unit concerned. Click
on the icon under the label titled ‘Update Tax Profile’. Check the ‘Use
Subscription of the Legal Entity’ box and save the party tax profile. After
setting this checkbox, all tax content subscribed to ‘Operating Unit
Owning Tax Content’ will no longer be applicable. In order to use tax
regimes subscribed under ‘Operating Unit Owning Tax Content’, add the
‘First Party Legal Entity’ to the regimes party subscription. Warning:
Checking the ‘Use Subscription of the Legal Entity’ box for the ‘Operating
Unit Owning Tax Content’ 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.
3. Before using the third party tax profiles, it is necessary to set up the
party / party site. You can create / update the third party information from
the e-business tax page. Please follow the instructions under chapter
‘Managing Tax Profiles and Registrations’ in Oracle E-Business Tax User
Guide to create a third party tax profile.

Country Defaults

Country default controls let you default the transaction tax-related values in the
countries that you do business. You can also setup the default ‘Tax Authority’ for
the country. You can default tax regime and tax for tax registrations belonging to
the legal establishment in the applicable country by choosing the option against
the tax regime or tax you entered as the default tax. For more details about this
option, please refer to the Oracle E-Business Tax User Guide.

Figure 3: Country Defaults

Tax Defaulting

Purchase documents call the eTax services for tax calculation every time the purchase order is saved regardless of the taxability
of the document line/schedule/distribution.

Regardless of the availability of tax definitions in e-business tax, Purchase


documents call the eTax services for tax calculation on saving the purchase
documents (Requisition/PO/Releases). If calculation results in applicable tax lines,
then these tax lines are defaulted on the purchase document. Tax calculation is
based on the values of the 'Tax determination attributes' along with the
‘Additional Tax Attributes’ on purchasing documents. The 'Tax determination
attributes', and ‘Additional Tax Attribute’ available on both purchase order and
requisitions are available in the ‘Appendix’ section below. The purchase
documents make a call to eTax services for tax calculation even if there are no
tax definitions available in tax repository. Therefore ebusiness tax determines
the tax applicability and purchasing only controls calls to the eBTax services. The
eTax API is called to avail the eBTax services to calculate the tax applicability.
Once the purchase document is saved the
Manage Tax menu is enabled.

When saving the purchase document, if there are tax calculation errors in
ebusiness tax, a message will be displayed to the user. Subsequently, the tax
lines will not be defaulted. Following is the error message that appears.

An error occurred during Tax Calculation. Please correct the problem or


contact your System Administrator. Your transactions have been saved.
Tax will be recalculated when the document is submitted for Approval.

The tax will be recalculated on submission for approval. If the tax calculation is
still erroring the document cannot be submitted for approval. The following error
message will be display on clicking the 'Approve' button.
Error Messages: Unexpected error occurred during Tax Calculation
Exception: xxx - An unexpected error has occurred. Please contact your
system administrator.

Please correct the problem or contact your System Administrator.

For troubleshooting the tax setups, please refer the troubleshooting section of
this article.

Steps:
1. Setup Ebusiness tax.
2. Enter the purchase document details.(PO/Release/Requisition)
3. Save the purchase document (PO/Release/Requisition)
Tax information will be displayed only after the purchase document is saved. The ‘Manage Tax’ link is enabled, which
navigates to a web page where the tax details can be viewed.
Figure 4: Manage Tax link on purchase order entry form

Displaying Tax Information


Tax information will be displayed only after the purchase document is saved. The
'Manage Tax' link on the toolbar of the purchase document will be enabled on
saving the purchase document and the users can navigate to the "Tax" page
where defaulted tax information can be viewed. This page has the following two
tabs for PO/Releases.
1. Schedules
2. Distributions
The above tabs will display the tax line details for each shipment in the
Schedules tab and non-recoverable and recoverable tax distributions for each
distribution in the distributions tab.

The Tax page will have the following tabs for requisition.
1. Lines
2. Distributions

If there are no taxes applicable for the purchase document the Manage Tax
menu will still be enabled. There will be no tax lines seen on expanding the
'Details' in the 'Schedules Tab' of this 'Tax' page.

Also the taxability of a shipment (schedule) can be seen from the purchase order
summary (Shipment window > Taxable flag can be added to the ‘Folder View’).
This is no longer available in the ‘Enter Purchase Order’ screen as seen in
releases prior to R12. In other places, if the tax is applied on the purchase order
then the details of the tax on schedule / distributions are available through the
‘Manage Tax’ link.

We can no longer make a shipment as non-taxable by setting the tax


classification to NULL in ebusiness tax. Overriding the defaulted tax with a zero-
rated tax classification is intended to minimize regression due to non-availability
of this functionality.

Tax code details and recovery rate cannot be viewed from the Purchase Order
Summary/Requisition Summary form. In purchase order summary form ‘Taxable
Flag’ will be displayed. This is the only place where we can find the ‘Taxable Flag’
unlike the previous versions where they could be viewed from the distributions
and purchase order entry form. Manage Tax is available as a drop down in the
‘Professional Buyer’s Workcenter’.

Figure 5: Purchase Order Tax Page

Steps:
1. Query the purchase document or save the purchase document (Enter
Purchase Order (POXPOEPO)/Enter Releases (POXPOERL))
2. Click on Actions > Manage Tax from the toolbar from Enter Purchase
Order (POXPOEPO)/Enter Releases (POXPOERL) forms and Tools > Manage
Tax for Requisition Entry (POXRQERQ) form.

Modifying Tax Information

Defaulted Tax information can be overridden in purchase orders and releases. Tax line can be manually added to the purchase
orders/releases even if they have not been defaulted.
Overriding Tax

The following setups govern tax rate override.


1. 'Allow Override of Calculated Tax Line' option in the 'Defaults and Controls'
> 'Configuration Owner Tax Options'. This will be greyed out if you choose
purchasing applications.
2. 'Allow Override of Calculated Tax Lines' option in 'Tax Configuration' >
'Tax'. This needs to be checked for overriding tax line.
3. 'Allow Tax Rate Override' option in 'Tax Configuration' > 'Tax Statuses'.
This checkbox should be set to checked. Prior to e-business tax, profiles
were used to govern if override was allowed. With e-business tax the
override is controlled with above-mentioned setups.

Also the following profiles are no longer useful for tax rate override.
1. 'eBTax: Allow Override of Tax Classification Code'. This should be set to
Yes to allow override.
2. 'eBTax: Allow Override of Tax Recovery Rate'. This is set to Yes to allow
override.

Tax can be overridden by navigating to the ‘Additional Tax Information’ page


available from the ‘Manage Tax’ page. This link is available after saving the
purchase order. If there is a tax calculation error while saving the purchase
documents, the additional tax information page will be greyed out and the tax
cannot be overridden in such a case.

