An Introduction to Oracle R12 E-Business Tax Authored by David Sparks Date of Publication January 2009 This is one of a series

of White Papers written by David Sparks, each one focussing on a specific aspect of Oracle. If you have found the content of this White Paper interesting and useful, and wish to explore the subject matter further, or wish to discuss any other aspect of the Oracle R12 Financial modules, then please contact David Sparks on daveasparks@yahoo.co.uk

An Introduction to E-Business Tax

CONTENTS An Introduction to E-Business Tax.........................................................6 Preamble - Tax Content and Tax Determination...................................................6 Getting started....................................................................................................6 External Dependencies........................................................................................8

Create First Party: Legal Entity and Establishments.........................................................8 Create Reporting and Collecting Tax Authorities..............................................................9
Tax Configuration...............................................................................................10

Create Tax Authority Party Tax Profiles..........................................................................10 ........................................................................................................................................11 Create Tax Regimes........................................................................................................11 Create First Party Legal Entity Party Tax Profile............................................................13 ........................................................................................................................................13 Create Tax ......................................................................................................................14 Create Tax Status............................................................................................................17 Create Tax Jurisdictions..................................................................................................19 Tax Recovery Rates........................................................................................................20 Tax Rates........................................................................................................................21
Tax Determination Processes and Tax Rules .....................................................22

Steps and Rule Types......................................................................................................22 Default Values.................................................................................................................24 Determine Applicable Tax Regimes and Candidate Taxes..............................................24 Determine Place of Supply and Tax Jurisdiction.............................................................25 Tax Determining Factor Set ...........................................................................................25 Tax Condition Set...........................................................................................................26 Rule Creation for Use in Payables..................................................................................26 Create First Party Legal Establishment Party Tax Profiles..............................................28 Third Party Tax Profiles..................................................................................................30 Making Tax Available.....................................................................................................33 E-Business Tax Setup - Results Displayed in Payables...................................................34

An Introduction to E-Business Tax

Fiscal Classifications..........................................................................................37

Inventory Based Product Fiscal Classification Rule Definition......................................37 ........................................................................................................................................39 ........................................................................................................................................40 Non-Inventory Based Product Fiscal Classification Rule Definition..............................42 E-Business Tax Setup - Results Displayed in Receivables..............................................44

An Introduction to E-Business Tax

ABOUT THE AUTHOR

David Sparks is an independent Oracle Applications Functional Consultant who has been working with the Oracle Financial Modules over 20 years. He has worked throughout Europe on a large number of pan-European implementations for companies such as Akzo Nobel, AT&T, Eaton Corporation, Nike, Oracle, SAS, Toyota, Unisys.

An Introduction to E-Business Tax

INTRODUCTION

Oracle introduces E-Business Tax as being “ a single point solution for managing your transaction-based tax requirements. E-Business Tax uniformly delivers tax services to all E-Business Suite business flows through one application interface. As a global system architecture, E-Business Tax is configurable and scalable for adding and maintaining country-specific tax content.” So, whereas in previous releases of E-business Suite tax codes were defined within the individual modules by operating unit, then now the tax configuration is defined at a single point across the modules and organisations. This change by it’s nature turns something that was relatively easy to understand and configure into something that is a little more complex and requires a little more thought and understanding. However, as with most complex things if it is broken down and addressed by it’s components, and the time is taken to assimilated the interaction of the components, and the thought is given to keeping it as simple, and as sweet as possible, then it all falls into place.

PURPOSE

The purpose of this document is to try and do just that, to break down E-business Tax, and to present the simplest of cases, thus giving the basis to build more complicated scenarios. It does so by navigating through the E-Business Tax menus and configuration screens in the appropriate order giving examples of a working configuration. It does not attempt to explain every configuration option or term, as to do so would end up recreating the existing Oracle manuals.

ASSUMPTIONS AND APOLOGIES

My starting point in this document assumes knowledge of Oracle applications and some knowledge of Oracle Release 12. There are many aspects of Release 12 that are new or different from previous releases. I will not try and explain these because to do so would deviate from the purpose of this document. My starting point assumes that a basic Organisation structure is already configured which has a Legal Entity, a Ledger and an Operating Unit defined.

WHO SHOULD READ THIS

Those who think they may need some help.

An Introduction to E-Business Tax

An Introduction to E-Business Tax
Preamble - Tax Content and Tax Determination
Oracle define two key aspects to the configuration of E-Business tax. The Tax Content Services and the Tax Determination Services. The Tax Content Services store and maintain the master and reference data components that are needed to support E-Business Tax. This includes: Tax Authorities and Tax Jurisdictions where taxes apply, First Party and Third party Entities involved in transactions which are taxable, Transactions that are taxable, Taxes that may be applicable The Tax Determination Services are the rules and the management of the rules that are used to determine which of the Tax Content Service components apply, and when. The rules are organised into a hierarchy of rule processes which determine: Place of Supply, Tax Applicability, Tax Registration, Tax Status, Tax Rate, Taxable Basis, Tax Recovery Rates In this document I’ll first look at the Tax Content, and then at the Tax determination. Towards the end of this document the approach becomes iterative as further content is required to allow specific determinations to be made.

