The legal entities and operating units in your company are each subject to specific sets of tax regulations as designated by the tax authorities where you do business. Often these tax regulations apply to all parties of the company doing business under a certain jurisdiction. In other cases, individual parties may be subject to special regulations or receive special dispensations or rates.
The tax regimes that you create identify the taxes and the set of regulations that make up each tax requirement. Configuration options identify the relationships between parties and tax regimes to reflect the tax requirements of each party.
Use configuration options to associate legal entities and operating units with their applicable tax regimes. The association between a party and a tax regime includes these definitions:
Configuration for Taxes and Rules - The setup that the party uses for taxes, tax statuses, tax rates, tax recovery rates, and tax rules.
Configuration for Product Exceptions - The setup that the party uses for product tax exceptions.
Service Subscriptions - The external service providers that the party uses in place of Oracle E-Business Tax to provide tax calculation services for US Sales and Use Tax. See: Setting Up Service Subscriptions for more information.
Your tax setups reflect the tax regulations that a party is subject to in each separate tax jurisdiction. You can apply the tax setups that you create to the entire company, or you can let individual parties within the company supplement parts of the tax setup to fulfill specific requirements. You can also let a party create and maintain its own tax setup. When a party supplements tax setup, or creates and maintains tax setup, it becomes a configuration owner of this setup. Otherwise, the party shares the tax setup of the global configuration owner.
E-Business Tax provides the global configuration owner to represent ownership of all tax setups at the company level. The configuration options that you set for each party/regime combination are in relation to the global configuration owner. These options are:
Common Configuration - The party uses the company tax setups for the applicable regimes. All parties with a Common Configuration option share the same tax setup.
When setting up taxes, tax details, and configuration owner tax options, the global configuration owner represents any party with a Common Configuration. Authorized updates to the tax setup affect all users of the Common Configuration.
Common Configuration with Party Overrides - The party uses the company tax setups for the applicable regimes, but with the ability to change, or override, portions of the company tax setup with tax setup specific to the party's requirements.
Party-Specific Configuration - A legal entity or operating unit party does not share the company tax setup, but instead creates and maintains its own tax setup for the applicable regimes. In this case, only this party can use the tax setup it creates.
You may need to analyze the specific tax requirements of each legal entity and operating unit in your company for each tax regime and country, to determine how to designate each party as a configuration owner. Tax regulations within a tax regime may apply to all or most parties, with individual exceptions, while other parties, because of line of business, places of operation, or some other reason, may have unique tax requirements that demand a separate tax setup.
The Common Configuration option provides the maximum sharing of tax setup among the parties in your company with the minimum amount of maintenance. All parties that are subject to the tax regulations of a given tax regime should use the Common Configuration option, unless it is necessary to create party-specific overrides. When you set up taxes in a tax regime, the available list of configuration owners is limited to the configuration owners associated with the tax regime. If the configuration owner is the global configuration owner or a Party-Specific Configuration, the statuses, rates, recovery rates, and rules belonging to the tax inherit the same configuration owner.
For Release 11i migrated data, the configuration owner of the tax setup converts to E-Business Tax in this way:
Tax codes. Party-Specific configuration, with the operating unit owning its tax setup.
Location-based tax codes. Common Configuration, with the global configuration owner owning the location-based tax setup.
The Configuration Owner Tax Options page displays the E-Business Tax tax option settings for each migrated operating unit. You can update certain of these settings according to your requirements. See: Setting Up Configuration Owner Tax Options for more informations.
Where applicable, you can also update the party tax profile of migrated operating units to use the shared tax setup of the legal entity to which it belongs. E-Business Tax uses the legal entity setting to calculate taxes on transactions for the operating unit. See: Party Tax Profiles in Oracle E-Business Tax for more information.
The configuration option setting for product exceptions determines whether the product tax exceptions defined for this tax regime are shared with other parties or remain specific to one party.
If the configuration option for taxes and rules is Common Configuration or Party-Specific Configuration, then E-Business Tax assigns the same setting to the configuration option for product exceptions.
If the configuration option for taxes and rules is Common Configuration with Party Overrides, you can set the configuration option for product exceptions to Common Configuration to let the party use the product tax exceptions of the global configuration owner; or Party-Specific Configuration to let the party set up its own product tax exceptions that are not shared with any other party.