Figure 6: Additional Tax Information Page

Steps:
1. Query the purchase document (Purchase Order Summary/Requisition
Summary form) or save the purchase document (Enter Purchase Order
(POXPOEPO)/Enter Releases (POXPOERL))
2. Click on Actions > Manage Tax (Tools > Manage Tax for Requisition) from
the toolbar from Purchase Order Summary/Requisition Summary/Enter
Purchase Order (POXPOEPO)/Enter Releases (POXPOERL) forms.
3. The tax page will appear with details of tax lines. Click on the 'Additional
Tax Information' button.
4. Locate the tax classification field. This field will have the existing tax
classification for each tax line. Choose the new tax from the LOV.
5. Click on Apply and this will navigate you back to the manage tax page.
This page will have the new tax calculation based on the new tax
classification rate.
6. If the tax classification is not overridden, then the tax classification is not
setup for override. Kindly check the setup for both the taxes for above
mentioned setups and profile.
Manually Adding Tax Information

If the purchase order/release/requisition do not have any taxable lines, you can
update the shipments with tax classification through the 'Additional Tax
Information' window provided by ebusiness tax. The tax line will be calculated
based on the new tax classification rate. If the tax is not defaulted, one of the
setups/profile options mentioned in the tax override setup above does not allow a
tax line override.

Steps:
1. Query the purchase document (Purchase Order Summary/Requisition
Summary form) or save the purchase document (Enter Purchase Order
(POXPOEPO)/Enter Releases (POXPOERL))
2. Click on Actions > Manage Tax (Tools > Manage Tax for Requisition) from
the toolbar from Purchase Order Summary/Requisition Summary/Enter
Purchase Order (POXPOEPO)/Enter Releases (POXPOERL) forms.
3. The tax page will appear with details of tax lines. Click on the 'Additional
Tax Information' button.
4. Locate the tax classification field. Choose the new tax from the LOV.
5. Click on Apply and this will navigate you back to the manage tax page.
This page will have the new tax calculation based on the new tax
classification rate.

Application Tax Options - Tax Hierarchy

The tax hierarchy is now available in ebusiness tax through ‘Application Tax Options’ available by each operating unit for
Purchasing application. This is similar to defining the tax hierarchy in ‘Purchasing Options’ prior to release 12. Application
Tax Options is available only for backward compatibility of the former Tax Defaulting Hierarchy.

Prior to ebusiness tax, a tax hierarchy would be defined either in payable options
or in purchasing options, which would determine the source and the order of
defaulting on purchase orders. The tax hierarchy is now available in ebusiness
tax through ‘Application Tax Options’ available by each operating unit for
Purchasing application. This is similar to defining the tax hierarchy in ‘Purchasing
Options’ prior to release 12. The tax will be defaulted based on the defaulting
order and the source option specified. Application Tax Options is available only
for backward compatibility of the former Tax Defaulting Hierarchy. If you are
using complex tax rules you may choose to disable the application tax options.
This is a one-time option. Once the application tax option has been disabled, it
would not possible to re-enable this option again for that operating unit.

For purchasing application we can choose up to the following 5 sources to default


the tax.
1. Supplier
2. Supplier Site
3. Item
4. Ship-To Location
5. Payables Financial Option

Figure 7: Application Tax Options

Supplier
You can attach tax to the supplier using the following steps.
1. In the tax page navigate to Parties > Party Tax Profiles.
2. Choose ‘Party Type’ as “Third Party” and query the Supplier in the ‘Party
Name’ for whom you like to define the tax.
3. Click on update icon (Pencil icon).
4. In the Main Tab check on ‘Allow Tax Applicability’.
5. Check ‘Set for Self Assessment / Reverse Charge’ if this is a self-assessed
tax*.
6. Navigate to Tax Registrations tab and click on ‘Create’ button and add the
tax regimes/taxes applicable to the supplier.

* A self-assessed tax is a tax calculated and remitted for a transaction, where tax
was not levied but it is deemed as due.
Supplier Site
You can attach tax to the supplier site using the following steps.
1. In the tax page navigate to Parties > Party Tax Profiles.
2. Choose ‘Party Type’ as “Third Party Site” and query the Supplier (using
the ‘Party Name’ field) for whom you like to define the tax.
3. Choose the site for which you want to define the tax and click on update
icon (Pencil icon).
4. In the Main Tab check on ‘Allow Tax Applicability’.
5. Check ‘Set for Self Assessment / Reverse Charge’ if this is a self-assessed
tax*.
6. Navigate to Tax Registrations tab and click on ‘Create’ button and add the
tax regimes/taxes applicable to the supplier site.

A self-assessed tax is a tax calculated and remitted for a transaction, where tax
was not levied but it is deemed as due.

Item

You can attach tax to the item using the following steps.
1. Navigate to Inventory/Purchasing Responsibility.
2. Navigate to Items > Master Items
3. Query the item for which you want to define the tax.
4. Navigate to the ‘Purchasing’ tab.
5. Choose ‘Yes’ from drop down for the ‘Taxable’ field.
6. Now choose the tax from ‘Input Tax Classification Code’ field LOV*.

The tax will only be available in ‘Input Tax Classification Code’ field LOV if the tax
has been associated with a ‘Tax Type’ in the tax configuration for this tax prior to
enabling the tax.

The place of supply rule determines the tax on the ship-to location based on the
tax jurisdiction for the tax. This is available though the subscription owner profile
in ebusiness tax. Tax for the Payables Financial Option can be applied through
the ‘Application Tax Options’ where tax to be applied can be selected for this
option.

Tax Rules

Tax rules provide flexibility to use the tax as required by the business / tax authority. The User-friendly interface makes it easier
for the implementation team to configure rules based on their requirements.

E-business tax provides flexibility to define all kinds of taxation rules that you
normally encounter in your business scenario. Tax engine requires some of the
mandatory tax rule types to be defined either by definining defaults available for
these rule types, or by defining tax rules that will determine the value for these
mandatory tax rule types. If both are defined, the tax engine will first use the
rule.

In case the rule does not evaluate a value, the default for the tax rule will be
used. Rules can be defined even after the tax is live. Following are mandatory
tax rule types required before enabling the tax for transactions.
Determine Place of Supply - The specific jurisdiction where the supply of goods or
services is deemed to have taken place for tax purposes, for a given tax; it is the
result of the place of supply derivation.

Determine Tax Applicability - The process and the data that identifies all the
taxes that need to be determined/levied for a given transaction; the result will be
an ordered list of applicable taxes.

Determine Tax Registration - The registration of a party with a tax authority to


ensure tax rights; responsibilities and rights are upheld.

Determine Taxable Basis - The arrived at value, quantity or action, on which tax
is calculated, after the tax rules which would affect it have been taken into
consideration for a specific tax. These rules may include deductions,
modifications, exemptions and discounts.

Calculate Tax Amounts - The calculation of tax amount and formula to be used
for calculating this amount.

Figure 8: Tax Rules

There are 2 methods available to define a rule.