Getting started
When I login into the E-Business Suite and select a Tax Manager Responsibility and select Home.

An Introduction to E-Business Tax

I come to the home page for E-Business Tax

An Introduction to E-Business Tax

On this page the tabs across the top show the different configuration sections available and the Setup Tasks section gives a Task List that runs through the various configuration steps in the correct order, and indicates which are required. Both the tabs and the task list can be used to access the setup pages required to configure the application.

External Dependencies
On the task list if the External Dependencies section is expanded a number of tasks are listed.

Two of these tasks are defined as being required: Create First Party: Legal Entity and Establishments and Create Reporting and Collecting Tax Authorities. Create First Party: Legal Entity and Establishments I have already identified and setup First Party Legal Entities and Establishments as part of the setup of my Organisation structure and Ledgers. These are the legally registered entities of my organisation in each country that I do business, and the sub-divisions of those organisations that need to be registered for tax. An example of one of them is as below.

An Introduction to E-Business Tax

Create Reporting and Collecting Tax Authorities. A Tax Authority is a government entity that regulates tax law, administers, or audits one or more taxes. A legal authority record needs to be setup for each tax authority that administers taxes in the tax regimes where you do business. If I click on the Go to Task icon it takes me to the Legal Authorities page. Here I can create Tax Authorities or search for existing Authorities. The example shown below is for UK, the dearly beloved ‘HM Revenue and Customs’.

The two tasks above are the only tasks in the External Dependencies section that I shall cover at the moment. The other tasks in this section will be covered later in this document, or in future documents.

An Introduction to E-Business Tax

I’ll now move on to the Tax Configuration section.

Tax Configuration
On the task list I’ll expand Tax Configuration section.

There are a several tasks in this section that need to be completed.

Create Tax Authority Party Tax Profiles A Tax Profile is the body of information that relates to a party's transaction tax activities. A tax profile can include tax registration, tax exemptions, configuration options, main and default information, party fiscal classifications, tax reporting codes, and account tax details. Tax Profiles will need to be setup for the First Party Legal Entities, Legal Establishments and Operating Units, for the Customers and Suppliers and their locations, and for the Tax Authorities that administer tax rules and regulations. Oracle reflects that for this particular task: ‘Set up a tax profile for each of your tax authority party records. The tax authority party tax profile identifies a tax authority party as a collecting authority and/or a reporting authority. A

An Introduction to E-Business Tax

collecting tax authority manages the administration of tax remittances. A reporting tax authority receives and processes all company transaction tax reports. The collecting and reporting tax authorities appear in the corresponding list of values on all applicable EBusiness Tax pages. All tax authorities are available in the list of values as an issuing tax authority.’ If I click on the ‘Go to Task’ icon against this particular task I am taken to the Party Tax Profiles page, where, for the Party Type ‘Tax Authority’, I can find ‘HM Revenue and Customs’.

I can then create the Tax Profile for this Authority. There is not really much to this. It’s just a case of checking the Collecting Authority and Reporting Authority boxes and Applying.

I then move on to the next task on the list.

Create Tax Regimes Oracle suggest ‘The common tax regime setup is one tax regime per country per tax type, with the tax requirements administered by a government tax authority for the entire country.’ And describe a Tax Regime as associating ‘a common set of default information, regulations, fiscal classifications, and registrations to one or more taxes with the same tax requirement.’ and providing the functions: ‘• groups similar taxes together.

An Introduction to E-Business Tax

• designates the geography within which taxes apply. • defaults the settings and values you define to each tax in the regime. • contributes to the definition of configuration options and third party service subscriptions. • optionally provides a single registration for all taxes associated with the regime. • defines the use of fiscal classifications.’ So, for the United Kingdom the VAT requirements would be satisfied by defining one Tax Regime, ‘GB VAT’, as follows.

The Tax regime must be associated with all of the First Party Legal Entities and Operating Units that are subject to the tax regulations of the regime. This association can be done either from the Tax Regime definition or the Party Tax profile definition. However, at this stage of the setup the association can’t be done because the Tax Profiles for these parties have not been created.

An Introduction to E-Business Tax

This comes in the next step.

Create First Party Legal Entity Party Tax Profile As said previously, a tax profile is the body of information that relates to a party's transaction tax activities. A tax profile can include tax registration, tax exemptions, configuration options, main and default information, party fiscal classifications, tax reporting codes, and account tax details. Defining the Tax Profile for First Party Legal Entities is pretty straightforward. I find the Legal Entity SPLE1 and click on Create Tax Profile

The configuration as below is sufficient.

