|Oracle E-Business Tax Implementation Guide|
Part Number E13629-03
Oracle E-Business Tax provides a common model for setting up and using existing Release 11i tax data for tax determination and tax calculation. This includes tax data that was originally set up in Payables, Purchasing, Receivables, and Projects.
Note: This chapter discusses background information and user tasks that are required to manage migrated tax data using the E-Business Tax user interface. For a complete discussion of Release 11i data migration, please see the Oracle Applications Upgrade Guide: Release 11i to Release 12.
The E-Business Tax solution for Release 11i migrated data includes these features:
Migration of application-specific ownership of tax setup to the E-Business Tax shared ownership model for all Procure-to-Pay and Order-to-Cash transactions.
Migration of tax codes and rates (Payables tax codes and Receivables VAT taxes) to the E-Business Tax Regime-to-Rate flow.
Migration of existing tax codes and tax groups, and existing defaulting hierarchies, to E-Business Tax as tax classification codes.
Tax determination and tax calculation based on the tax classification code.
The Release 11i migration solution lets you begin using E-Business Tax according to your existing tax setup with a minimum number of changes. This solution allows for a gradual adaptation of the E-Business Tax setup and tax determination processes according to your needs. Once you complete the transition to E-Business Tax processes, you can disable the Release 11i migrated solution with no loss of service.
In Release 11i, each application owned and maintained its own tax codes and rates for use with its application-specific transactions. Because E-Business Tax provides a single source for all transactions for tax determination and tax calculation services, the ownership of the tax setup moves to the E-Business Tax shared ownership model. In this model all legal entities and operating units of the company can share the same tax setup, while individual operating units may need to own tax setup for specific requirements as defined by the tax authority.
Existing operating units with Release 11i tax setup migrate as party-specific configuration owners, with the operating unit owning the tax setup. If a Receivables or Projects tax setup contains location-based tax codes, then these tax codes migrate as part of the common configuration, with the global configuration owner owning the location-based tax setup.
If you designate an operating unit with migrated tax setup to use the subscription of the legal entity, you can still make use of the tax classification code model for tax determination and tax calculation. See: Tax Classification Codes in Oracle E-Business Tax.
In Release 11i, Payables held summary tax distributions and allocations without showing taxable amount details or tax line information. Procurement transactions did not carry explicit tax lines and distributions, and every transaction query was a recalculation.
In E-Business Tax, there are these improves to the management of transaction handling and display:
One single repository with detailed and fully-allocated tax lines.
Common single repository for tax distributions for Procure to Pay transactions.
Document level summary tax lines for Payables transactions.
Tax line and tax distribution IDs are stamped on Payables and Receivables tax lines for reconciliation with product transactions.
Tax line and tax distribution IDs from product transactions are carried to Subledger Accounting for account reconciliation.
Note: Tax lines existing on an 11i item line, that are migrated to R12 will be recalculated, however, no new tax lines can be added to the 11i migrated item lines.
In Release 11i, the application-specific tax code performed many tax-related functions. These included the tax type, tax rate, offset taxes, recovery rules, taxable basis determination, tax calculation, and maintenance of related tax accounts. The Receivables tax group let you combine tax codes to calculate multiple taxes on single taxable items. In keeping with the E-Business Tax setup, the functions of Payables and Receivables tax codes migrate to E-Business Tax records according to the E-Business Tax Regime-to-Rate model.
Note: For the Latin Tax Engine, tax regime codes are created based on the Tax Rule Set (global_attribute13) in AR_SYSTEM_PARAMETERS and taxes are created based on Latin Tax Categories. If you are using the Latin Tax Engine to calculate taxes, do not create new tax regimes and taxes, but continue to use the Latin tax categories, tax codes, and tax groups.
This table describes the major features of tax code migration.
|AP/AR Tax Codes||E-Business Tax Record|
|OU country + Tax Type||Tax Regime Code|
|Tax code name||Tax Code and Tax Rate Code (minus numeric identifiers)|
|All tax codes||Tax Status of value Standard|
|Tax rate details:
||Tax Rate record|
|Location-based tax rates||
|Tax account details:
||Tax Rate tax account record:
|Tax calculation details||Tax classification code|
|Tax group with tax compounding||
In Release 11i, you used the global descriptive flexfield to hold tax-specific information for Payables and Receivables transactions.