1. Expert Rule
2. Guided Rule
Expert Rule

The below steps will guide you through a step-by-step process to create a tax
rule using the expert rule. You can alternatively use the ‘Guided Rule Entry’
option to define tax rules. For e.g. define applicability of tax only for ship to
location as New York City
1. Go to responsibility 'Tax Managers'
2. Navigate to Advanced Setup Options > Tax Determining Factor Sets
3. Click on 'Create' button
4. Enter the following values
a. Tax Determining Factor Set: <Enter a code for your Tax Determining
Factor Set>
b. Name: <Enter a name for your Tax Determining Factor Set>
5. Set Usage: Tax Rules
6. Optionally Enter:
a. Regime Code: <Regime code where the rule will be applicable>
7. Scroll down to the 'Associate Tax Determining Factors' region.
8. Enter the following values
a. Determining Factor Class: <In our case it is 'Geography'>
b. Class Qualifier: <In our case it is 'Ship To'>
c. Determining Factor Name: <In our case it will be 'City'>
9. Click on 'Apply' to save the 'Tax Determining Factor Set'
10. Navigate to Advanced Setup Options > Tax Condition Sets
11. Click on 'Create' button
12. Enter the following
a. Tax Condition Set: <Enter a code for 'Tax Condition Set'>
b. Determining Factor Set: <Enter the value from the LOV for the
13. 'Tax Determining Factor Set' defined in step 4 above>
14. Click on 'Continue' button
15. We will see the 'Determining Factor Class', 'Class Qualifier' and
'Determining
16. Factor Name' defaulted and greyed out
17. 15. Enter the following values:
a. Operator: Not Equal To
b. Value/From Range: NEW YORK
18. 16. Click on 'Finish' button.
19. 17. Query the tax in the Tax Configuration > Tax Rules page
20. 18. Click on Expert Rule Entry icon against the ‘Determine Tax
Applicability’ rule.
21. 19. Enter the following values:
a. Rule Code: <Enter a Rule Code>
b. Name: <Enter a Rule Code>
c. Effective From: <Enter the effective date for this rule>
d. Determining Factor Set Code: <Choose the 'Determining Factor
22. Set Code' defined in step 4 above from the LOV>
23. 20. Click on Next to complete Step 1 of 3
24. 21. Enter the following details:
a. Condition Set Code: <Select the 'Tax Condition Set' defined in
25. step 12 above from the LOV>
c. Result: <for our case the value is 'Not Applicable'>
26. 22. Click on Next to complete Step 2 of 3
27. 23. Enter the value of Rule Order and check the 'Enable' checkbox
28. 24. Click on 'Finish' to create the rule.

Guided Rule
You can also use the Guided Rule entry to define the rules for each tax. This step
guides you through a step-by-step process to create a tax rule. You can
alternatively use the ‘Expert Rule Entry’ option to define tax rules. For e.g.
define applicability of tax only for ship to location as New York City
1. Query the tax in the Tax Configuration > Tax Rules page
2. Click on Guided Rule Entry icon against the ‘Determine Tax Applicability’
rule.
3. Provide a name for the tax rule code and the effectivity.
4. You can choose to apply this rule for all transactions or only for specific
transactions.
5. Click on Enable and the click on ‘Next’ button.
6. In the ‘Transactions’ tab enter the details for the location. In our case it
will be New York.
7. Also choose the operations. For e.g. equal to/not equal to. In our case
choose not equal to.
8. Click on ‘Next’ button.
9. Enter the condition set code and the order of preference for this rule.
10. Choose the result for the rule and its operation. In our case the rule
combined with operation was: If Ship To not equal to New York. The result
for this rule is that tax will not be applicable in such a case. So choose the
option ‘Not Applicable’. So the rule becomes: If Ship To not equal to New
York the tax is ‘Not Applicable’.
11. Click on Next and choose Enable to apply this rule.

Fiscal Classification

Fiscal Classification allows you a way to classify each part of your transaction and define tax rules based on these
classifications. E-business tax allows you classifications based on party, product and nature of transaction.

As already defined ‘Key Concepts’ section, Fiscal Classification is a way that tax
authority classifies each part of a transaction. It is not necessary to define fiscal
classification to setup taxes in e-business tax. It only allows you to classify each
part of a transaction so that you may create rules based on them for specific tax
requirements. We can model three types of fiscal classification in e-business tax.
1. Parties involved in the transaction - Party Fiscal Classification
2. Products involved in the transaction - Product Fiscal Classification
3. Nature of the transaction - Transaction Fiscal Classification

Party Fiscal Classification

The classification is used to categorize parties. For example a tax authority could
claim a reduced tax rate for transaction in which the goods are purchased from a
supplier establishment that have been classified as ‘Research and Development’
organization by the tax authority in order to promote research activities.

Steps:
The below is an example of defining a rule for party fiscal classification for the
above mentioned example:
1. Define Party Classification in TCA
a. Go to responsibility ‘Trading Community Manager’
b. Navigate to Trading Community > Administration > Classifications
c. Click on ‘Create Class Category’ button.
d. Enter the following details
i. Class Category Name: <Enter a name for you party classifications>
ii. Meaning: <Enter the name for meaning of your party classification>
iii. Description: <Enter the description for your party classification>
e. Click on ‘Apply and Create Class Codes’
f. Enter the value for Class Code, Meaning and Description (Description is
optional) by which you would like to define your supplier establishment. For
this example the following needs to be entered to define a party
classification of type ‘Research and Development’:
i. Class Code: Research and Development
ii. Meaning: Research and Development
iii. Description: Research and Development
g. Click on ‘Apply’ button.
h. Click on Compile and this would submit concurrent program to define your
party classification in TCA. (This step also returns the concurrent request
id submitted for definition to take effect).
i. Click on ‘OK’.
2. Create Fiscal Classification for the party in e-business tax
a. Go to responsibility ‘Tax Managers’
b. Navigate to Parties > Party Classification
c. Click on ‘Create’ button.
d. Party Classification: <Choose the ‘Party Classification’ defined in TCA
during step 1 above>
e. Fiscal Classification Type Code: <Define a code for your party fiscal
classification code>
f. Name: <Define a name for your party fiscal classification code>
g. Effective From: <Enter the effective date>
h. In the Tax regimes define all regimes to which this party fiscal classification
will be applicable. Enter the following details for each regime:
i. Regime Code
ii. Effective From
i. Click on ‘Apply’ to save the party fiscal classification.
Figure 9: Party Fiscal Classification

Figure 10: Party Fiscal Classification (Supplier Type)

