Overview of Tax
You can set up Receivables to use one of three basic types of tax: Value Added Tax (VAT), US Sales Tax, or Canadian Sales Tax.
VAT
Value Added Tax (VAT) is imposed on the supply of goods and services paid for by the consumer, but collected at each stage of the production and distribution chain. The VAT charged on a customer invoice is called Output Tax. Any VAT paid on a vendor invoice is called Input Tax. The amount due each period can be described as follows:
Amount Due = Output Tax - Input Tax
Receivables provides a comprehensive solution for VAT reporting using standard and country-specific reports.
For a step by step description of how to implement Value Added Tax, see: Implementing Value Added Tax.
Sales Tax
Sales tax in Receivables is based on the destination of the supply of goods or services. The calculation of sales rates is automatic, and is based on the state, county, city, and zip code of your customer's address and the tax rates assigned to each of these components. You can override any tax rate through customer and product exemptions and you can compile periodic sales tax returns using the US Sales Tax Report.
You can import address validation and sales tax rates from your tax vendor and use the Tax Vendor Extension to integrate external tax calculation programs with Receivables and Oracle Order Entry. See: Importing Data From Your Feeder System and Implementing the Tax Vendor Extension.
For a step by step description of how to implement sales tax and the setup windows specific to a sales tax system, see: Implementing US Sales Tax.
Canadian Sales Tax
Canadian sales taxes exist at both the federal and the provincial level. Sales tax at the federal level, which is referred to as Goods and Services Tax (GST), is standard across Canada. Some goods and services are exempt from GST.
Provincial Sales Tax (PST) is levied by each Canadian province except Alberta and the Territories. Each province has its own legislation which determines the PST rate and decides which goods and services are exempt from PST. The appropriate Provincial Sales Tax is based upon the destination of the goods or services, not their origin.
For a step by step description of how to implement Canadian Tax, see: Implementing Canadian Sales Tax.
See Also
Setting Up Tax: An Overview
Calculating Tax
Invoice Tax Payables Options.
Defining Purchasing Options
Setting Up a Multi-Organization Enterprise (Multiple Organizations in Oracle Applications Manual)
