tax setup steps r12.1.2

SETUP TAX CODES IN R12.1.2 May 26, 2010

How to Setup Taxes in R12.1.2

Prerequisite:

Go To: Tax Manager > Tax Configuration > Tax Regime>Home> Create First Party Legal Entity and Establishment

1: 1.1 Check the “Create First Party: Legal Entity & Establishment”

Click on Got Task:

1 Made By : Mohamed Elhamy | Tax Codes

‐ Enter the country name and click go


Step 1: Create the Tax Regime

The tax regime is the highest/ultimate level that taxes are rolled up to, typically, a specific country. In this step, the Controls and Defaults must be set. The Control section outlines 4 options. Once the tax is made live, the control options cannot be changed.

The Defaults section will default as applicable to the tax, status, jurisdictions, and tax rate levels, but they can be changed at each level.

Go To: Tax Manager > Tax Configuration > Tax Regime

1.1: Press On create



1.2:

- Enter Tax regime Code & Name the same

- Entry Regime level: Country

- Entry Effective date: old date EX: 1-Jan-2000

- Check Boxes: Allow Tax Recovery - Allow Tax Exemptions - Allow Override and Entry of Inclusive Tax Lines

- Allow tax inclusion: standard inclusive handling


- Default recovery rate: immediate


1.3:


- Click Continue Button to Assign Party Name which is the “Legal Entity Name”


1.4:

- Go To: Create Tax Authorities Party Tax Profile from (Parties TAB)

-- Choose party type: First party Legal Entity




- Click Update Tax Profile Yellow Pencil to assign the Tax Regime Code through “Configuration Option” tab Button – Note you will find it already Assigned and that step for confirmation only


1.5:

- Go To: Create Tax Authorities Party Tax Profile in Home page

- Choose party type: Operating Unit Owing Tax Content


- Choose Party name: As shown


‐ Click on Create Tax Profile Link


- Go to “Configuration Option” Button to assign the Tax Regime code with the “Operating Unit Name”



Go to Check the Tax Regime Code to verify the Configuration Option to view the assignment of the Legal Entity Name & the Operating Unit Name to the Tax Regime Code


Step 2: Create the Tax

One Tax Regime can have multiple taxes defined under it. The tax type, e.g. sales, VAT, use, is determined when the tax is set up. Taxes can be set up by geography type, which allows for taxes at different levels... For example, in the US, there is can be a tax levied at the State level, one at the County level, and one at the City level.

Go To: Tax Manager > Tax Configuration > Taxes

2.1:

- Enter the required fields:

Tax Regime - Configuration Owner - Tax Source …… etc


‐ In configeration owner : choose Globale Configeration Owner to make the tax aviliable on both of legel entity & Operating Unit


NOTE: DOES NOT MARK ON Check Box (Make Tax Available for Transaction) till you complete the remaining setup steps as We Going To DO


NOTE: Important Do Choose the check box ALLOW PRIMERY RECOVERY RATE determination rules that will make duplicate tax rule and will give you error in calculation tax


NOTE: THAT THE DEFAULT RECOVERY RATE CODE WILL BE DEFIEDN LATER SO YOU WILL CHOOSE IT WHEN YOU ARE GOING TO FINISH AND MAKE THE TAX AVAILIABLE

Then click on TAX ACCOUNT: To determine the liability account of the tax

‐ Choose TAX code regime ‐ Choose TAX name


‐ Choose your ledger then press on create



‐ Choose the liability account it’s mandatory


Step 3: Create the Tax Status

This is used primarily in the UK to define reduced rate, zero rate, etc. taxes. All taxes must have at least one tax status defined, and one of those must have the "Set as Default Status" option checked.



‐ Complete the data and press apply


Step 4: Create the Tax Jurisdiction

A tax jurisdiction is a geographic area for which a tax is levied, e.g. Colorado, California, Florida, El Paso County, and Los Angeles.

There must be at least one Tax Jurisdiction for each Tax Status with the "Set as default Tax Jurisdiction" selected and the "Default Effective Date" supplied.



‐ Complete the data as shown


Associated Juristification tax rulesConfiger it after you difine tax rate and you have to define ti to every tax rate you will define

‐ Click on Apply ‐ Click on Tax Accounts : Choose the ledger you created and enter the liability account ‐ Click on Apply

Step 5: Create the Tax Rate & Recovery Rate

Create specific tax rates to be applied for geography. There must be at least one default tax rate. The tax accounts are also set up in this step.

