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Attention: If you use the Oracle Applications Multiple Organization Support feature, you need to perform this implementation for each of your operating units. For more information, refer to the Multiple Organizations in Oracle Applications manual.
Suggestion: To help you plan and complete your tax-specific setup steps, use this essay with the Oracle Applications Implementation Wizard. You can use the Implementation Wizard as a resource center to read online help for a setup activity and open the appropriate setup window and to see a graphical overview of setup steps. You can also document your implementation by using the Wizard to record comments for each step for future reference and review. For more information, see: Implementation Wizard Documentation.
Deferral: France, Italy and Russia allow the liability on Output VAT to be deferred until payment has been collected on certain transactions. This is referred to as "Cash accounting for VAT" and, if allowed, may be used in an accrual system.
Document Rounding: VAT amounts are typically calculated once per tax code within an invoice. Receivables controls tax codes at the document line, but allows VAT amounts to be rounded at the document header or line.
Domestic Transaction: Transactions between registered traders in the same EU (European Union) country. Domestic transactions have VAT charged on goods and services with different countries applying different VAT rates to specific goods and services.
EU: The European Union is a single European market where customs and tariff barriers between member states have been removed.
Input VAT: The tax charge on the receipt of taxable goods and services (e.g. tax on supplier invoices or expense items). Input VAT should be reported wherever you account for expenditures. Input VAT is usually deductible.
Intra-EU, Taxed Transactions: Transactions between non-registered traders in different EU (European Union) countries. VAT must be charged to customers within the EU if you do not know their VAT registration number. The destination country and inventory item controls which VAT rate to use.
Intra-EU, Zero-Rated Transactions: Transactions between registered traders in different EU (European Union) countries. An Intra-EU transaction is zero rated if and only if you know the customer's VAT registration number; otherwise, VAT must be charged on the invoice.
Japanese Consumption Tax: The Value Added Tax (VAT) paid on any expense (Input VAT) is usually recoverable against the VAT Charged on revenue (Output VAT). This ensures that VAT is not inflationary within a supply chain.
Natural Account: The segment of your accounting flexfield that you assign the qualifier 'Natural Account'. This segment indicates whether the Accounting Flexfield is an Asset, Liability, Equity, Revenue, or Expense account. In Receivables, the Natural Account typically identifies the Revenue account.
Non-Deductible Input VAT: The VAT amount paid on expense items that may not be reclaimed against Output VAT. Usually, all items purchased for a business are deductible. Certain high value purchases, (for example, luxury cars for an executive's spouse) may be considered non-deductible. For small companies, service or items of value to both the owner and business may be partially non-deductible.
Output VAT: The tax charge on the supply of taxable goods and services (e.g. tax on customer invoices or revenue items). Output VAT should be reported wherever you account for sales.
Recargo de Equivalencia: An additional tax levied in Spain on specific types of businesses. The rate of tax is related to the primary rate of VAT for the item sold.
Tax Engine: A collection of programs, user defined system parameters, and hierarchical flows used by Receivables to calculate tax.
VAT Classification: Each country classifies VAT into a small number of rates. Following are the five basic classes of VAT:
Setup Checklist for Value Added Tax
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