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NOTICE: Proprietary and Confidential. This material is proprietary to Rolta / Karen Brownfield / Alyssa Johnson and contains trade secret and confidential information which is solely the property of Rolta. This material is solely for Client's internal use. This material shall not be used, reproduced, copied, disclosed, and transmitted, in whole or in part, without the express consent of Rolta / Karen Brownfield / Alyssa Johnson.
E-Business Tax Engine Not Sexy but Smart
March 23, 2012
Karen Brownfield and Alyssa Johnson
Prepared for:
Understanding the Past: Oracle Standard Tax R12 E-Business Tax Engine Benefits and Features E-Business Tax Configurations E-Business Tax Third Party Integration
Agenda
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E-Business Tax Reporting Module Integration Transactions Management Tax Simulator Summary
UNDERSTANDING PRE-R12 STANDARD TAX
US Based entities Lack of foreign entity controls Manual in nature Currency driven Rates both manual and subscription Common/main usage for Sales Tax
Standard Tax - Basics
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Common/main usage for Sales Tax Use Taxes are afterthoughts Despite Multi-national organizations (multi-org), previous
releases do not address full global control of taxes, taxing authorities, regulatory and governmental compliance.
No single source for oversight and control of taxes both foreign and domestic
R12 E-BUSINESS TAX ENGINE
Single Point Source Service oriented architecture within EBS
Self-Service User Interface:- Extended control for products-based tax- Country-specific tax content- Simple to complex country-specific legislations
Global Control with E-Business Tax
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- Simple to complex country-specific legislations- Cross-border transactions- Local compliance requirements (domestic)- Constant tax changes by local jurisdictions, legislation, rates and
exceptions Simplified Tax Configuration
BENEFITS AND FEATURES
Easy to follow Setup Tasks
Required/Not Required
Ease of Configuration and Control
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Required Quick Link to
Setup Task Global
View/Global Control
Tax Repository Self-Assessment/Reverse Charge Tax Zone Types Tax Formulas Tax Condition Sets Tax Simulator:
Simulates Tax Calculations based on What-If scenarios
New Features with E-Business Tax
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Simulates Tax Calculations based on What-If scenarios Parallel audit trail to review which Tax Rules were satisfied Can be used to replicate standard transactions for PO, Invoices,
Invoices matched against POs, etc. typically integrated with the Tax Lines Interface
A quick way to enter transactions to perform what-if scenarios on tax calculation, but not perform normal validation in the application forms.
NOTE: Tax Simulator emulates, but does not trigger real transactions.
Service Oriented Architecture
Tax Management
Services
Repository, Reports, Dashboards, etc.
Validate Calculate Determine AdditionalAddress Taxes Recovery Services
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Rules Engine
Configuration
Definition Setup
METADATAMETADATAMETADATAMETADATATaxonomy
& Rules
Tax Regimes Place of Registration RatesTaxes Supply Taxable Basis Recovery
PartyPartyPartyParty ProductProductProductProduct PlacePlacePlacePlace ProcessProcessProcessProcess
Tax Regime
Tax Tax Juris-diction
Tax Status
Tax Rate
RecoverRate
OU Tax Accts
CONFIGURATIONS
E-Business Tax Definitions
Tax Regime Tax Tax Jurisdictions Tax Status Tax RateRecovery
RateOperating Unit Tax Accounts
Set of Tax rules that determine treatment of one or more
The geographical area where a tax is levied by a specific tax
Taxable nature of a product or service in context of a
The rate specified for a tax status in effect for a
The rate of Input Tax that is allowed to be
Tax Accounts that are associated with Tax
Distinct charge imposed by a government through a fiscal tax authority
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treatment of one or more taxes administered by tax authority
tax is levied by a specific tax authority or where the specific tax rate applies
context of a transaction and a specific tax (taxable, exempt, non-taxable)
status in effect for a period of time
allowed to be recovered or offset against Output Tax
associated with Tax Rates and Recovery Rates Accounting
FOUNDATION FOR E-BUSINESS TAX ARCHITECTURE
through a fiscal tax authority
Body of information that relates to a partys transaction tax activities
Legal entities,
Party Tax Profile - Required
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Legal entities, legal establishments and operating units that have tax requirements must have tax profiles
First Party Legal Establishment Operating Unit Owning Tax Content Tax Authority Third Party Third Party Site
Tax Profile Party Types
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Third Party Site
Term definition on setup form
US Sales Tax is an example of a
Tax Regimes - Required
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example of a Tax Regime
Or in our example US Pirate Treasure Tax!!!
