Monday, August 11, 2008

Oracle E-Business Tax: Regime to Rate Flow in Oracle R12

In Oracle Release12, there has been some very significant changes, one among them being how we define tax. E-Business Tax is now a single point where we define our taxes for all the sub-ledger modules. In this article I will try to do a sample Tax setup using the Regime to Rate Flow of Oracle E-Business Tax in the Tax Manager responsibility.

Creating a Tax Regime

In Oracle E-Business Tax, a Tax Regime is the system of regulations for the determination and administration of one or more taxes.

  1. Navigate to the Create Tax Regime:

• Navigation: Tax Configuration àTax Regimes

• Click the Button “Create”

  1. Enter a new tax regime based on the following information:

· Tax Regime Code: TESTREGIME1

· Name: Test Regime1

· Regime Level: Country

· Country Name: United States

· Parent Regime Code: Blank

· Effective From: 01-JAN-1950

· Effective To: Leave Blank

· Used to group Regimes: Unchecked

  1. Expand the Controls and Defaults region

· Allow Tax Recovery: Checked

· Allow Override and Entry of Inclusive Tax Lines: Unchecked

· Allow Tax Exemptions: Checked

· Allow Tax Exceptions: Checked

· Tax Currency: USD

· Minimum Accountable Unit: 0.01

· Rounding Rule: Nearest

· Tax Precision: 2 (default)

  1. Click on Button “Continue”
  2. Enter tax regime configuration options:
    • Party Name: Vision Operations (Note: Select the Operating Unit owning Tax Content party type)
    • Configuration for Taxes and Rules: Common Configuration with Party Overrides
    • Configuration for Product Exceptions: Party-Specific Configuration
    • Effective From: 01-JAN-1950
    • Effective To: Leave blank
  3. Click on Button “Finish”
  4. You will get the message “The tax regime was successfully created”

Creating a Tax

  1. Navigate: Tax Configuration à Tax Regimes
  2. Search for the Tax Regime you created above using the filter criteria of Country as “United States” and Tax Regime Code as “TESTREGIME1”
  3. Click on button “Go”
  4. Click on icon “Regime to Rate Flow”
  5. Click on button “Create Tax”

  1. 2Create a new Tax as per information mentioned below:
    • Tax Regime Code: TESTREGIME1 (defaults)
    • Configuration Owner: Global Configuration Owner
    • Tax Source: Create a new tax (defaults)
    • Tax: TESTTAX1
    • Tax Name: Test Tax1
    • Tax Type: SALES
    • Effective From: 01-JAN-1950 (defaults)
    • Effective To: Leave blank
    • Geography Type: STATE
    • Parent Geography Type: COUNTRY
    • Parent Geography Name: United States
    • Tax Currency: USD (defaults)
    • Minimum Accountable Unit: 0.01 (defaults)
    • Rounding Rule: Nearest (defaults)
    • Tax Precision: 2 (defaults)
    • Exchange Rate Type: Blank
  2. Click on “Show Controls and Defaults”
  3. Enter the details as per information mentioned below
    • Allow Override and Entry of Inclusive Tax Lines: Unchecked
    • Allow Tax Rounding Override: Unchecked
    • Allow Override for Calculated Tax Lines: Checked
    • Allow Entry of Manual Tax Lines: Checked
    • Use Legal Registration Number: Unchecked
    • Allow Duplicate Tax Registration Numbers: Unchecked
    • Allow Multiple Jurisdictions: Unchecked
    • Tax Accounts Creation Method: Create Tax Accounts (defaults)
    • Allow Tax Exceptions: Checked (defaults)
    • Allow Tax Exemptions: Checked (defaults)
    • Tax Exemptions Creation Method: Create Tax Exemptions (defaults)
    • Allow Tax Recovery: Unchecked

  1. Click on Button “Apply”
  2. You will get the message “The Tax has been successfully created”
  3. Return to Tax Regimes. Click on “Expand All”
  4. Click on icon “Create Tax Status”
  5. Enter the following:
    • Tax Status Code: TESTSTATUS1
    • Name: Test Tax Status1
    • Click on Button “Apply”
    • Check as Default Tax Status: Checked
    • Default Status Effective From: 01-Jan-1950
  6. Click on button “Apply”
  7. You will get the message “The tax status was successfully created.”

