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”

2. 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

3. 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)

4. Click on Button “Continue”
5. 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
6. Click on Button “Finish”
7. 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”

6. 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
7. Click on “Show Controls and Defaults”
8. 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

9. Click on Button “Apply”
10. You will get the message “The Tax has been successfully created”
11. Return to Tax Regimes. Click on “Expand All”
12. Click on icon “Create Tax Status”
13. 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
14. Click on button “Apply”
15. 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

4. 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

5. Click on the button “Apply” to return to the Create Tax Rate page.
6. Click on the button “Apply” to return to the Regime to Rate Flow page
7. 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

3. Click on the button “Apply” to return to the Regime to Rate Flow page
4. 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

8. Click on button “Apply” and return back to Tax Accounts page.
9. Click the button “Apply”, to return to the Update Tax page.
10. Click the button “Apply”, to return to the Taxes page.
11. 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”

5. Click on button “Apply”.
6. 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”
7. 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.

New Features in Approving Expense Reports in Oracle Internet Expense (iExpense) using AME

Following features are new in R12 Oracle Internet Expense if you are using AME for Manager Expense report approval.
1. Parallel Approval
With Parallel Approvals, you will be able to route approvals in parallel when expense reports are charged to multiple cost centers, multiple projects, or multiple awards. This will streamline the approvals process and thus ensure users are reimbursed as quickly as possible.
2. FYI Notification
Now, you will be able to define rules in AME to send FYI notifications to managers and others who should be informed of expenses charged to their area of authority, but who do not need to approve the expense report.
3. Aggregation of Amount
You will be able to route expense approvals based on the aggregated amounts charged to cost centers or projects. The approval notification will show both the total amount to be approved, and how much of each expense was charged to the area of approval authority. This feature will ensure that proper approval authority is enforced when an expense report is allocated to many different cost centers, projects, or awards.

Conversion (Data Migration) of Invoices in Receivables

Whenever we are going in for implementation of Receivables module, we have to consider the necessity of bringing in customer open balances from the old system to Oracle Receivables.

Some of the key questions that needs to be addressed before we take up a conversion activity. This is just a sample list and not an exhaustive one:

1. What are the different types of invoices in existing system Provide invoice samples? (invoices, credit/ debit memos, commitments, chargebacks)

2. Do we need to migrate only open invoices?

3. Do we migrate closed invoices also, if yes, then for what time period?

4. Please explain the invoice numbering mechanism? Is it automatic?

5. What are the interfaces from/to your existing receivables system?

6. Will the old system still be in place for querying and reporting purpose?

One can adopt one of the following three strategies for conversion:

1. Consolidate all the open balances customer-wise and create a single open invoice for each customer in the new Oracle system. The advantage of this system is that it is quite easy and not data intensive and makes good business sense in case of small businesses with very few customers. The major demerit of this approach is that later on one cannot track the individual invoices which the customer had sent and can become an audit issue also. In case of dispute over payment, this invoice will remain open till the dispute is resolved. Also, aging of invoices and dunning history will be lost.

2. Bring in all the open and partially paid invoices, credit/debit memos into the new system. Migrate all the unapplied and partially applied receipts to the new system. The advantage of this process of conversion is that you can track all open invoices individually and apply the correct receipt to correct invoice. Also, the conversion effort will be moderately low compared to case if you migrate all open and closed invoices. The disadvantage of this approach is that you cannot have a track of closed invoices in the new system. Also, it would be tough to handle scenarios where there is a dispute regarding incorrect receipt application, etc. This is the most common approach taken for receivables invoice, credit/debit memo and receipt migration.

3. Migrate all open and closed invoices to the new system. Reapply the migrated receipts to invoices in the new system. This approach makes sense if your receivables data is quite small else the effort involved in migrating all closed invoices and credit memos to the new system does not make much business sense.

The next question that arises is how we should migrate the invoices, credit/debit memos and receipts to the new system. Oracle provides standard interfaces to load the same. We can also use tools like Dataloader or manually key in the data into Oracle.

In this article i will talk of invoice, credit/debit memo conversion only. Prior to invoice migration, customer migration should be over apart from other pre-requisites. Following is the list of pre-requisites that should be completed prior to invoice, credit/debit memo conversion:

•Set-up of Customer Payment Terms should be complete

•Set-up of Currencies should be complete (this is necessary in case you have foreign currency invoices also)

•Set-up of Transaction Types should be complete

•Set-up of Accounting Rules should be complete

•Set-up of Tax rates and Tax codes should be complete

•Set up for sales representative should be complete

•Set up for debtor area should be complete

•Set up for income category should be complete

•Automatic customer invoice numbering should be set to 'No'

•Customer and Customer address should be migrated in the system

•Disable the Invoice interface purge program so that the data successfully imported should not get purged in the interface table.

•Set up for invoice batch source name should be complete

In the next step extract Invoice data from the legacy files and using SQL loader populate the interface tables RA_INTERFACE_LINES_ALL and RA_INTERFACE_DISTRIBUTIONS_ALL. Submit the Auto Invoice open interface program. Data from the two interface tables will be uploaded to the following base tables using the Invoice open interface program:

•RA_CUSTOMER_TRX_ALL

•RA_CUSTOMER_TRX_LINES_ALL

•RA_CUST_TRX_LINE_GL_DIST_ALL

•RA_BATCHES_ALL

•RA_CUST_TRX_LINE_SALESREPS_ALL

•AR_RECEIVABLE_APPLICATIONS_ALL

•AR_PAYMENT_SCHEDULES_ALL

•RA_INTERFACE_ERRORS_ALL

Ensure that the Purge Interface check box is not checked when you submit the Autoinvoice program. In the Autoinvoice errors form you can see the error corresponding to failed records. Correct the errors in the interface table and rerun the Autoinvoice program. Submit the Autoinvoice Purge Program separately. Only records that have been successfully processed by Autoinvoice are purged.

Using autoinvoice you can migrate invoices, credit/debit memos and on-account credits into Oracle. However, you have to set grouping rules (Navigation > Setup > Transactions > Autoinvoice > Grouping Rule) to group lines to create one transaction and ordering rules (Navigation > Setup > Transactions > Autoinvoice > Line Ordering Rules) to determine the order of the transaction lines on a particular invoice.