Regime is setup whats next?
Previous releases we would
Next Step? Create Tax
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would scramble to find it
Here we see Create Tax is next
Distinct charge imposed by a government through a
Tax
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through a fiscal or tax authority
Notice geo structure is defined (Country and State)
Notice the evolving setup hierarchies / entities / steps
Next Step? Create Tax Status
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steps Regime to
Rate Flow steps you through the setups
Taxable nature of a product in the context of a transaction
Tax Status
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of a transaction and a specific tax on the transaction
Next Step? Create Tax Rate
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Integration with Ledger here
Notice the TX
Tax Rates and Accounts
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TX jurisdiction here this could be populated with tax partner
Accountant Joy!!!! Account setups
Notice the Ledger is the
Tax Rates and Accounts
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Ledger is the intersection with operating unit
Guided Rule Entry should guide you through
Next: Tax Rules
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through
Tax Rules Build - Guided
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Oracle-guided setup for building Tax Rules Multiple-Jurisdiction tax rules can be enabled for
both foreign and domestic tax regimes Easily updateable Choice either self or Oracle guided rule building
Tax Rules Build Guided (cont)
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Tax Jurisdiction Optional..
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Geographic Region or Tax Zone where tax is levied Tax Status must be setup Multiple-Jurisdiction taxes can be enabled for all counties, or all provinces for a particular type of tax within a particular region/state One Tax Jurisdiction must be setup for a tax before transactions can be performed on that jurisdiction
E-Business Tax Configuration
Party Process-Legal Party Fiscal Classification-Registration
-Document-Transaction Fiscal Classification-Transaction Generic
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Product Place
-Registration-Party Fiscal
-Goods and Services
Generic Classification-Accounting Event
-Geography associated with the transaction(s)
Legal Entity Setup - Required
Mandatory or Required setups are clearly noted
Quick link to configurations
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Geographic Region or Tax Zone where tax is levied Tax Status must be setup Multiple-Jurisdiction taxes can be enabled for all counties, or all
Party Classifications - Optional
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for all counties, or all provinces for a particular type of tax within a particular region/state One Tax Jurisdiction must be setup for a tax before transactions can be performed on that jurisdiction
EE--Business Tax Rules EngineBusiness Tax Rules Engine
ProjectsPayables
Receivables
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PurchasingInventory
Party Process
Product PlaceTax Values
4Ps determining factors
EE--Business Tax ServicesBusiness Tax Services
Does NOT provide services forDoes NOT provide services forDoes NOT provide services forDoes NOT provide services for:*Payables withholding taxes*Latin American receivables transactions*India transaction taxes
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*Latin American receivables transactions*India transaction taxes
THIRD PARTY INTEGRATIONS
Vertex- O Series Order to Cash, Procure to Pay- 3.3.14, 3.3.15, 3.4, 4.0.5.3 Order to Cash
ADP/Taxware- Enterprise Order to Cash, Procure to Pay- 3.5 Order to Cash
Thomson Reuters/Sabrix Order to Cash, Procure to Pay
Validated Partners
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CCH, a Wolters Kluwer business Order to Cash- Procure to Pay slated for validation April 2012
Contact Vendor for support- For older versions Vertex/Taxware, see 1335680.1 for link to
implementation guide
How To: R12: What versions of Vertex, ADP/Taxware and Thomson Reuters/Sabrix are validated with E-Business Tax (EBTax) [ID 465260.1]
E-Business Tax Engine standard package integration (Pre-bundled) Integration and Configurations:
Licensing required Auto Upgrade of existing server-side version if existing, and certify if
necessary the more recent versions (compared to CD versions) Setups may include
Install scripts, profile options, lookup codes (tax exemption reasons), provider-specific tax regimes and taxes, client-side tax software, load rates, setup tax
Third Party Tax Integration
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specific tax regimes and taxes, client-side tax software, load rates, setup tax accounts (liability), turn-on address validation (make sure before creating new addresses), jurisdiction codes, validate/test provider implementation (test cases).