Release 11i global descriptive flexfield values migrate either as E-Business Tax entities or entity attributes. This table describes the migration of global descriptive flexfields to E-Business Tax.
|Global Descriptive Flexfield||E-Business Tax Destination|
|Tax Codes window||
|First and Third Parties||Attributes in party tax profiles, tax registrations, and party fiscal classifications|
|Items window||Product fiscal classifications|
|Payables Invoices window||Payables Invoices named columns|
|Payables Distributions window||Payables Invoice Lines named columns|
|Tax group with tax compounding||
Oracle E-Business Tax, Oracle Financials and Oracle Procurement Functional Upgrade Guide: Release 11i to Release 12
The migration of Release 11i tax codes and related tax setup to E-Business Tax is designed such that after migration you can arrive at the same tax result for the same transactions. Release 11i tax codes migrate to E-Business Tax as tax classification codes. The tax classification code is a tax determining factor under the Transaction Input Factor determining factor class. You can use tax classification codes and the Direct Tax Rate Determination rule type to set up a tax determination model similar to Release 11i. The elements of the direct tax rate determination model are:
Tax classification code setup - Payables and Purchasing tax codes migrate as input tax classification codes under the ZX_INPUT_CLASSIFICATIONS lookup type. Receivables and Projects tax codes migrate as output tax classification codes under the ZX_OUTPUT_CLASSIFICATIONS lookup type.
You can use these lookup types to define additional tax classification codes according to your requirements.
Tax classification code assignments - E-Business Tax replaces the Release 11i tax code assignments to products, parties, and application system options with tax classification code assignments. You can update these tax classification code assignments for the customers, suppliers, and other entities involved in your transactions.
Defaulting hierarchy - Set up a defaulting hierarchy for tax classification codes similar to the Release 11i Payables and Receivables tax code defaulting hierarchies. You can update existing migrated tax classification code hierarchy assignments and create new assignments.
Tax conditions - Set up tax condition sets using the TAX_CLASSIFICATION_CODE determining factor and condition values equal to the tax rate codes that you need.
Direct Tax Rate Determination rules - Set up tax rules under the Direct Tax Rate Determination rule type to determine tax applicability, tax status, and tax rate.
At transaction time, E-Business Tax uses the tax classification code that is defaulted to the transaction line to determine the tax status and tax rate for applicable taxes. You can also manually enter a tax classification code on the transaction line.
Setting Up Lookup Codes
Using Application Tax Options, Oracle E-Business Tax User Guide
Using Tax Classification Codes, Oracle E-Business Tax User Guide
Setting Up Tax Determining Factor Sets, Oracle E-Business Tax User Guide
The automated migration process converts Release 11i tax data to E-Business Tax tax configuration data. Once the automated migration process is complete, you can begin using your migrated tax data in E-Business Tax without any additional modifications or updates.
Over time, you can apply incremental updates and modifications to migrated tax data in order to gradually move from the Release 11i tax code model to the E-Business Tax regime-to-rate and tax rules model. This gradual change can include:
Replace tax classification codes with tax statuses and tax rates, and inactivate the corresponding defaulting hierarchy.
Use tax rules, for example, for status and rate determination and tax recovery.
Use the TCA geography hierarchy.
Create tax setup data under the Global Configuration Owner, to allow future sharing of tax content.
As you become familiar with E-Business Tax setup tasks, you can create new tax data directly in E-Business Tax, according to your requirements.
This table provides guidelines for using Release 11i tax data in E-Business Tax, and indicates, where applicable, ways to increase your use of E-Business Tax features for your tax determination needs.
|Feature||Release 11i Steps||Release 11i Usage in E-Business Tax||Using E-Business Tax|
|Tax Code Defaulting Hierarchy||Define the defaulting hierarchy using system options and select a tax code for each source.||Update/define the defaulting hierarchy using Application Tax Options and select a tax classification code for each source.||Replace the defaulting hierarchy with tax rules for specific tax regulations.|
|Tax Jurisdictions||Define location values under a location structure and associate each value with a tax rate.||Update/define location values and rates under:
||Define multiple tax rates for a jurisdiction, for different statuses and rates.|
|Tax Compounding||Define compounding in tax groups.||
|Tax Inclusive Settings||
||Update/define Standard Inclusive Handling, Standard Non-Inclusive Handling, and Special Inclusive Handling at the tax regime, tax, and tax rate levels.||
||Use Configuration Owner Tax Options for a combination of configuration owner and application event class to define a rounding precedence hierarchy for deriving the rounding level and rounding rule to use on a transaction.|
|Tax Profile Options||Set tax-related profile options under Payable, Receivables, and Cash Management.||Set tax-related profile options under E-Business Tax.||
||Use Configuration Owner Tax Options for a combination of configuration owner and application event class to define specific override settings.|
|Tax Registrations||Define separate single tax registrations for:
||Backward compatibility for:
||Set up tax exemptions as part of a third party tax profile for a customer/customer site and tax regime, and optionally for a tax, tax jurisdiction, tax status, and tax rate.
Note: Exemptions are applicable only at the party site level for ship-to. Bill-to exemptions are applicable only when the exemption is defined at that party level.
||You can also set up tax exceptions for non-Inventory items, and optionally apply them to tax jurisdictions, tax statuses, and tax rates.|
|Tax Formulas||Define PL/SQL for tax codes, and only for taxable basis formulas.||Define tax formulas for tax regimes, or tax regime and tax.||Define several formula types, including taxable basis, calculate tax amounts, and tax compounding.|
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