3. Attach the Party Fiscal Classification to the party in PTP (Party Tax Profile)
a. Go to responsibility ‘Tax Managers’
b. Navigate to Parties > Party Tax Profiles
c. Select the party type and party from the LOV and click on ‘Go’. In our case
choose Party Type as ‘Third Party’ and Party as the supplier that needs to
be defined as a ‘Research and Development’ type organization.
d. Click on Update pencil icon.
e. Navigate to the ‘Classifications’ tab.
f. Click on button ‘Add Another Row’.
g. Choose the ‘Fiscal Classification Type Code’ defined step 2 above from the
LOV.
h. Choose the ‘Fiscal Classification Code’ for the supplier based on the
available codes defined in TCA. In our example the supplier ‘Fiscal
Classification Code’ is ‘Research and Development’.
i. Click on ‘Apply’ to save the party tax profile.
4. Create a new tax status and tax rate. (Follow steps 3, 5 and optionally 6 in-
case recovery is required in the section ‘TAX SETUP’ below)
5. Create an Expert / Guided Rule as shown in the ‘Tax Rules’ section above.
Please use the following specification to create the rule.
a. Tax Determining Factor Set
i. Determining Factor Class: Party Fiscal Classification
ii. Class Qualifier: Ship From Party
iii. Determining Factor Name: <'Fiscal Classification Type Code' defined in
step 3 above>
b. Tax Condition Sets
i. Operator: Equal To
ii. Value/From Range: <In our case 'Research and Development'>
c. Tax Status: <Defined in step 4>
d. Tax Rate: < Defined in step 4>

Therefore the rule becomes:


When Ship From Party has a Party Fiscal Classification Value of ‘Research and
Development’ then apply the tax rate defined in step 4 above.
Product Fiscal Classification

The classification is used to categorize a product. There are three types of


product classification available in e-business tax.
1. Inventory Based
2. Non-Inventory Based
3. Intended Use Classification
Inventory Based

This is used to classify categories defined in Oracle Inventory. This can only be
used if Oracle Inventory is in installed status. For example, all domestically
purchased items that are used as office supplies, will be sold at a lower rate.

Steps:
1. In Oracle Inventory define a category. For e.g. in our case we will define a
category called ‘Office Supplies’. (Please refer to the page 4-66 of Oracle
Inventory User's Guide for steps to create an inventory category)
2. Create a new category set and associate the category set with the
category created in step 1 above. In our example associate the category
defined in step 1 above to the Purchase Category Set (This is a seeded
category set available by default i.e. we will associate the category ‘Office
Supplies’ in the Purchasing Category Set. (Please refer to the page 4-68 of
Oracle Inventory User's Guide for steps to update an inventory category to
a category set)
3. Assign items to the category defined in step 1. For e.g. in our case we will
create an item ‘File 6x6’ which is a purchased item with the category
‘Office Supplies’. (Please refer to the page 4-74 of Oracle Inventory User's
Guide for Assigning Items to Categories and page 4-74 of Oracle Inventory
User's Guide for defining an item)
4. Define a ‘Product Fiscal Classification’ for the above category in ebusiness
tax.
a. Go to ‘Tax Managers’ responsibility.
b. Navigate to Products > Product Classifications
c. Click on ‘Create’ button to create a new ‘Product Fiscal
Classification’.
d. Inventory Category Set: <Choose the category set defined
in step 2 above>. In our example we need to choose Purchasing
(Purchasing Category Set) against which we have defined a
category ‘Office Supplies’.
e. Fiscal Classification Type Code: <Define a code for your
product fiscal classification >
f. Name: <Define a name for your product fiscal classification
code>
g. Effective From: <Enter the effective date>
h. In the Tax regimes define all regimes to which this product
fiscal classification will be applicable. Enter the following details for
each regime:
I. Regime Code
II. ii. Effective From
III. Click on ‘Apply’ to save the product fiscal classification.
Figure 11: Product Fiscal Classification (Inventory Based)

5. Create a new tax status and tax rate. (Follow steps 3, 5 and optionally 6
incase recovery is required in the section ‘TAX SETUP’ below)
6. Create an Expert / Guided Rule as shown in the ‘Tax Rules’ section above.
Please use the following specification to create the rule.
a. Tax Determining Factor Set
I. Determining Factor Class: Product – Inventory Linked
II. Determining Factor Name: <'Fiscal Classification Type Code'
defined in step 4 above >
b. Tax Condition Sets
i. Operator: Equal To
ii. Value/From Range: <In our case 'Office Supplies'> (Please note
the value of the category segments are concatenated without
delimiters therefore query this LOV with value of one of the
segments and use the category description to choose the correct
segment)
c. Tax Status: <Defined in step 5>
d. Tax Rate: < Defined in step 5>
7. Create a purchase order with category ‘Office Supplies’. The rate should be
one created in step 5 above.

Therefore the following rule will be applied:

If the category used in purchase order is ‘Office Supplies’ then apply the rate
used in step 5 above.

Non-Inventory Based
This is used to classify categories that are not defined in Oracle Inventory. The
advantage of such a classification is that, it can also be used if Oracle Inventory
is not in installed status. We will continue to use the above example we without
using Oracle inventory example, all purchased items that are used as stationary
materials for your office supplies, will be sold at a lower rate.

Steps:

1. Define a ‘Product Fiscal Classification’ for the non-inventory category in e-


business tax.
a. Go to ‘Tax Managers’ responsibility.
b. Navigate to Products > Product Classifications
c. Product Classification Source: From the drop down ensure
to choose Oracle E-Business Tax.
d. Click on ‘Go’ button.
e. This would retrieve the seeded fiscal classification type
code: PRODUCT_CATEGORY.
f. Click on the pencil icon below the ‘Update’ field of
PRODUCT_CATEGORY fiscal classification code, to update the information
in this category.
g. Click on ‘Create’ button to create a new category.
h. Enter the following details
a. Fiscal Classification Code: <Enter a code for the fiscal
classification which will be used as the category>. In our example
we will define it as ‘OFFICE_SUPPLIES’
b. Name: <Enter a name for the fiscal classification which will
be used as the category>. In our example we will define it as
‘Office Supplies’
c. Effective From: <Enter an effective date>
d. Click on ‘Apply’
i. You will now be able to view the ‘OFFICE_SUPPLIES’ under
‘PRODUCT_CATEGORY’. (If you are not able to view it. Click the Next 5
arrow to check the entire list under ‘PRODUCT_CATEGORY’).
j. You may create sub categories by clicking on the ‘+’ icon
under ‘Create Sub – Level’ heading. For example in our case we will create
a sub-category called ‘STATIONARIES’.
k. Enter the following details
i. Fiscal Classification Code: <Enter a code for the fiscal classification
which will be used as the sub-category>. In our example we will
define it as ‘STATIONARIES’
ii. Name: <Enter a name for the fiscal classification which will be used
as the sub-category>. In our example we will define it as
‘Stationeries’
iii. Effective From: <Enter an effective date>
l. Click on ‘Apply’
m. You will now be able to view the ‘STATIONARIES’ under
‘OFFICE_SUPPLIES’ category of ‘PRODUCT_CATEGORY’.
n. (If you are not able to view it. Click the Next 5 arrow to
check the entire list under ‘PRODUCT_CATEGORY’).
o. Click on ‘Apply’ to save the fiscal classification.
Figure 12: Product Fiscal Classification (Non-Inventory Based)

2. Create a new tax status and tax rate. (Follow steps 3, 5 and optionally 6
incase recovery is required in the section ‘TAX SETUP’ below)
3. Create an Expert / Guided Rule as shown in the ‘Tax Rules’ section above.
Please use the following specification to create the rule.
a. Tax Determining Factor Set
i. Determining Factor Class: Product – Non-Inventory Linked
ii. Determining Factor Name: ‘Product Category’
b. Tax Condition Sets
i. Operator: Equal To
ii. Value/From Range: <In our case 'Office Supplies/Stationeries'>
c. Tax Status: <Defined in step 5>
d. Tax Rate: < Defined in step 5>
4. Create a purchase order and save.
5. Click on the Actions > Manage Tax link from menu.
7. Click on ‘Additional Tax Information’ button.
8. Scroll to the ‘Product Classification’ field and choose the product
classification ‘Office supplies/Stationeries’ from the LOV.
9. Click on Apply and the new tax rate will be used based on the rule created
above.