With configuration options, you can define relationships between parties and tax requirements that reflect the specific taxation needs of your company and the way it is organized. These include:
One legal entity owns and maintains its tax configuration.
Multiple operating units of one legal entity share the legal entity tax configuration.
Multiple legal entities share the same tax configuration.
Multiple legal entities share the same tax configuration, with individual legal entities able to override the shared tax configuration for requirements specific to the legal entity, including tax, tax status, tax rate, and tax rules and formulas.
One or more operating units of one legal entity own and maintain a separate tax configuration.
A legal entity, or an operating unit that owns and maintains a separate tax configuration, uses third party tax services for specific transaction events.
Set up configuration options to associate tax regimes with the parties in your company that have a tax requirement under these tax regimes. You can set up tax configuration options when you create a tax regime or when you create a party tax profile for a first party legal entity or operating unit. Both setup flows display and maintain the same party/regime definitions.
Configuration options only apply to tax regimes directly linked to taxes and not to tax regimes that are used to group other tax regimes.
You must set the eBTax: Read/Write Access to GCO Data profile option before you set up configuration options. Any authorized user can maintain the common tax setup associated with the global configuration owner. See: Setting Profile Option Values, Oracle E-Business Tax Implementation Guide for more information.
Before you can set up configuration options, you may need to complete one or more of these tasks:
Set the eBTax: Read/Write Access to GCO Data profile option. (mandatory for Global Configuration Owner setup)
Set up tax regimes. (mandatory)
Set up party tax profiles. (mandatory)
To set up a configuration option:
Navigate to the Configuration Options page.
If you are setting up a tax regime, enter the party name. If you are setting up a party tax profile, enter the tax regime code.
Select the configuration option for taxes and rules and the configuration option for product exceptions for this combination of party and tax regime.
Unless you select the taxes and rules configuration option Common Configuration with Party Overrides, the product exception configuration option defaults to the taxes and rules configuration option.
If you select the taxes and rules configuration option Common Configuration with Party Overrides:
Select Common Configuration to let the party use the product tax exceptions of the global configuration owner for this tax regime.
Select Party-Specific Configuration to let the party set up its own product tax exceptions for this tax regime that are not shared with any other party.
If you select the taxes and rules configuration option Common Configuration with Party Overrides, E-Business Tax enables the Copy and Override icon on the regime to rate flow for this configuration owner and tax regime.
Enter the effective date range for this configuration option. Enter a date range that is within the date range of both the party tax profile and the tax regime.
If you want to use an external service provider for this configuration option, navigate to the Service Subscriptions page. See: Setting Up Service Subscriptions for more information.
E-Business Tax lets you use the tax services of external service providers for tax calculation of US Sales and Use Tax on Receivables transactions. E-Business Tax provides transparent integration between the external provider tax service and Oracle Receivables. Both E-Business Tax and the external service provider execute and complete the tax services without any interruption to the application business flow.
You can use the tax services of these external service providers:
Taxware, LP - A First Data Company
Vertex, Inc.
The setup for provider services is called a service subscription. A service subscription applies to the transactions of one configuration option setup for a combination of tax regime and legal entity/operating unit.
Note: The level of detail of tax rounding definitions for the taxes in the tax regime must equal or exceed the level of detail of the service provider tax rounding definitions. See: Setting Up Taxes for more information.
Before you can set up service subscriptions, you may need to complete one or more of these tasks:
Set up tax regimes. (mandatory)
Set up party tax profiles. (mandatory)
Set up configuration options. (mandatory)
To set up a service subscription for US Sales and Use Tax:
Navigate to the Subscription Options page.
Enter the service provider.
Select the Order to Cash business flow.
Enter the effective date range for this combination of service provider and business flow. Enter an effective from date that is greater than the system date.
Related Topics
Installing the Vertex Q-Series or Taxware Sales/Use Tax System, Oracle E-Business Tax: Vertex Q-Series and Taxware Sales/Use Tax System Implementation Guide
Business Processes, Oracle E-Business Tax: Vertex Q-Series and Taxware Sales/Use Tax System Implementation Guide
E-Business Tax provides predefined event class settings for each combination of application and event class. Event class settings provide a means of standardizing the interaction between E-Business Tax and other applications. E-Business Tax responds to specific application transaction events, such as a Payables invoice or a Receivables credit memo, according to the predefined settings of each application event class. In this way, E-Business Tax can determine and calculate taxes without requiring access to each product.
