Tax Recoverability Determination for Expense Payment Requests

You can determine the tax recoverability of payment requests based on the expense type, expense location, and employee legal entity location.

The Tax Classification Code and the tax product categories associated with the expense types in the expense report template help in tax recoverability determination. Expense managers can associate the applicable tax product category when setting up the expense types.

When a tax product category is associated with an expense type, the related tax determining factors are passed to Payables from Expenses when the payment requests are created for expense reports. The tax determining factors used in tax rules are:

• Tax Product Category: Indicates the taxable nature of an item or service purchased or sold.

• Expense Location: Different locations may attract different tax rates for the same expense type.

• Employee Location: Depending on the employee’s primary location, the tax on an expense report may or may not be recoverable.

• Tax Classification Code: One of the determinants for tax applicability, tax recovery rate determination, and other tax rules.

Payables passes these tax determining factors to Oracle Tax. The tax module uses one or more of these tax determining factors, based on the tax rules configured, to determine the recoverability for each expense line.

Enabling Tax Recoverability Determination for Expense Payment Requests

To enable Tax Recoverability Determination for Expense Payment Requests, follow these steps:

1. In the Setup and Maintenance work area, select the Financials offering.

2. Click Change Feature Opt In.

3. On the Opt In: Financials page, click the Features icon for Expenses.

4. On the Edit Features: Expenses page, select Enable for the Tax Recoverability Determination for Expense Payment Requests feature.

5. Click Done.

This feature will be available without enabling the opt in at a later release.