Therefore the following rule will be applied:


If the ‘Product Classification’ field entered in additional tax information page from
the ‘Manage Tax’ link on the purchase order is ‘Office Supplies/Stationeries ’ then
apply the rate used in step 2 above.

Intended Use

This is used to classify transactions based on purpose for which a product maybe
used. There are two types of intended use.
1. Inventory Based
2. Non-Inventory Based

For upgraded instances intended use is always inventory based. For non-upgrade
customers this choice can be made only once.

Example of Intended Use can be recovery tax on alcohol is based on its use. If it
is used for ‘Industrial Manufacturing’, the recovery rate will be higher than when
it is used for direct ‘Retail Sale’. In this whitepaper we will discuss example of
inventory based ‘Intended Use’. The difference is that for inventory based
defaulting automatically occurs when we choose the inventory-based items.
While for noninventory based intended use, the Intended use must be explicitly
specified from the ‘Intended Use’ field seen from the ‘Additional Tax Information’
page after navigating to the tax page though the ‘Manage Tax’ link. Also for non-
inventory based intended use, the codes for ‘Intended Use’ must be created in e-
business tax.

Steps:
1. In Oracle Inventory define categories for intended use. For
e.g. in our case we will define a category called ‘Industrial Use’ and ‘Retail
Sales’. (Please refer to the page 4-66 of Oracle Inventory User's Guide for
steps to create an inventory category)
2. Create a new category set and associate the category set
with the category created in step 1 above or use the default INTENDED_USE
category set. In our example associate the categories defined in step 1
above to the INTENDED_USE Category Set (This is a seeded category set
available by default i.e. we will associate the category ‘Industrial Use’ and
‘Retail Sales’ in the INTENDED_USE Category Set. (Please refer to the page
4-68 of Oracle Inventory User's Guide for steps to update an inventory
category to a category set)
Figure 13: Intended Use (Inventory Category)

3. Assign items to the categories defined in step 1. For e.g. in


our case we will create an item ‘Industrial Alcohol’ which is a purchased
item with the category ‘Industrial Use’. (Please refer to the page 4-74 of
Oracle Inventory User's Guide for Assigning Items to Categories and page 4-
74 of Oracle Inventory User's Guide for defining an item)
Figure 14: Intended Use (Item Assignment)

4. Create a new recovery rate for your tax. (Follow step 6 in


the section ‘TAX SETUP’ below)
5. Create an Expert / Guided Rule as shown in the ‘Tax Rules’
section above. Please use the following specification to create the rule.
a. Tax Determining Factor Set
i. Determining Factor Class: Transaction Input Factor
ii. Determining Factor Name: Intended Use
b. Tax Condition Sets
i. Operator: Equal To
ii. Value/From Range: <In our case ‘Industrial Use’> (Please note the
value of the category segments are concatenated without delimiters therefore
query this LOV with value of one of the segments and use the category
description to choose the correct segment)
c. Tax Recovery Rate: < Defined in step 4>
6. Create a purchase order with category ‘Office Supplies’. The recovery rate
should be defaulted from the one created in step 4 above.

Therefore the following rule will be applied:

If the ‘Intended Use’ of the item in purchase order is ‘Industrial Use’ then apply
the recovery rate used in step 4 above.

Transaction Fiscal Classification


The classification is used to categorize transactions according to the
requirements of a tax authority. This is used when the nature of the transaction
itself determines the tax and the tax rate that applies. The ‘Transaction Fiscal
Classification’ must be entered manually from the ‘Additional Tax Information’
page (Purchase Orders > Manage Tax > Click on ‘Additional Tax Information’
button). Three Types of Transaction Fiscal Classification’ can be defined in e-
business.

Transaction Business Category: To classify transactions based on the nature of


business. Seeded Transaction Business Categories
• Expense Report
• Purchase pre-payment transaction
• Purchase transaction
• Sales transaction
• Sales transaction adjustment
• Intercompany transaction

New categories can be created under the seeded categories.

Document Fiscal Classification: To classify based on the documents required / the


type of documents used for the transaction. For e.g. Export Sales User Defined
Fiscal Classification: Used for defining transaction based on any other
classifications from transaction other then the above mentioned. For e.g. a
sample sale may invite a lower tax. So users can define a user defined fiscal
classification of type ‘Sample Sales’ and create rules to define tax rates for such
a transaction.

Tax in Interface

. Tax information provided through the interface will be considered as an override and not defaulting information. If tax
details are not specified in the interface, then ebusiness tax will determine the appropriate tax classification and recovery
rate.

Requisition Import

If the requisition lines interface (PO_REQUISITIONS_INTERFACE_ALL) does not


specify any tax details, then ebusiness tax will determine the appropriate tax
classification and recovery rate. Tax information provided through the interface
will be considered as an override and not defaulting information. Therefore it
should fulfill all the criteria for overriding a tax as mentioned in above under the
heading ‘Modifying Tax Information’ (Overriding Tax). A new field TAX_NAME is
introduced in release 12. Tax classification can be provided for overriding the tax
line information. TAX_CODE_ID field is supported on the data import for backward
compatibility. If TAX_CODE_ID field based on the old AP tax codes is specified,
then the tax classification will be derived and passed on to ebusiness tax.

PDOI

Tax classification can be provided in the PO_LINES_INTERFACE for overriding the


tax line information using the TAX_NAME. If the PO lines interface
(PO_LINES_INTERFACE) does not specify any tax details, then ebusiness tax will
determine the appropriate tax classification and recovery rate.
TAXABLE_FLAG will be used as an item attribute for item creation in Oracle
Inventory to update the taxability of the item. However, taxable flag on the PO
document transaction table, which will be derived based on the existence of tax
lines on the shipment and will not be affected by the TAXABLE_FLAG provided in
the interface.

Tax During AutoCreate

During AutoCreate the tax will be redefaulted on the purchase order based on the tax determining attributes of the purchase
order. Tax overridden on the requisition will no longer be passed to the purchase order, as was the functionality prior to release
12.

During AutoCreate the tax will be redefaulted on the purchase order based on
the tax determining attributes of the purchase order. Tax overridden on the
requisition will no longer be passed to the purchase order, unlike the functionality
prior to release 12. Tax will not be part of shipment grouping criteria so it is
possible to have requisition lines with different tax values being grouped into a
single PO shipment. Tax will be recalculated on the PO document created
through autocreate.