Create Tax Rates

  1. Go back to the Regime to Rate Flow
  2. Click on “Expand All”.
  3. Click on icon “Create Tax Rate”. Enter the Tax Rates based on information mentioned below:
    • Tax Regime Code: TESTREGIME1 (defaults)
    • Configuration Owner: Global Configuration Owner (defaults)
    • Tax: TESTTAX1 (defaults)
    • Tax Status Code: TESTSTATUS1 (defaults)
    • Tax Jurisdiction Code: Blank
    • Tax Rate Code: TESTRATE1
    • Rate Type: Percentage (defaults)
    • Percentage Rate: 10
    • Effective From: 01-JAN-1950 (defaults)
    • Effective From: Leave blank

  1. Click on icon “Rate Details”. Enter the Tax Rate Details based on information mentioned below:

· Tax Rate Name: Test Sales Tax Rate1

· Tax Rate Description: Test Sales Tax Rate1

· Set as Default Rate: Checked

· Default Effective From: 01-JAN-1950

· Default Effective To: Leave blank

· Allow Tax Exemptions: Checked (defaults)

· Allow Tax Exceptions: Checked (defaults)

· Internet Expenses Enabled : Checked

  1. Click on the button “Apply” to return to the Create Tax Rate page.
  2. Click on the button “Apply” to return to the Regime to Rate Flow page
  3. You will get the message “The Tax Rate has been successfully created.”

Creating Tax Jurisdiction

  1. Navigate: tax Configuration à Tax Jurisdiction
  2. Click on button “Create”. Enter the Tax Jurisdiction details based on information mentioned below:
    • Tax Jurisdiction Code: TESTJUR1
    • Tax Jurisdiction Name: Test Tax Jurisdiction1
    • Tax Regime Code: TESTREGIME1
    • Tax: TESTTAX1
    • Geography Type: STATE (pick from list!)
    • Effective From: 01-JAN-1950
    • Effective To: Leave Blank
    • Geography Name: CA
    • Precedence Level: 300 (defaults)
    • Collecting Tax Authority: Blank
    • Reporting Tax Authority: Blank
    • Set as default Tax Jurisdiction: Yes (defaults)
    • Default Effective From: 01-JAN-1950
    • Default Effective To: Leave blank

  1. Click on the button “Apply” to return to the Regime to Rate Flow page
  2. You will get the message “The tax jurisdiction was successfully created.”

Creating Tax Accounts

  1. Navigate: Tax Configuration à Taxes
  2. Search for the Taxes that we created just now using the following filter criteria:
    • Country Name: United States
    • Tax Regime Code: TESTREGIME1
    • Tax: TESTTAX1
  3. Click on the button “Go”. Then click on icon “Update”.
  4. Click on button “Tax Accounts”.
  5. Enter the Ledger as “Vision Operations (USA)”
  6. Click on button “Create”
  7. Enter the Tax Account details based on following information:

· Operating Unit : Vision Operations

· Tax Expense: 01-210-7710-0000-000

· Tax Recoverable/Liability: 01-000-2220-0000-000

  1. Click on button “Apply” and return back to Tax Accounts page.
  2. Click the button “Apply”, to return to the Update Tax page.
  3. Click the button “Apply”, to return to the Taxes page.
  4. You will get the message “The tax was successfully updated”.

Creating Tax Rules

  1. Navigate: Tax Configuration à Tax Rules
  2. Access the rule type by filtering on the following criteria:
    • Configuration Owner: Global Configuration Owner
    • Tax Regime Code: TESTREGIME1
    • Tax: TESTTAX1
  3. Click on button “Go”. Then click on “Expand All”.
  4. Set the following values corresponding to the Rule Types:
    • Determine Place of Supply: Ship To
    • Determine Tax Applicability: Applicable
    • Determine Tax Registration: Bill From Party
    • Determine Taxable Basis: STANDARD_TB
    • Calculate Tax Amounts: STANDARD_TC

Making Tax Available for Transactions

  1. Navigate: Tax Configuration àTaxes
  2. Select the Tax created based on the following filter criteria:
    • Country Name: United States
    • Tax Regime Code: TESTREGIME1
    • Tax: TESTTAX1
  3. Click on button “Go”. Then click on icon “Update” on the “TESTTAX1” row.
  4. Check the box “Make Tax Available for Transactions”

  1. Click on button “Apply”.
  2. You will get the message “This tax does not have an exchange rate type. Are you sure you want to enable this tax?” having options “Yes” and “No”. Click on “Yes”
  3. You will get the message “The tax was successfully updated.”

