How You Configure Inclusive Tax Calculation for Purchasing

As an administrator you can enable and set up inclusive tax calculation for purchase orders.

Normally the price entered on a purchase order line is considered as the item price and excludes all taxes. Applicable taxes are calculated on top of the line or schedule amount.

In some countries, tax authority guidelines require transaction taxes to be calculated and tracked as part of the pricing in your transactions. You can enable and set up the Inclusive Tax Handling in Procure to Pay Flows feature to implement inclusive tax calculation and tracking on purchase orders processed in Oracle Enterprise Resource Planning Cloud.

How You Enable Inclusive Tax Handling in Procure to Pay Flows

In the Offerings work area, enable the Inclusive Tax Handling in Procure to Pay Flow feature in the Financials functional area.

Perform Additional Set Up for Inclusive Tax

Typically, transaction taxes, inclusive and exclusive taxes, tax rates and tax rules are set up by the Tax Administrator in the Financials offering's Transaction Tax functional area. For details, refer to the Oracle Financials Cloud Implementing Tax guide, available on the Oracle Help Center.

A procurement-specific tax setup worth noting is to enable the inclusive tax option for a business unit's or legal entity's purchase orders. To enable the option, in the Setup and Maintenance work area, use Manage Configuration Owner Tax Options in the Transaction Tax functional area.

1. On the Manage Configuration Owner Tax options page, search using these criteria:

   • Configuration Owner: Enter the business unit or legal entity.

   • Application Name: Select Purchasing.

   • Event Class: Select Purchase Order and Agreement for Enterprise Tax.

2. In the results, select the record and click View Tax Options.

3. On the Configuration Owner Tax Options page, select the check box for Inclusive Treatment for Calculated Tax.