Quantity Based Tax

One of the features of e-business tax for purchasing is the capability to define tax
on the basis of quantity instead of the Line amount. In order to define tax based
on quantity we can follow the steps mentioned in the ‘TAX SETUP’ section below.

Please follow the below mentioned changes in the


1. Tax Rate: In tax rate define the following (Step 5 in ‘TAX SETUP’
section):
a) Rate Type: Quantity
b) UOM: <Unit of Measure for the purchase>
c) Quantity Rate: <Rate of tax per quantity>
Figure 15: Quantity Based Tax (Tax Rate)

2. Tax Rule: In tax rules of for the tax, use the following as default
value (Step 7 in ‘TAX SETUP’ section):
a) Determine Taxable Basis: STANDARD_QUANTITY
Figure 16: Quantity Based Tax (Tax Rules)

TAX SETUP

Following are the brief setup steps for defaulting basic tax in purchasing. Based
on the business requirement the setups can be complex involving multiple tax
rules.

These steps can be used for performing quick tests for using tax in purchasing.
1. Set up Tax Regime (Responsibility: Tax Managers, Navigation: Tax
Configuration > Tax Regime)
a. Regime Level - A Tax Regime is usually defined for a country
b. Controls and defaults – Following options can be checked. Instead of
replicating choices for different OUs, define which regimes need to support
recovery / Exemptions / Exceptions / Overrides
i. Allow Tax Recovery
ii. Allow Tax Exemptions
iii. Allow Tax Exceptions
c. Click on ‘Next’ to choose the subscriptions for the regime.
d. Party Subscription Options
i. Define the parties (legal Entity / operating unit) that subscribe to this
tax.
ii. Configuration for Taxes and Rules: Choose if the regime will be
available as ‘Common Configuration’ i.e. Tax setups will be available for tax
across legal entities / operating units (use ‘Global Configuration Owner’ as the
Configuration Owner in the rest of the setups) or you may use ‘Party Specific’
that only allows tax setups to be used for the specific legal Entity / operating unit
or you may use ‘Common Configuration with Party Overrides’ which will allow
you to define portion of the tax setups to be overridden and available only for
your specific legal Entity / operating unit.
iii. Configurations for Product Exceptions: Choose if the product
exceptions can be ‘Common Configuration’ to allow the regime to use product
exceptions across all the legal entities / operating units units (use ‘Global
Configuration Owner’ as the Configuration Owner when setting up product
exceptions) or choose ‘Party-Specific Configuration’ to configure party specific
product exceptions.
e. Click on ‘Finish’ to save the tax regime.
2. Set up Tax (Responsibility: Tax Managers, Navigation: Tax Configuration > Taxes)
a. Configuration Owner: <Based on the tax regime setup for ‘Configuration
for Taxes and Rules’ in Step 1>
b. Geography Type: Based on the applicability of the tax to a geography
c. Parent Geography Type: Based on the geography of the tax regime.
d. Tax Type: Based on the type of tax for e.g. VAT, Sales etc.
e. Applied Amount Handling: Recalculated is set by default. Set to Prorated
for tax to arrive at an amount calculated previously.
f. Controls: Check the options required for your tax. For e.g. the following
can be checked for overriding tax rounding/tax line and entry of manual
tax line.
i. Allow Tax Rounding Override
ii. Allow Override for Calculated Tax Lines
iii. Allow Entry of Manual Tax Lines
g. Tax Exceptions/Exemptions Controls: Check the following options to allow
Tax Exceptions and Tax Exemptions.
I. Allow Tax Exceptions
II. Allow Tax Exemptions
h. Tax Recovery Controls: Recovery rate is not mandatory and is totally
optional. Once the allow recovery rate tab is checked for a tax then it will
not be live till recovery rate is defined. Check the following options to
allow tax recovery and override.
I. Allow Tax Recovery
II. Allow Tax Recovery Rate Override
i. Defaults: Set the following options/defaults.
I. Allow Tax Rate Rules: Checked
II. Default Recovery Settlement: Immediate
j. Save the Tax details by clicking on ‘Apply’
3. Setup Tax Status (Responsibility: Tax Managers, Navigation: Tax
Configuration > Tax Status)
a. Configuration Owner: <Based on the tax regime setup for
‘Configuration for Taxes and Rules’ in Step 1>
b. Set as Default Tax Status: Checked (For defaulting it as the tax
status)
c. Default Controls: Following options are available. Choose the
options required for your tax.
i. Allow Tax Exemptions
ii. Allow Tax Exceptions
iii. Allow Tax Rate Override
d. Tax Rate Defaults: Set the following option.
i. Default Recovery Settlement: Immediate
e. Save the Tax Status details by clicking on ‘Apply’
4. Setup Tax Jurisdiction Code (Responsibility: Tax Managers, Navigation: Tax
Configuration > Tax Jurisdiction)
a. Geography Type: Based on the applicability of the tax to a geography
b. Parent Geography Type: Based on the geography of the tax regime.
c. Parent Geography Name: Name of the parent geography. For e.g. if the
parent geography type was country, the geography name could be United
States, UK, India etc (based on your tax).
d. Geography Name: Name of the jurisdiction geography. For e.g. if the
geography type was country, the geography name could be United States,
UK, India etc (based on your tax).
e. Effective From: <specify the effective date>
f. Default Tax Jurisdiction Settings: Set the following options / defaults
i. Set as default Tax Jurisdiction: Checked
ii. Default Effective From: <specify the effective date>
* There should be at least one default jurisdiction.
5. Setup Tax Rate (Responsibility: Tax Managers, Navigation: Tax
Configuration > Tax Rate)
a. Configuration Owner: <Based on the tax regime setup for ‘Configuration
for Taxes and Rules’ in Step 1>
b. Rate Type: Percentage (For calculating the tax rate based on percentage)
c. Percentage Rate: <Set the rate for the tax>
d. Rate Details: Click on the icon under the ‘Rate Details’ and set the
following.
i. Set as Default Rate: Checked
ii. Default Effective From: <Date effective>
e. Tax Accounts: Click on the icon under the ‘Tax Accounts’ and set the
following.
i. Ledger: Primary Ledger Name
ii. Click on ‘Create’
iii. Operating Unit: <Enter the value of Operating Unit>
iv. Tax Recoverable/Liability: <Enter the code combination for this
account>
v. Click on ‘Apply’
vi. Click on ‘Apply’
*Tax accounts can to be defined at the tax and rate level. If defined at
both the places then rate level takes precedence.
f. Save the Tax Rate details by clicking on ‘Apply’
*There can be multiple taxes under a regime, multiple statuses under a
tax and multiple tax rates under a status.
6. Setup Tax Recovery Rate* (Responsibility: Tax Managers, Navigation: Tax
Configuration > Tax Recovery Rate)
a. Configuration Owner: <Based on the tax regime setup for‘Configuration
for Taxes and Rules’ in Step 1>
b. Recovery Rate Periods: Set up the following values
i. Percentage Recovery Rate: <Recovery Rate%>
ii. Effective From: <specify the effective date>
iii. Set as Default Rate: Yes
iv. Default Effective From: <specify the effective date>
*Recovery rate is not mandatory and is totally optional. Once the allow
recovery rate tab is checked for a tax then it will not be live till
recovery rate is defined. Recovery rate can to be defined at the tax
and rate level. If defined at both the places then rate level takes
precedence.
7. Setup Tax Rules (Responsibility: Tax Managers, Navigation: Tax
Configuration > Tax Recovery Rules)
a. Query the tax for the Configuration Owner (Based on the tax regime setup
for ‘Configuration for Taxes and Rules’ in Step 1)
b. Setup the following default rule types
i. Determine Place of Supply: Ship To
ii. Determine Tax Applicability: Applicable
iii. Determine Tax Registration: Ship From Party
iv. Determine Taxable Basis: STANDARD_TB
v. Calculate Tax Amounts: STANDARD_TC
8. Update Tax to make it available for transactions
a. Query the Tax
b. Update the following option:
i. Make Tax Available for Transactions: Checked
ii. Default Primary Recovery Rate*: <Choose the setup in step 6 from the
LOV>
c. Apply the changes.
9. Setup Configuration Owner Tax Options (Responsibility: Tax Managers,
Navigation: Defaults and Controls > Configuration Owner Tax Options)
a. Set up the following for enabling tax on Purchase Orders
i. Configuration Owner: <As defined in the tax regime>
ii. Entity Name: Purchase Order
iii. Application Name: Purchasing
iv. Effective From: <specify the effective date>
v. Event Class: Purchase Order and Agreement
vi. Enabled: Checked
10. Setup Application Tax Options* (Responsibility: Tax Managers, Navigation:
Defaults and Controls > Application Tax Options)
i. Application Tax Options: <Operating Unit>
ii. Operating Unit: Vision <Operating Unit>
iii. Application Name: Purchasing
iv. Defaulting Order 1: <Choose from the drop down list>
v. Defaulting Order 2: <Choose from the drop down list>
vi. Defaulting Order 3: <Choose from the drop down list>
vii. Defaulting Order 4: <Choose from the drop down list>
viii. Defaulting Order 5: <Choose from the drop down list>
*Defining ‘Application Owner Tax Options’ is optional
11. Setup Tax on Source: Depending on the source from where tax needs to
be defaulted, please define the setups as mentioned in the section for
‘Application Tax Options - Tax Hierarchy’. (i.e. Supplier, Supplier Site, Item,
Ship-To Location or Payables Financial Options). For e.g. for supplier, following
setups are required.
a. In the tax page navigate to Parties > Party Tax Profiles.
b. Choose ‘Party Type’ as “Third Party” and query the Supplier in the
‘Party Name’ for whom you like to define the tax.
c. Click on update icon (Pencil icon).
d. In the Main Tab check on ‘Allow Tax Applicability’.
e. Check ‘Set for Self Assessment / Reverse Charge’ if this is a
selfassessed tax.
f. Navigate to Tax Registrations tab and click on ‘Create’ button and
add the tax regimes/taxes applicable to the supplier.
12. Create a Purchase Order with a supplier defined in step 11 above and save
the purchase order. Click on Actions > Manage Tax to navigate to the tax
details page.