Test your Tax Setup by creating an Invoice in Payables /Receivables or creating a Purchase Order.

32 comments:

Anonymous said...

Thanks for the giving such a detailed setup for E Tax. We are planning to upgrade from Oracle 11.5.9 to R12. Should we have to re-implement E-Tax or does Oracle give us a direct upgarde path for tax?

Alex

Amit said...

No, Oracle has seamless upgarde process.
Amit Jain

Anonymous said...

Hi!
we have follow the steps but we have the following problem:
Default Tax Rate cannot be overridden on invoice lines.

I'm working in R 12.0.4. I have created two tax rates one as VAT16% and other as VAT7%. I have set VAT16% as default
rate, Now at the time of entering invoice lines , i want to select tax rate
other then dafault rate which is VAT16%. the system allows me to select VAT7%
from TAX CLASSIFICATION CODE LOV but it calcuates tax as per defult rate.
i have enabled the option:
1. 'Allow Override of Calculated Tax Line' option in the 'Defaults and Controls' > 'Configuration Owner Tax Options'. for payables.


2. 'Allow Override of Calculated Tax Lines' option in 'Tax Configuration' > 'Tax'. This has been set to checked.

3. 'Allow Tax Rate Override' option in 'Tax Configuration' > 'Tax Statuses'. This has been set to checked.

Also system profile options have been set as follows:
eBTax: Allow Override of Tax Classification Code = Yes
eBTax: Allow Manual Tax Lines = Yes


Any ideas?

Anonymous said...

HI,I have encountered a strange problem,when i create a Tax Jurisdiction ,need to choose a Geography Name,but i canot choose any one of the Geography Names,i donot know what's wrong with it,can u help me,thks!our Oracle Applications is 12.0.4

Anonymous said...

HI,i have solved the problem,forget that

Anonymous said...

Bose,

This is a great explanation of setting up Regime to Rate flow. I have one small clarificaiton, in US Sales tax scenario how do you achieve tax accounting state wise using EBTAX?

Krishanu Bose said...

I have not explored e-Biz tax for US environment. However, in the e-tax implementation guide i find there is a mention of US Sales Tax setup.

Krishanu

Dheeraj said...

Hi,

Thanks for giving such a good & detailed explanation of EBS Tax R12.

Anonymous said...

I am trying to test this setup. When I am in the sales order lines, after choosing the item# and the quantity, i proceed to entering a tax classification code (TESTRATE1). When I tab out of the fields to get ready to save, I notice that the tax is not applied to the sales orders.

Am I doing something wrong?

P.S. - I am assuming no setup has to be done on the customer/item levels.

jagpreet said...

Hi Krishanu,
I have a question related to the tax calculation on an AP invoice. I would really appreciate if you could help me out on it.

For the supplier of employee-type, while creating an AP Invoice of standard type, there is no Bill_From location that gets passed to the tax engine.

Is this the standard functionality? If no, what address should be passed as the bill_from location; home address of employee or the Assignment Location?


Thanks,

JP

Bobby said...

Hi Krishanu,

Can you please provide me with BR100 for EB tax.My mail id is orafin07@gmail.com

Thx
Dinesh

Anonymous said...

Hi Krish,

in the Create Tax Jurisdiction form how do I get a Geography Name to appear in the LOV that is not currently there.

Not sure if this is related but I have looked in HZ_GEOGRAPHIES table and see the City Name (geography_use = MASTER_REF) but I do not see one for TAX.

Thanks

Darma

Anonymous said...

Hi Krishnu,

We have followed all setup steps as you suggested, unfortunately we canot save Tax setup if we enable

"Make Tax Available for Transactions" check box.

i am getting following errors.

