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Harmonise VAT with ERP and

eliminate

Oracle e-Business Tax Specialists

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We provide an unparalleled service when it comes to Oracle Financials eBTaxintegration, understanding the limits of the eBTax module but more importantly,

when those limits are reached we know how to work around the issue with proven

solutions so we can always meet your needs.

When you have invested a significant sum in anOracle R12 or Fusion solution you want to avoidunwelcome surprises resulting from a VAT audit.Bearing in mind that the consequences for non-compliance could involve heavy fines in additionto interest on unpaid VAT, you would be facedwith a potentially huge yet avoidable - cost and

embarrassment to your business.You depend on your ERP system to ensure that thecorrect VAT treatment of the transactions has beentaken into consideration and also ensuring optimalreporting capabilities. In our experience however,standard Oracle ERP systems do not necessarilydetermine all VAT transactions correctly.We often find:

a lack of control over the business processesinvolved in VAT imposition

a failure to implement the correct tax logic with

respect to the relevant parts of a VAT transactiona manual approach when a fully automatedsolution is possible

The consequences can be expensive both in terms oftime spent dealing with tax audits and the inevitablecosts incurred.

There is a way to ensure that VAT is aligned withOracle ERP and have the peace of mind fromknowing that your VAT solution is the best it can be -by allowing eBiz Answers to conduct a system audit.

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Consider some of the key issues which an audit would

be able to address.

It is a maxim that we reduce user error by reducinguser interaction, however the vast majority of theclients we visit have a manual VAT tax solution inplace. This is the process of defaulting the tax ratecode from sources including items or customer sitesand then allowing the end user to override the tax ratewhether it is correct or not. Allowing an untraineduser to potentially select a wrong tax rate could goundetected until a VAT audit! Any solution that relieson user intervention to ensure the correct tax is almostcertainly exposed to error. With a complex tax situation,

do you want to rely on the under-qualified payablesclerk deciding if the tax rate should be exempt, zerorated or out of scope? Instead, a solution should applyadditional determining factors in combination with theuser-entered data to determine the tax. In this way, theonus of the determination is on the tax logic installedand not on the decision of the user.

An effective Oracle indirect tax solution should be fullyautomated with minimal manual intervention. This isparticularly true for inter-company and receivables

transactions where all the information is at hand tocorrectly determine the tax. For payables transactionsit is often impossible to be 100% automated aspurchases may be using an exempt or reduced rateor there could be VAT rounding differences. Tax logicshould still be used to determine the majority of thetax rates with only the exemptions requiring any sort ofcontrolled manual intervention.

Many poor solutions will default a tax rate from a staticsource, for example, from the customer site. Thisposes problems. First, defaulting permits only one

value to be set and the tax rate could be different forthe same customer under varying conditions (sale ofgoods or services). A further issue arises when the taxrate changes and a new one must be used to replace

it, with every location where the old tax rate was storedhaving to be updated manually.

Missing, poor or inaccurate configuration is a frequentissue. A typical example is that the seeded EMEAVAT set up has not been carried out so all the richreporting capabilities designed for Europe are simplynot available. Often, configuration may have beenperformed in an unprofessional way that not only failsto meet all current requirements but renders thesolution extremely difficult to maintain or expand.

The Oracle Tax module is vast and extremely complexand you dont know what you dont know is oftenthe case when VAT in Oracle is set up. The consultantimplementing it may have limited knowledge ofthe eBTax module and this coupled with a limitedunderstanding of VAT legislation results in a poorsolution. A user who then has to maintain the taxor enter transactions will only know what they havebeen told - often by the consultant - and simply hasto accept it regardless of whether it is right or wrong.Who and how can they challenge this?

If your VAT accounting is based on an upgraded oracle11i solution it is most likely that the structure is goingto be impractical, difficult to maintain and even morechallenging to try converting it into a fully automatedsolution. In almost every case the tax rates have beenset up on a country-by-country basis rather than witha structure that is designed to be global. It is better tohave a consistent design for your tax structure usinga common naming convention and recycling tax rulesto ensure ease of maintenance and issue resolution.These are all matters that can be highlighted in ourreview.

We recognise that some customers simply dont wantan automated solution and while there is a higher risk,a manual process can remain in place.

With a wrongly or a misaligned implementation of the VAT system, companies run the risk of making errorsthey are not even aware of until they are discovered by the tax authorities. VAT compliance risk in the ERPsystem can come from several different sources including:

Changes in business structuresGrowth through mergers and acquisitions andgeographic expansionRegistrations to new country VAT regimes

Changes in logistics flowsLack of tax training to new usersPolicy changes by tax administrationsLegislation changes at jurisdiction or EuropeanCommission levels

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Should you wish to contact us to discuss a VAT audit, Oracle R12 and Fusion tax configuration or any other

eBTax related issues then please contact:

EU: +44 208 123 2833 US: +1 818 435 6435 E: info@ebizanswers.net www.ebizanswers.net

Oracle e-Business Tax Specialists

Analysis of existing set up of all tax regimes

Review of existing VAT issues(resolution if appropriate)

Understanding of user requirements

Review of requirements from modules where taxcan be influenced: Projects, Depot Repair, OracleContracts, etc.

Invoice formats and VAT

VAT reporting (including country specific reportssuch as the European Sales Listing)

Interface review to see how the tax is importedinto and out of Oracle

20-plus page report available within 72 hours ofthe audit

Analysis of existing set up of all tax regimes

Review of existing VAT issuesresolution if appropriate

Understanding of user requirements

Review of requirements from modules where taxcan be influenced: Projects, Depot Repair, OracleContracts, etc.

Invoice formats and VAT

VAT reporting including country specific reportssuch as the European Sales Listing

Interface review to see how the tax is importednto and out of Oracle

20-plus page report available within 72 hours ofthe audit

Our System Indirect Tax Audit will analyse your existing solution and clearly identify what you have andwhat is missing, but most importantly: propose practical ways in which you can move forward. We will takea completely unbiased approach to this task, taking into consideration all relevant factors before makingrecommendations. Furthermore, we can work with your tax partner to ensure that the VAT on all transactionsis being correctly determined. Our tax audit will comprise the following:

For the first time you will have an accurate overview of your existing set up, potential future issues that youmay face will be flagged up and recommendations provided on how to take your VAT solution to the next level.Above all, you will have the reassurance of the advice and support required to reinforce the concepts withinyour business and to implement necessary changes.