You could also view a demonstration of the tax setups for purchasing though the
viewlets attached with this white paper.

DATA FLOW

Following is the mechanism of calls to the ebusiness tax to calculate tax.


1. Purchasing will populate tax-determining attributes to global temporary
tables.
2. It will then call ebusiness tax API's to calculate tax.
3. Once the tax lines are calculated, appropriate tables in ebusiness tax is
populated with tax details and the purchasing tables are updated to indicate
taxable line.
4. The data from the global temporary tables will be deleted.

Following are the main ebusiness tax tables that will contain the setup
information that will help support in troubleshooting ebusiness tax information.
a. Tax Regimes: ZX_REGIMES_B
b. Taxes: ZX_TAXES_B
c. Tax Status: ZX_STATUS_B
d. Tax Rates: ZX_RATES_B
e. Tax Jurisdictions: ZX_JURISDICTIONS_B
f. Tax Rules: ZX_RULES_B

To get a dump of the eTax setups, you can use the following set of queries.

Please provide the tax regime code when prompted. If the issue is limited to a
tax then provide the tax name when prompted else please leave it blank.

SELECT *
FROM zx_regimes_b
WHERE tax_regime_code = '&tax_regime_code';
SELECT *
FROM zx_taxes_b
WHERE DECODE('&tax_name',null,'xxx',tax) = nvl('&tax_name','xxx')
AND tax_regime_code = '&tax_regime_code';
SELECT *
FROM zx_status_b
WHERE tax = '&tax_name'
AND tax_regime_code = '&tax_regime_code';
SELECT *
FROM zx_rates_b
WHERE tax = '&tax_name'
AND tax_regime_code = '&tax_regime_code';
SELECT *
FROM zx_jurisdictions_b
WHERE DECODE('&tax_name',null,'xxx',tax) = nvl('&tax_name','xxx')
AND tax_regime_code = '&tax_regime_code';
SELECT *
FROM zx_rules_b
WHERE tax = '&tax_name'
AND tax_regime_code = '&tax_regime_code';

Following are the main ebusiness tax tables that will contain the transaction
information that will have the tax details after tax is calculated.
a. ZX_LINES: This table will have the tax lines for associated with
PO/Release schedules.
TRX_ID: Transaction ID. This is linked to the
PO_HEADERS_ALL.PO_HEADER_ID
TRX_LINE_ID: Transaction Line ID. This is linked to the
PO_LINE_LOCATIONS_ALL.LINE_LOCATION_ID
b. ZX_REC_NREC_DIST: This table will have the tax distributions for
associated with PO/Release distributions.
TRX_ID: Transaction ID. This is linked to the
PO_HEADERS_ALL.PO_HEADER_ID
TRX_LINE_ID: Transaction Line ID. This is linked to the
PO_LINE_LOCATIONS_ALL.LINE_LOCATION_ID
TRX_LINE_DIST_ID: Transaction Line Distribution ID. This is linked to the
PO_DISTRIBUTIONS_ALL.PO_DISTRIBUTION_ID
RECOVERABLE_FLAG: Recoverable Flag. If the distribution is
recoverable then
the flag will be set to Y and there will be values in the
RECOVERY_TYPE_CODE and RECOVERY_RATE_CODE.
c. PO_REQ_DISTRIBUTIONS_ALL: This table will have the tax distributions
for associated with Requisition distribution.
RECOVERABLE_TAX: Recoverable tax amount
NONRECOVERABLE_TAX: Non Recoverable tax amount
d. ZX_LINES_DET_FACTORS: This table holds all the information of the tax
line transaction for both the requisitions as well as the purchase
orders/releases.
TRX_ID: Transaction ID. This is linked to the
PO_REQUISITION_HEADERS_ALL.REQUISITION_HEADER_ID /
PO_HEADERS_ALL.PO_HEADER_ID
TRX_LINE_ID: Transaction Line ID. This is linked to the
PO_REQUISITION_LINES_ALL.REQUISITION_LINE_ID /
PO_LINE_LOCATIONS_ALL.LINE_LOCATION_ID

TROUBLESHOOTING
Tax Simulator

Simulator is a powerful user interface too that can be used to simulate Tax
Calculation based on what-if scenarios. It gives flexibility to test new and/or
changed tax rules. Tax Simulator helps on audit trail with respect to which Tax
Rules were satisfied in calculating a particular tax. You can start using the Oracle
Tax Simulator by attaching this responsibility to your user. Navigate to the Oracle
Tax Simulator and enter the Header and Line information as appropriate. Click on
‘Tax Lines’ to display the tax lines for your tax. For detailed steps please review
the tax simulator viewlet attached to metalink Document ID (Note) for this
whitepaper.