5.1: Go To: Tax Manager > Tax Configuration > Tax Recovery Rate

For the Non Recovery tax recovery rate to make it available in tax accounts for the non recovery rate after u define it put the AP ACCRUAL ACCOUNT

- Complete Data As Shown


- Check on tax accounts that it’s right from (TAX ACCOUNTS)


- After Finish Click On Apply

5.2: Go To: Tax Manager > Tax Configuration > Tax Rate

For the Non Recovery rate to make it available in tax accounts for the non recovery rate after u define it put the AP ACCRUAL ACCOUNT

- Complete the data

- Define the tax accounts


- After Finish Click On Apply


Step 6: Define Tax Rules

Prerequisite:

1- Enter a Tax Determining Factor Set and Name and Click Create to Assign it later to the rules ( And this will Be done to each Regime Code you will Made ( If you Make more than one Regime ) but if you are going to make more than one regime ( You have to check on the check box named : Allow Cross Regime Compounding )

2- DO this proceed to every rate you will define

A) Go To : Tax Manager > Advanced Setup Options > Determine Factor Set



‐ Insert Determining Factor Class: 'Transaction Input Factor' ( Data Entry From Your Choose ) ‐ Insert Determining Factor Name: 'Tax Classification Code' ( Data Entry From Your Choose ) ‐ Choose Your Tax Regime ‐ Choose Your Ledger ‐ Set Usage Choose: Tax Rules ‐ In Determining Factor Class Choose : Transaction Input Factor ‐ In Determining Factor Name Choose : Tax Classification Code ‐ After Finish Click On Apply

B) Go To : Tax Manager > Advanced Setup Options > Tax Condition Set

‐ Enter You Tax Condition Name ( It refers To The Percentage of the Tax )


‐ Enter Name


‐ Choose The Determine Factor that you Made ‐ Choose Ledger ‐ Choose Country ‐ Click On Continue

‐ Choose the Operator : Equal To ‐ Choose the Value/From Range: Name of your regime And it can be Override ‐ Then Click On Finish

3- Make This Step to Assign the Rules To Every Tax Regime you Made

‐ Select Your Legal Entity ‐ Select Tax Regime Code


‐ Select Tax



‐ Click On GO to show the rules set


‐ Make all the rules for each application are you going to use from event class

Set defaults for the following rule types:

Some definitions needed to know it before going to tax rules:


For every application AP & AR & PURCHASING choose: Event Class and then choose application and then choose the event that you the tax to effect on but for SALES ORDER in the EVENT CLASS CATEGORY CHOSSE : TAX EVENT CLASSE & EVENT CLASSE : SALES TRANSACTIONS


Direct tax rate determination:

For Example :

‐ Choose Event Class Category :Event Class ‐ Choose Application: Purchasing ‐ Choose Event: Purchase Order Agreement


‐ Complete Data As shown


Place of Supply ( Use to assign the tax to the supply place )

‐ Complete the data as Shown


‐ And click Save



Determine Tax Apllicabiltiy



Determine tax Registration



Taxable Basis


Countinue the same for the all rules

Step 7: Make the Tax Live for Transactions

Return back to the Tax created in step 2, and select the Make Tax Available for Transactions option. If it is not available to be checked, the tax is not set up correctly. Any missed setups will need to be completed before this can be setup.


‐ Make it Available for transactions



‐ Choose the recovery rate


‐ The Last step to after making the tax avaliable for transactions you Default and controls window to make the tax you defiend avaliable on application and the applications can use this tax in the transactions

‐ Make the definations one time for legel entity and seconde time operating unit

‐ Do this step for every appliaction you entend to use tax on it


GO TO : Default and Controls > Configration TAX options


After Finish this: GO to: Default and controls > Application Tax Options


To arrange the default hierarchy for the tax


After Finish this: GO to: Default and controls > Application Tax Options


To make the Tax Available for the country Default


After All That

You ready to use tax on application




And here is Some Profile options you may need to control tax:

eBTax: Allow Ad Hoc Tax Changes The eBTax: Allow Ad Hoc Tax Changes profile option controls which users can make Ad hoc tax changes on the transaction line, such as selecting a different tax status or tax rate. The changes that a user can make also depend upon the details of the applicable tax setups. If the tax rate associated with a tax has the Allow Ad Hoc Rate option enabled, then users can override the calculated tax rate on the transaction line. eBTax: Allow Manual Tax Lines The eBTax: Allow Manual Tax Lines profile option controls which users can enter Manual tax lines on the transaction for the tax setups that allow this update. If the tax configuration has the related options enabled, then users can enter manual tax Lines on the transaction for the applicable tax. The related tax setups are: • Taxes: Allow Entry of Manual Tax Lines • Configuration Owner Tax Options: • Allow Entry of Manual Tax Lines • Allow Manual Tax Only Lines eBTax: Allow Override of Customer Exemptions The eBTax: Allow Override of Customer Exemptions profile option controls the display Of the Tax Handling field on the transaction line. You use the Tax Handling field to Apply and update customer tax exemptions to transactions. If you set the eBTax: Allow Override of Customer Exemptions profile option to Yes, you Must also complete the related setups for tax exemptions. eBTax: Allow Override of Tax Classification Code The eBTax: Allow Override of Tax Classification Code profile option controls whether Users can update the tax classification code that is defaulted to the transaction line. E‐Business Tax defaults the tax classification code to the transaction line according to The defaulting hierarchy defined for the operating unit and application. eBTax: Allow Override of Tax Recovery Rate The eBTax: Allow Override of Tax Recovery Rate profile option controls which users Can enter or update the calculated tax recovery rates on the transaction for the tax Recovery rate setups that allow this update. If the tax recovery rate associated with a tax has the Allow Ad Hoc Rate option enabled, Then users can override the calculated tax recovery rate on the transaction. The meaning of ad hoc entry of tax recovery rates differs according to the source Application for the transaction: • Payables ‐ The user can only select another previously defined recovery rate for the Tax. • Procurement ‐ The user can either select another previously defined recovery rate For the tax or enter a new recovery rate.



eBTax: Inventory Item for Freight (Oracle Order Management only) The eBTax: Inventory Item for Freight profile option lets Order Management use an Inventory item defined as Freight on Receivables transaction lines. You can use the Freight Inventory item to control the tax rate on taxable freight amounts. The values for this profile option are: • Freight Charge ‐ The freight Inventory item applies to external Receivables Transactions. • Freight for Intercompany ‐ The freight Inventory item applies to internal Receivables Transactions only. You must also set the eBTax: Invoice Freight as Revenue profile option to Yes. eBTax: Invoice Freight as Revenue (Oracle Order Management only) The eBTax: Invoice Freight as Revenue profile option controls whether to consider Freight amounts as taxable line items. Set the eBTax: Invoice Freight as Revenue profile option to yes, if you are required to Tax freight amounts. The freight amounts entered in the Order Management Ship Confirm window are then passed to Receivables transactions as taxable line items. If you set the eBTax: Invoice Freight as Revenue profile option to Yes, you must also set The eBTax: Inventory Item for Freight profile option. eBTax: Read/Write Access to GCO Data The eBTax: Read/Write Access to GCO Data profile option controls whether users can Set up tax configuration data for the global configuration owner. If you set the eBTax: Read/Write Access to GCO Data profile option to Yes, then the Setting Up Applications for Oracle E-Business Tax 2-7 Applicable users can set up taxes and related configuration data for the global Configuration owner. Legal entities and operating units can then share the global Configuration owner tax setups. See: Configuration Options in Oracle E‐Business Tax, Oracle E-Business Tax User Guide For more information. eBTax Taxware: Service Indicator The eBTax Taxware: Service Indicator profile option indicates whether taxes are Calculated on service or a rental transactions. The Taxware API parameter that accepts this profile option value is JurLink.ServInd. The values for this profile option are: • Service ‐ Service transaction. • Rental ‐ Rental transaction. • Space ‐ Non‐service transaction. eBTax Taxware: Tax Selection The eBTax Taxware: Tax Selection profile option indicates whether Taxware uses Jurisdiction‐level jurisdiction codes to calculate taxes. The Taxware API parameter that accepts this value is TaxSelParm of Taxfn_Tax010. The values for this profile option are: • Tax only ‐ Taxware calculates tax based on the ship‐to address only. • Jurisdiction and Tax ‐ Taxware calculates tax based on all jurisdiction information, Including ship‐to, ship‐from, point of order origin (POO), and point of order



acceptance (POA). eBTax Taxware: Use Nexpro The eBTax Taxware: Use Nexpro profile option indicates whether Taxware uses the Nexpro functionality. If you enable this option, additional configuration is required on The Taxware side of the integration to achieve nexus‐based taxation. The Taxware API parameter that accepts this value is TaxLink.UseNexproInd. eBTax Vertex: Case Sensitive The eBTax Vertex: Case Sensitive profile option e ables case‐sensitive searches of Vertex n

Tax calculation data. The default value is yes.

tax setup steps r12.1.2

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