Business Processes: Service Provider Codes definitions (Vertex=Geocodes,
Taxware=Jurisdiction Code) Handling Exemptions Reconciliations and Procedures
Regime to Rate Flow
Integration for current rates, and location based tax controls
Tax Relationship Flow - Detail
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TAX MANAGEMENT REPORTING
Single reporting solution to address complex global tax requirements from P2P transactions in a summary format of tax information from AR, AP and the GL.
Tax Extract copies the data to the interface tables Use Oracle Reports, XML Publisher, or RXi tools to
Tax Reporting Ledger
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Use Oracle Reports, XML Publisher, or RXi tools to specify which data columns to use and what format you want.
TRL supports Deferred Output Tax Register, Recoverable/Non-Recoverable Tax Register, Single Cross Product Tax Register, Standard Input and Output Tax Registers
Common Report Parameters:- Reporting Level (multi-org access)- Reporting Context (reporting level=ledger, OU, etc)- Company Name- Accounting Status (accounted, unaccounted, both)- Currency- GL Date
E-Business Tax Reporting Setups and Programs
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- GL Date- Transaction Date
XML Publisher Reports generation
Customers with 0 VAT and no VAT Registration Number
Financial Tax Register Intra-EU Audit Trail Report Tax Received
E-Business Tax Reports - Examples
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Tax Received Tax Reconciliation/ by Taxable Account Tax Register Tax Audit Tax-Only Open Invoices Report
EMEA VAT reporting: Oracle Financials for Europe, using E-Business tax data extracts to retrieve VAT for EMEA.
EMEA VAT reports are XML reports Latin America Tax Reporting: Makes use of the
Latin Tax engine for country-specific reports
E-Business Special Tax Reports
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Latin Tax engine for country-specific reports Asia Pacific Tax Reporting: Makes use of both
Payables and Receivables tax transactions for reporting requirements
Some Asia Pacific Tax Reports are XML reports
TAX SIMULATOR WHAT IF
Ability to test tax changes and rules Test bed for entering POs, Invoices, Invoices
matched against POs integrated with Tax Lines Interface
Create What-If scenarios on tax calculations
Simulation Key Functionality
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Create What-If scenarios on tax calculations without affecting environment with real transactions
Ability to enter transactions with fewer validations to test your What-If scenarios
Simulation Example - Receivables
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UPGRADE FROM 11I
11i Tax codes become R12 Tax Classification Codes
Tax classification codes are entered on the transaction lines and the tax rate associated with the tax classification code is then applied to the
Tax Code Upgrade from 11i to 12
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the tax classification code is then applied to the transaction
Contact support to verify have latest scripts to upgrade 11i transactions to R12 with correct taxes and rates- Test changes to upgraded transactions
A tax regime is created for each operating unit defined in 11i. Tax regimes are named as 2 digit country code (from the Operating Unit Address) TAX, (ex: US-TAX) and hold the tax setup that has been upgraded
Regimes created for use with integration partners such as Taxware and Vertex have a slightly different naming convention and are typically upgraded as "US-Sales-Tax-101"
A Tax is created for each tax code A Tax Status is created for each tax code A Tax Rate is created for each tax code
What does this look like in Ebiz Tax
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A Tax Rate is created for each tax code Tax codes are created and stored in a lookup table as "Output" tax
classification codes for O2C and Input for P2P The tax regime has a "subscription" defined to the operating unit(s) where
taxes are to be calculated for the regime Country. A Tax "Rule" is then created as a "Direct rate rule". This simple rule hard-
codes the relationship between the tax classification code and the tax, tax status and tax rate. When a transaction is entered and the user picks the tax classification code, the direct rate rule automatically retrieves and associates each of these items to the transaction and does the tax calculation
Similar to tax codes except in a few key areas In both cases the user enters the tax
classification code The key difference is that the Direct Rate rule
that is created has additional formulas that are
Tax Groups
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that is created has additional formulas that are used to determine when each of the underlying tax rates should apply
Jurisdictions are migrated for these records and are associated to tax rates
Each Tax Rate will have an associated jurisdiction that includes the state, county and city/postal code
These jurisdictions are linked to geography
Locations Based Taxes
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These jurisdictions are linked to geography records that tie back to actual registered location in the TCA
As in 11i, Location based taxes calculate using the jurisdiction and do not require specific tax codes
After the upgrade, the system will set "Configuration Owner Tax Options" for each product and event class (e.g. Invoices, Credit Memo, etc). This will be set as "Standard Tax Classification Code" or STCC following an upgrade
Combined with the Direct Rate Rule that are created during the 11i upgrade result in a unique branch of code to be called when calculating taxes
What is the STCC?