Use the Event Class Settings pages to review the event class mappings and event class options, including default tax options, for each event class. The event class settings provide the information about the tax determination process that is used for transactions belonging to each event class.
This table lists the event classes that are applicable to E-Business Tax:
| Application | Event Class |
|---|---|
| Payables | Standard Invoices |
| Payables | Prepayment Invoices |
| Payables | Expense Reports |
| Purchasing | Requisition |
| Purchasing | Purchase Order and Agreement |
| Purchasing | Release |
| Receivables | Invoice |
| Receivables | Credit Memo |
| Receivables | Debit Memo |
| Trade Management (source application) | Tax Event for Claims Interfacing to AP |
| Trade Management (source application) | Tax Event for Claims Interfacing to AR |
Use the Event Class Mapping page to review individual event class mappings. An event class mapping describes the mapping between an application event class and the corresponding tax event class. You cannot update event class mappings.
The Event Class Mapping header region contains these fields:
Event Class Name. The application event class.
Application Name. The application that calls E-Business Tax for transactions belonging to the event class.
Entity Name. A higher level grouping of the application event class.
Tax Event Class Name. The tax description of the application event class.
The event types region maps the application event types belonging to the application event class to the corresponding tax event type.
You can use event class mapping information when setting up tax rules. You can set up tax rules that refer to application event classes and/or tax event classes. See: Setting Up Tax Rules: Guided Rule Entry for more information.
Use the Event Class Options page to review the default tax settings for each application event class. E-Business Tax uses these settings as the basis for determining and calculating taxes on transactions belonging to each event class.
This section describes each of the event class options. By default, the event class option settings of an event class apply to all configuration owners. You can update some of the event class options belonging to an application event class for individual configuration owners. See: Setting Up Configuration Owner Tax Options for more information.
The Associated Party Type regions (Parties and Party Sites) are used to determine the party tax profiles to reference for transactions belonging to this event class. These regions display the party types that are associated with first and third parties and party sites for transactions of the event class. At transaction time, the event class application provides the specific parties and party sites that are part of the transaction. E-Business Tax uses this information from the application to retrieve the correct party tax profiles and related tax information.
For example, in transactions belonging to the Oracle Payables Standard Invoices event class, the Ship From and Bill From party is the supplier and the Ship To and Bill To party is the legal establishment involved in the transaction.
The rounding precedence hierarchy indicates the order in which E-Business Tax looks at party tax profiles of parties involved in the transaction for the rounding level and rounding rule to use.
If no party tax profile provides a rounding level, then E-Business Tax uses the event class default rounding level.
If no party tax profile provides a rounding rule, then E-Business Tax uses the tax rounding rule. See: Setting Up Taxes for more information.
Allow Tax Applicability. This option determines if E-Business Tax calculates tax on transactions for this event class.
If this option is set for the Payables event class, you must also set this option on the party tax profile of third parties and third party sites acting as suppliers/supplier sites that are involved in transactions belonging to this event class. See: Setting Up a Third Party Tax Profile for more information.
Allow Entry of Manual Tax Lines. This option determines whether you can enter manual tax lines on transactions, in addition to the automatically calculated tax lines.
Allow Recalculation for Manual Tax Lines. This option only applies if the Allow Entry of Manual Tax Lines option is set. This option determines, when there is an update to automatic tax calculation, whether E-Business Tax also recalculates the manual tax lines.
Allow Override for Calculated Tax Lines. This option determines whether you can override the automatically calculated tax lines on transactions.
Tax Line Override Impacts Other Tax Lines. This option only applies if the Allow Override for Calculated Tax Lines option is set.
This option determines, when there is an override of automatically calculated tax lines on transactions, whether E-Business Tax also recalculates the taxes on prior tax lines in the compounding process.
Allow Override and Entry of Inclusive Tax Lines. This option only applies if these options are set:
Allow Entry of Manual Tax Lines.
Allow Override for Calculated Tax Lines.