Define either a default tax formula or a tax rule for the rule type: Determine Taxable Basis.
Allow Primary Recovery R... - You cannot select Allow Primary Recovery Rate Determination Rules unless you define a tax rule for the Determine Recovery Rate rule type for this tax.
Allow Secondary Recovery... - You cannot select Allow Secondary Recovery Rate Determination Rules unless you define a tax rule for the Determine Recovery Rate rule type for this tax.
Default Primary Recovery Rate Code - Please enter a default primary recovery rate code.


Please suggest me what other setup steps i need to follow to complete this setup

If you find the solution please mail me "prasanthbab@gmail.com".

Anonymous said...

Amazing article Krishanu, I just completed Regime to Rate setup on a test instance following your article.Thank you so much and keep posting.

Rgds,
Satish

Joe P A said...

Hi Krishani,

Nice doc. Can u share us BR100 for EBS Tax ??? My email is spljoe@gmail.com

Thanks,
Joe

km007 said...

Hi Kishani,

Thanks for the doc. I get an error related to tax code when I change schedule ship date in an order line or cancel an order line. The error is
"Error: The system cannot find tax rate information for Tax regime: NL VAT, Tax: NL VAT,
Tax status: NL DOMESTIC AR , Tax rate code: NL_OT_EX_DGOODS and Tax Jurisdiction code: NULL. Please contact your tax manager."

Could you please suggest what could be wrong? Any SQL to check the setups? Thanks in advance.

-sreejith

pavan said...

hi ,

In E-Business taxes it is possible to change already defined configuration owner.? while we are creating the taxes.

if its possible how it is..?

Anonymous said...

I have followed all the steps and have set up a tax jurisdiction, but even when it is assigned, I get the error stating I haven't assigned a tax jurisdiction to my tax when I try to make it available for transactions. Is there some magic fix for this that I am just not aware of? I really really hate tax setups.

Anonymous said...

I have to say that your document, when followed completely, works beautifully! I went back and started over and followed your setup steps. I was able to make the tax available for transactions. Whoo Hoo!

Thanks.

Anonymous said...

security can be implemented by operating unit tax?

tax debts said...
This comment has been removed by a blog administrator.
Anonymous said...

Hi Krishnu,

I have followed all the steps suggested in the above document.
But when I enter a transaction(eg.AP invoice) tax does not get calcualted.I clicked on Tax details and tried to enter Tax manually, but I am not able to select any value in the Rate Name field. I am able to select value for all other fields-Tax regime code, Tax, Jurisdiction, Tax status.
Make tax avaialble for transaction check box is checked for the tax.
Thanks
A

Anonymous said...

Hi Krishnau

In addition to my yesterdays post...
Tax calcualation is working fine for OM and AR. It is only in AP and PO Tax is not being calculated.
I tested this in Tax simulator for AP and it is working fine there.

Thanks
A

Anonymous said...

Hi,

Great!

Not calculating the tax automatically in AR/AP, i have setup three tax regimes to resolve the issue.


Please assist.

Thanks,

N

Cid Kleber Lobo said...

Hi Krishnau,

I'm facing an error when I enter with a sales order in OM. The following message is shown: "The system cannot find tax regime information for tax regime".
This message is raised when I save the SO.

Please assist.

Thanks a lot.
Cid

Anonymous said...

Thanks soo much for this document.
I create setup tax based on this document.

Ella

Tanvir said...

Hi,
I am implementing E Business Tax and i came across an issue while enabling it for Inter Expense. In our screenshots, I can see that there is a option to check the box to enable for "Internet Expense" but in my E Biz Tax page I cannot see any option for this.
I did not enable the tax rate in Global Configuration level. Is it the reason for this to not show up ?

Please help me out with this.

Thanks,
Tanvir

Anonymous said...

Could you please send me your BR100 if you have a chance? Thanks in advance!

msadelman@yahoo.com

Anonymous said...

Is E-Business Tax included with Financials or separate licensing? Do you know? Thanks!

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Krishanu's Oracle Applications Blog - Oracle Apps consulting services scenario in India. Also, an inside view of Oracle Apps outsource services in India. Also the blog features new developments in Oracle Apps and my learning's in this field. The views expressed are my own only and not of my employer Wipro Technologies. The views and opinions expressed by visitors to this blog are theirs and do not necessarily reflect mine.