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during the 11i upgrade result in a unique branch of code to be called when calculating taxes
R12 "Fresh" setup uses the "Determine Tax Regime" tax determination method not STCC
See MOS ID 1062897.1 Case Study: How to Switch From an Upgraded Tax Regime to a New Tax Regime -Canada HST example
In release 12, the tax location flexfield has been replaced by the TCA geography hierarchy
Geography and Tax validation must be reviewed and configured to meet organizational needs
Critical to configure address validation early in the upgrade process. Failure to do so will cause issues
Tax Location Flexfield
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upgrade process. Failure to do so will cause issues if any customer data is entered or imported. This is particularly relevant if migrating data from a non-Oracle legacy system into R12
State, County and City must all be defined in TCA for US-based setups where the organization taxes at all three levels
Exemptions are migrated and have much the same capabilities
In 11i - Exemption records linked to the customer or ship to
customer site record In R12
Exemptions
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In R12 - Exemption records tied to the Party or ship-to Party site
With the broader adoption of the TCA structure to include Vendors and Employees, this is an important distinction that should be noted if you define any custom reports or query base tables to report on exemptions
If the configuration owner tax options are set to STCC, users CANNOT- Create new tax rules - Modify or add to existing tax rules - Modify existing tax formulas - Newly implement partner integrations such as Vertex or
Restrictions on Migrated Setups
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- Newly implement partner integrations such as Vertex or Taxware
- Set up new tax groups- Patch 9723745 allows users to add new tax rates to an
existing tax rate (not create new rates). For example if a jurisdiction rate has changed from 5% to 6%, the old rate could be end dated and create the new rate
Upgraded Regime- Faster - Exemptions are regime specific so a new regime
means all new exemptions must be defined - Few changes for the end user
Pro/Cons for Upgrading or Fresh Implementation of Regimes
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Fresh Implementation- More flexibility to add/remove tax codes - 11i PL*SQL rules do not migrate - Able to automate many of the tax decisions through the
creation of tax rules
SUMMARY
E-Business Tax (EBTax) Information Center [ID 1117544.1] Information Center: Use E-Business Tax Release 12 and
later [ID 1336679.2]
EBusiness Tax Seed Data [ID 463001.1] Case Study: Setup R12 E-Business Tax (EBTax) for Canada:
Helpful Documentation
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Case Study: Setup R12 E-Business Tax (EBTax) for Canada: Includes 2010 HST Changes [ID 577996.1]
E-Business Tax For Oracle Purchasing [ID 464243.1] eBusiness Tax Release 12 Error Messages: Causes and
Actions [ID 744185.1] How to obtain debug logfile for R12 E-Business Tax (EBTAX)
[ID 417238.1]
Greater Efficiencies through automated processes Improved Consistencies utilizing global tax rules, allowing
the business to conform to governmental requirements both foreign and domestic.
Allowing Better Control of the decision-making process through increased global visibility of the enterprise
Summary Global Benefit
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through increased global visibility of the enterprise Ease of configurability and usage Ability to test/pre-determine taxable scenarios
Release 12 Books by Rolta Employees
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The Release 12 Primer Shining a Light on the
Release 12 World
The ABCs of Workflow for Oracle E-Business Suite
Release 11i and Release 12Available from Amazon.com,
Barnes & Noble (bn.com)Lulu.com
Questions?
Thank You !!
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Karen BrownfieldKaren.Brownfield@roltasolutions.com
Alyssa JohnsonAlyssa.Johnson@roltasolutions.com