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Within the United States of America, Sales and Use tax rates can be approximated to be a direct function of the Ship To address. This is the approach that Oracle takes, and is appropriate for many customers.
Larger, multinational customers and other countries may require tax calculation that takes into account one or more of the following parameters:
When is the Tax Extension called to calculate a rate?
The Tax Extension will be called when Receivables or Oracle Order Entry calculates a sales tax or VAT rate. The following concurrent programs and windows do this:
Why is the Tax Extension called from Credit Memos and Adjustments windows when a tax rate is not calculated for these transactions?
Although a tax rate is not calculated for credit memos or adjustments, Receivables calls the Tax Extension to maintain an audit trail of all the tax activity for a transaction. For credit memos, Receivables calls the Tax Extension to maintain the tax amount credited. For adjustments, Receivables calls the Tax Extension to maintain the taxable amount for the adjusted tax amount.
What Sales Tax Location flexfield structure should I select when implementing the Tax Extension within the US?
Oracle Applications provides two possible default location structures for sites within the US.
How do we make orders or invoices exempt from tax when using a Tax Vendor?
Receivables and Oracle Order Entry will automatically find customer exemptions based on the bill-to customer and ship-to site. If found, the exemption certificate number and reason will be passed down to the Tax Vendor.
How do we manage more complex customer exemptions, such as Customer, Inventory Item, and Site exemptions?
You can define these Customer Exemptions using setup programs supplied by your tax vendor. Once the exemption is entered within your tax vendor your implementation of the Tax Vendor Extension need only ensure that the identifying information (Customer, Inventory Item, or Site ) has been passed to the program for rate calculation. If managed by the tax vendor, this information is not fed back to Receivables.
How do we make products exempt for orders and invoices?
You can pass any segment of the Inventory Item Flexfield or any other attributes of the Inventory item to your Tax Vendor. Most Vendors allow you to control which products are exempt depending upon State and other order or invoice information.
How do we distinguish between tax rates calculated by Oracle and tax rates calculated by an installed Tax Vendor?
Receivables will mark tax lines for an invoice that have been calculated by an installed Tax Vendor.
Can an Oracle Order Entry window call a Tax Vendor?
Yes, Oracle Order Entry and Receivables share the same tax engine. This one engine will call a Tax Vendor if it is installed.
Does Oracle Order Entry store tax amounts in the database?
No, tax on an order is for information only and will be recalculated at the time of invoice creation. This is necessary because tax rates change over time and there could be a large gap between when an order is taken and when the customer is invoiced for the items on the order.
Can I use any columns in the tax views for customizations?
No, you should not. If you do need to redefine columns of your tax views, ensure that you only redefine the following columns (this will limit the impact of your customizations for future releases of Oracle Financials):
POO_CODE VARCHAR(30) /* POO_ADDRESS_CODE */ POA_CODE VARCHAR2(30) /* POA_ADDRESS_CODE */ SHIP_FROM_CODE VARCHAR(30) /* SHIP_FROM_ADDRESS_CODE */ SHIP_TO_CODE VARCHAR2(30) /* SHIP_TO_ADDRESS_CODE */ FOB_POINT VARCHAR2(30) /* FOB_CODE */ PART_NO VARCHAR2(40) /*PART_NUMBER or PRODUCT_CODE*/
Within the US, how can I uniquely identify a taxing authority not defined by city limits?
You should implement the Sales Tax Location Flexfield structure, State.County.City, to validate customer addresses during data entry. By combining this structure with the five digit zip code for the customer address, Oracle Applications can accurately identify all but 160 recognized taxing authorities within the US.
If your site has customers within the 160 exception authorities, you can either enhance the five digit zip code to a nine digit zip code for these specific customers, or implement an additional descriptive flexfield for the specific jurisdiction code for each customer address.
Converting to a nine digit zip code would require you to:
1) Update the context field of the user descriptive flexfield on the table, ar_location_rates, to be enterable.
2) Update the customer address to store a nine digit zip code.
3) Update the postal code ranges, tax rate assignments and jurisdiction code assignments to support a nine digit zip code.
How do I implement tax on freight?
Receivables will calculate tax on freight lines if you can enter freight as a revenue line item. Additionally, you can automatically present freight lines as revenue lines during the ship confirm process within Oracle Order Entry. If the Oracle Order Entry user profile Tax: Invoice Freight as Revenue is set to Yes, the Oracle Order Entry/Receivables Interface program will generate a standard invoice line for the freight amount, optionally using the inventory item defined by the user profile Tax: Inventory Item for Freight.
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