R12 eBusiness Tax

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R12 E-Business Tax

Laurie [email protected] Principal Consultant

Impac Services


Agenda

• E-Business Tax and Tax Terms

• R12 Tax Structure

• Upgrade/Migration Path

• Options

• Creating a New Structure


What is E-Business Tax?

• New Module in Release 12

• New Tax Engine that automates tax calculation across all Order to Pay and Procure to Pay applications

• Use E-Business Tax to set up and maintain your transaction tax requirements in all geographic locations where you do business


R12 Tax Terms• Tax Regime

• Tax

• Tax Status

• Tax Jurisdictions

• Tax Codes/Rates

• Tax Recovery Rates

• Tax Rules

• STCC


R12 Structure• Canadian Structure

GST AND HST

GST HST

GST STD GST EXEMPT HST STD HST EXEMPT

GST EXEMPT HST EXEMPTBC HST HST STD

Tax Regime

Tax

Tax Status

Tax Rate

GST STD


R12 Structure• United States Structure

US SALES TAX

SALES TAX

STANDARD

Tax Regime

Tax

Tax Status

Tax RateWA RATE OR RATECA RATE ID RATE


Upgrade and Migration

What happens during Migration (R11 to R12)

• A tax regime was created for each operating unit defined in 11i. These tax regimes, named as 2 digit country code (from the Operating Unit Address) - tax, (ex: US-TAX) hold the tax setup that has been upgraded.

• Tax was created for each tax code

• Tax Status was created for each tax code

• Tax Rate was created for each tax code

• Tax codes are created and stored in a lookup table as "Output" tax classification codes

• The tax regime has a "subscription" defined to the operating unit(s) where taxes are to be calculated for the regime Country.


Upgrade and Migration

• A Tax "Rule" is created as a "Direct rate rule". This sets the relationship between the tax classification code and the tax, tax status and tax rate.

• STCC:After an upgrade, the system will set "Configuration Owner Tax Options" for each product and event class (An event class would be Invoices, Credit Memo, etc). This will be set as "Standard Tax Classification Code" or STCC following an upgrade. This, combined with the Direct Rate Rule that is created during the 11i upgrade result in special code to be called when calculating taxes.

• R12 New or Fresh setup will use the "Determine Tax Regime" tax determination method.


Migrated R11 Structure

US SALES TAX

STANDARD

Tax Regime

Tax

Tax Status

Tax RateWA RATE OR RATECA RATE ID RATE

OR RATEWA RATE ID RATECA RATE


Why Move to R12 Structure?

R12 Upgraded Structure has limitations, including:

• Restrictions on creating new tax rules

• Restrictions on Modifying or adding to existing tax rules

• Restrictions on creating new tax jurisdictions

• Restrictions on creating new taxes

• You cannot modify existing tax formulas

• You cannot implement partner integrations such as Vertex or Taxware


Why Move to R12 Structure?

• You can’t set up new tax groups

These limitations often make it difficult to use an upgraded a tax regime for extended periods of time. And, tax laws change or your business may expand into new areas covered by different tax laws.

Benefits/Reasons for setting up fresh structure:

• More flexibility to add/remove tax codes • Able to automate many of the tax decisions through the creation of tax rules • Single Source/Shared Module• All Legal Entities and Operating Units of the company can share the same tax setup.• Individual Operating Units can still ‘own’ tax setup for their specific requirements as needed or as defined by the tax authority.


Option 1-Modify Upgraded Structure


Option 2 – Create New Structure

• End-date the upgraded regime and replace it with a new/freshly configured Regime.

• Option 2 is the recommended method.


How To Create a New Structure

Steps for Creating a new Structure:

Step 1 – Update the Tax Profile

Step 2 – Set up the new Regime to Rate Flow

Step 3 – Set up New Tax Rules

Step 4 – Update the Configuration Tax Options

Step 5 – Update Parties (Suppliers and/or Customers)

Step 6 – Test, Test, Test!


Pre-Requisites

Setting up the Applications for E-Business Tax:

1. Setting Up Tax Users2. Setting Profile Option Values 3. Setting Up Lookup Codes 4. Setting Up TCA Geography Hierarchy 5. Setting Up Legal Entity6. Setting Up Operating Units7. Setting Up Accounts and Accounting Information8. Setting Up TCA Classifications9. Setting Up Oracle Inventory


TCA Architecture


Step 1

Update the Tax Profile


Step 1


Step 2-Create A RegimeTax Regime:


Step 2 – Create a Regime

Assign Regime to a Party


Step 2 – Create a Tax


Step 2 – Create a Tax


Step 2 – Create a Tax Status


Step 2 – Create a Jurisdiction

OR Jurisdiction



WA Jurisdiction



ID Jurisdiction


Step 2 – Create a Tax Rate









Idaho-6%


Step 3 – Create a Tax Rule

Before



Determine Place of Supply



After


Step 3 – Make Tax Available

Tax


Step 3 – Regime to Rate Flow

Completed Tax Structure – Regime to Rate Flow


Step 4 – Application Options

• Last – change the Tax Regime from STCC to Direct Rate by End-dating the old Configuration Owner and creating a new Configuration Owner record.


Step 4 – Application Options

Create the new Configuration Owner record.


Step 5 – Update Party Records

• Optionally, Call up specific supplier and/or customer records – and assign them as exempt or as a ‘no-rate’ code.


Step 6 – TEST, TEST, TEST!

AR – Idaho Customer – 6% Tax Rate







AR-Oregon customer – 0% Tax Rate







AP – Washington Supplier – 9.5% Rate





Oregon Supplier -0% Tax Rate




Questions???


R12 E-Business Tax

Laurie [email protected] Principal Consultant

Impac Services

Documents

R12 eBusiness Tax