Useful Tips:
1. Ship from Ship to and Bill From Bill to LOVs change depending upon the
application selected. Ship To/Bill To information is required for calculation
of location-based tax.
2. First Party locations need to be associated with the legal establishment for
the tax simulator to calculate tax.
Troubleshooting Tips

1. Determine the configuration owner subscription - Party tax profile of


Operating Unit. Check whether the OU has subscribed to LE setups.
Depending upon the set up above check whether the configuration owner
has subscribed to the regime. Check the configuration option e.g. party
specific configurations.
2. For the configuration owner (OU or LE) as determined above check the
Configuration Owner Tax Option for the event class. Check the Regime
Determination Set. For location-based taxes it should be Determine
Applicable Regime. Check the Tax Applicability flag.
3. Check the Party Tax Profile of the Third Party (supplier) and third party site
(supplier site). Check for the Tax Applicability flag at main tab and at
registration tab
4. Regime to Rate Flow: Depending upon the regime subscription option e.g.
party specific, common configuration or common with party override,
check following tax set ups. Check that every set up entity is effective for
the transaction date. Check that one status is default and every status has
a default rate. In case of jurisdiction specific rates, check that every
jurisdiction has a default rate.
5. Tax Rules: Check the default place of supply or the rule for the tax. There
should be at least one valid jurisdiction for the place of supply determined.
Check whether the tax is by default Applicable. If not then at least one
rule must be satisfied.
Tax Log and File Versions

If there is an error while calculation please use the Note 417238.1 to obtain the
tax debug log. Below are the information that will be sufficient for Oracle Support
to progress the service request for any ebusiness tax calculation issues.

1. Set the following profile options on at user level for the user saving the
purchase order.
FND: Debug Log Enabled = 'Y'
FND: Debug Log Level = 'Statement'
FND: Debug Log Module = %
2. Now change the responsibility to purchasing and open the Purchase
Order/Requisition Form where this issue is happening and enter the
details.
3. Obtain the AUDSID for your login. For obtaining this, perform the following
from just before opening Purchase Order / Requisition form. Go to Help-
>About Oracle Applications, you will find the AUDSID field. (* Sometime
AUDSID is not available for a few customers Please ignore this step in such
a case)
4. Obtain the max log sequence using the following query.
SQL> select max(log_sequence)
from fnd_log_messages;
5. Just before saving the PO/Requisition, turn trace on by:
Help > Diagnostics > Trace > Trace with Binds
6. Save the purchase order / requisition and then stop immediately
afterwards by.
Help > Diagnostics > Trace > No Trace
7. You will get a message showing the location of the trace file.
8. Please retrieve trace with tkprof. Run the trace file through tkprof as
follows:
tkprof <filename>.trc <filename>.out explain=<found
username/password>
example: tkprof file1234.trc file1234.out explain=<apps/apps>
9. Please get the debug log using the following query.
SQL> select *
from fnd_log_messages
where log_sequence > <output from step1>
and (module like 'ZX%' or module like 'zx%)
and audsid = <audsid from step 3 above>
order by log_sequence;
* If the AUDSID is not available please use the following query to
retrieve the tax
log.
SQL> select *
from fnd_log_messages
where log_sequence > <output from step1>
and (module like 'ZX%' or module like 'zx%)
and user_id = (SELECT user_id FROM fnd_user where user_name =
‘&Username’)
order by log_sequence;
10. Provide the output of ‘Diagnostics: Appscheck’ concurrent program.
Navigate to Purchasing/Purchasing Super User/System Administrator
Responsibility.
Click on View > Request and Click on Submit a New Request
Click on OK for option Single Request
Choose the concurrent program Diagnostics: Apps Check
Select the following parameters
Application1= Ebusiness Tax
Application2 = Purchasing
Submit the Request and upload the output of the program for
validating the file version information.

APPENDIX

References
Oracle Internal References

Tax Determination Attributes

Requisitions
=======
Header
----------
Requisition Type
Transaction Currency
Tax Header (Navigation: Tools > Manage Tax)
----------------
Taxation Country
Document Sub-type

Line
-------
Item
Unit of Measure
Quantity
Unit Price
Amount
Need-by Date
Tax Classification
Ship-to Organization
Ship-to Location
Supplier
Supplier Site

Additional Tax Attributes (Navigation: Tools > Manage Tax > Additional Tax
Information)
---------------------------------
Business Category
Intended Use
User-defined Fiscal Classification
Product Fiscal Classification
Product Category
Assessable Value

Distribution
---------------
Quantity
Amount
Charge Account
Tax Recovery Rate
Project
Task
Award
Expenditure Type
Expenditure Organization
Expenditure Date

Additional Tax Attributes (Navigation: Tools > Manage Tax > Additional Tax
Information)
--------------------------------
Intended Use

POs/Releases
=========

Header
-----------
PO Document Type
Transaction Currency
Rate Type
Rate Date
Rate
FOB
Supplier
Supplier Site
Bill-to Location
Provisional Tax Determination Date (for Consumption Advice Orders)

Tax Header (Navigation: Tools > Manage Tax)


----------------
Taxation Country
Document Sub-type

Line
------
Item
Unit of Measure
Unit Price

Shipment
-------------
Quantity
Amount
Need-by Date
Tax Classification
Ship-to Organization
Ship-to Location
Source Document (for Scheduled Releases of Planned PO)
Source Shipment (for Scheduled Releases of Planned PO)

Additional Tax Attributes (Navigation: Tools > Manage Tax > Additional Tax
Information)
--------------------------------
Business Category
Intended Use
User-defined Fiscal Classification
Product Fiscal Classification
Product Category
Assessable Value

Distribution
----------------
Quantity
Amount
Account CCID
Tax Recovery Rate
Project
Task
Award
Expenditure Type
Expenditure Organization
Expenditure Date
Source Distribution (for Scheduled Releases of Planned PO)

Additional Tax Attributes (Navigation: Tools > Manage Tax > Additional Tax
Information)
--------------------------------
Intended Use (defaults from shipment level)

Você também pode gostar