This option determines whether you can change the setting for tax inclusive handling on transactions.
Allow Exemptions. This option determines whether you can set up tax exemptions for taxes in this event class. See: Setting Up Tax Exemptions for more information.
Allow Manual Tax Only Lines. This option determines whether you can enter manual tax only tax lines on transactions. A tax only tax line is a tax line that is not related to the transaction or to any item line on the same invoice.
Perform Additional Applicability for Imported Documents (Payables event classes only). This option determines whether E-Business Tax runs the tax applicability process to identify missing taxes on an imported document. Taxes not included in the imported document are marked as Self Assessed, if self-assessment applies to the transaction.
Enforce Tax from Reference Document. This option determines whether E-Business Tax applies to the transaction the tax that is assigned to the transaction reference document.
Enforce Tax from Account. This option determines whether E-Business Tax applies to the transaction the tax that is assigned to the accounting segment of the transaction line.
Allow Offset Tax Calculation. This option determines whether E-Business Tax can calculate offset taxes for this event class. See: Setting Up Offset Taxes for more information.
Offset Tax Basis. This field displays the third party or third party site that E-Business Tax refers to in order to determine whether to calculate offset taxes.
The applicable third party or third party site must also have the Allow Offset Taxes option enabled in the party tax profile. See: Setting Up a Third Party Tax Profile for more information.
Regime Determination Set. This field displays the determining factor template that E-Business Tax uses to determine the tax regime to use for all transactions belonging to this event class.
Set up configuration owner tax options for a combination of configuration owner and application event class. You can update some of the E-Business Tax predefined event class settings for a particular configuration owner. You can also update migrated tax option settings for configuration owners migrated from Release 11i.
If you are using Direct Tax Rate Determination with tax classification codes and migrated tax data, then you must set up configuration owner tax options using the STCC regime determination set for the applicable configuration owner and event class. See: Tax Processing Using Standard Tax Classification Codes for more information.
Configuration owner tax options let a configuration owner update default tax options on transactions that belong to a specific application event class. At transaction time, E-Business Tax uses the tax option settings of the configuration owner and application event class instead of the default settings.
The tables below list the tax options you can update for each application and its event classes. See: Reviewing Event Class Options for a description of these tax options.
| Payables: Expense Reports, Prepayment Invoices, Standard Invoices |
|---|
| Rounding Precedence Hierarchy |
| Regime Determination Set |
| Perform Additional Applicability for Imported Documents |
| Offset Tax Basis |
| Allow Tax Applicability |
| Allow Entry of Manual Tax Lines |
| Allow Recalculation for Manual Tax Lines |
| Allow Override for Calculated Tax Lines |
| Tax Tolerance |
| Purchasing: Requisition, Purchase Order and Agreement, Release |
|---|
| Rounding Precedence Hierarchy |
| Offset Tax Basis |
| Allow Tax Applicability |
| Receivables: Invoice, Credit Memo, Debit Memo |
|---|
| Rounding Precedence Hierarchy |
| Allow Exemptions |
| Regime Determination Set |
| Offset Tax Basis |
| Allow Tax Applicability |
| Allow Entry of Manual Tax Lines |
| Allow Recalculation for Manual Tax Lines |
| Allow Override for Calculated Tax Lines |
You can define tax tolerances for the entry of tax override values on Payables event class transactions belonging to a configuration owner. Tax tolerances are used to determine whether E-Business Tax places a tax hold on an invoice due to the override of calculated tax lines.
A tax tolerance is the acceptable variance between the calculated tax amount on an invoice and the override tax amount entered by the user. If the variance between these two amounts exceeds the tolerances you specify, then E-Business Tax places the invoice on hold.
To define tax tolerances, you must first set the Allow Override for Calculated Tax Lines option. Setting the Allow Override for Calculated Tax Lines option lets you override automatically calculated tax lines on transactions. You use tax tolerances to define the limits of user override.
You can enter these tolerance values:
Tolerance Percentage. Enter a tolerance percentage to define the maximum percentage that a user override can differ from the automatically calculated tax line before placing a hold on the invoice.
Tolerance Range Amount. Enter a tolerance range amount to define the maximum amount that a user override can differ from the automatically calculated tax line before placing a hold on the invoice.