Tax Box Allocations

You are often required to submit tax returns in a format that groups taxable transactions by applying specific grouping rules defined by the tax authorities.

In most cases, the grouping rules for taxation are based on the location where the transaction took place, transaction type, tax rate, product type, and tax recovery.

Tax box allocation supports definition of tax grouping rules and complex tax reporting by providing transactional and accounting information, segregated by tax boxes.

Define two sets of rules to report periodic and annual allocations: periodic and annual.

You can:

• Define tax box allocation rules on two different levels to support specific needs.

• Share the rules across legal entities or define them for a specific legal entity.

In most tax regimes, legal entities that reside within the same tax regime share the same set of tax grouping rules defined by the tax authorities. Tax box allocation provides you the flexibility to define tax box allocation rules once, and share them across legal entities.

For each tax reporting period, transactions are processed and based on the tax determining factors, tax box numbers are assigned to the transaction lines.

Tax box allocations support periodic and annual reporting. It enables you to separate:

• Purchase and sales transactions

• Recoverable and nonrecoverable taxes

• Domestic and foreign transactions

• Goods and services

Tax box allocation comprises of:

• Tax Box Allocation Rules

• Tax Allocation Process

• Tax Box Allocation Reports

Tax Box Allocation Rules

Tax box allocation rules are user-defined rules. They set the correspondence between tax box number and a set of transaction attributes based on which tax or taxable amount is reported in the tax box.

A tax box represents a tax declaration cell in which tax or taxable amount is reported. It may also represent a group of transactions in tax registers or other tax reports.

Tax Allocation Process

The Tax Allocation Process:

• Checks whether the tax box allocation rule condition is met

• Allocates applicable tax box numbers to taxable transactions

• Verifies whether the rules are defined at the legal entity or global level. If more than one rule is applicable to a transaction, all the rules are applied. However, all the applicable rules must be at the same level, either at the legal entity or global level. Rules at the:

  • Legal entity level are given higher precedence than the rules you define at the global level.

  • Global level are processed and applied only when no rules are defined at the legal entity level.

Note:

Run the Tax Allocation Process for a period only after the Tax Reporting Selection Process is executed for the period.

Tax Box Allocation Reports

Oracle Tax provides various generic reports that are associated with tax box allocations. These reports provide details on tax computation and tax returns.

The following reports are provided:

• Tax Allocations Listing Report

• Tax Allocation Exceptions Report

• Tax Box Return Preparation Report

Run the Tax Box Return Preparation Report to list taxable and tax amounts grouped by tax declaration box numbers for periodic or annual allocations.

Run the Tax Allocation Listing Report and Tax Allocation Exceptions Report to:

• Verify the tax boxes allocated to the transaction lines

• Check the transaction lines that don't have any tax boxes allocated