At this stage the Legal Entity can be associated with the Tax Regime defined previously. A component of this association is the Configuration for Taxes and Rules. The Common Configuration option provides the maximum sharing of tax setup among the parties in the organisation with the minimum amount of maintenance. All parties that are subject to the tax regulations of a given tax regime should use the Common Configuration option unless it is necessary to create party-specific overrides.

An Introduction to E-Business Tax

The next step in the task list is Create Tax

Create Tax This is where the details of the Taxes are defined for the Tax Regime. While it is possible to define multiple Taxes for each Tax Regime, the context in which it can be viewed is that there is one tax, VAT. The different rates of VAT are defined later as Tax Statuses (Standard, Zero Rated, Exempt…) with associated Tax Rates (the standard rate may vary, for example, from 17.5% to 15% for a period of time, and then back to 17.5% again). Each Tax defined here may require the definition of a corresponding Offset Tax. An Offset Tax calculates and records third party Payables tax liabilities for reverse charges. An offset tax record is a matching, duplicate record with negative amounts that reduces or completely offsets the tax liability recorded in the tax transaction. This is expressly used in Payables for recording Intra EU transactions. The below screen shows the Taxes that have been defined for the Tax Regime GB VAT

The main details of the Tax ‘GB VAT’ are shown below.

An Introduction to E-Business Tax

And the Controls and Default information is as follows.

Default tax accounts can be setup for each Tax. The tax accounts define here serve as default accounting information for taxes, tax rates, tax jurisdictions, and tax recovery rates. I do so by clicking on the Tax Accounts button and then creating the accounts for a particular Ledger / Operating Unit combination. These can only be defined for those primary ledgers in the my security profile that have at least one operating unit assignment.

An Introduction to E-Business Tax

The Definition of the Offset tax is as follows

An Introduction to E-Business Tax

The next required step on the task list is the creation of Tax Statuses

Create Tax Status Tax statuses need to be created for each tax. A Tax Status is the taxable nature of a product in the context of a transaction and a specific tax on the transaction. They reflect the different states of the tax, such as Standard, Reduced, Exempt or Zero

An Introduction to E-Business Tax

The setup for each status for a tax is essentially the same, other than the code and the name. One can be chosen as the default status, although this may be overridden by the tax rules.

The Offset Tax Status is defined as a component of the Offset Tax.

An Introduction to E-Business Tax

Create Tax Jurisdictions A Tax Jurisdiction is a geographic region or tax zone where a specific tax authority levies a tax. A tax jurisdiction specifies the association between a tax and a geographic location. At transaction time E-business Tax derives the jurisdiction or jurisdictions that apply to a transaction line based on the place of supply.

An Introduction to E-Business Tax

Tax Recovery Rates A Recoverable Tax is a tax that allows full or partial recovery of taxes paid on purchases, either as a recoverable payment or as an offset against taxes owed. A tax recovery rate code identifies the percentage of recovery designated by the tax authority for a specific transaction. If the Allow Tax Recovery option is set for the Tax Regime and Tax, which for VAT it should be, then at least one recovery rate for the tax must be set up. What we see below is a standard recovery rate of 100% for GB VAT, a 0% recovery of GB VAT, and a 100% Recovery of GB VAT OFFSET.

And looking at the details of ‘GB VAT STANDARD REC RATE’

An Introduction to E-Business Tax

The next step is the creation of Tax Rates

Tax Rates A Tax rate record should be setup for each applicable tax rate that a tax status identifies. The Screen below shows the Tax Rates that have been defined for the UK.

And the details of the GB VAT STANDARD RATE are as below.

An Introduction to E-Business Tax

Setting up Tax Rates is the last task in the Tax Configuration section of the Task List. Having completed this section I shall move on to Tax Determination Process and the creation of Tax Rules.

Tax Determination Processes and Tax Rules
The E-Business Tax Tax Determination process is organized into Rule Types. Each Rule Type identifies a particular step in the determination and calculation of taxes on transactions and each can have a Default Value, and any number of Rules. However, performance is in inverse proportion to the number of rules!

Steps and Rule Types Looking at the page below you can see the configuration of the rule types for the tax GB VAT.

An Introduction to E-Business Tax

The steps in the Tax Determination process are as follows: Determine Applicable Tax Regimes and Candidate Taxes: This is a preliminary step used by E-Business Tax to determine tax regimes and candidate taxes within each tax regime. This step identifies the first party of the transaction and the countries associated with the transaction. For each country identified, the process selects the tax regimes that are associated with the first party and defined for the country as candidate tax regimes. The process then selects the taxes defined for each candidate tax regime as candidate taxes. Determine Place of Supply and Tax Jurisdiction: Determines the location where a transaction is considered to have taken place for a specific tax, and the associated tax jurisdiction for each candidate tax. This step uses the Determine Place of Supply rule type. If E-Business Tax cannot find a tax jurisdiction for the location that corresponds to the place of supply location type, then the tax does not apply and it is removed as a candidate tax for the transaction. Determine Tax Applicability: Determines the tax applicability of each candidate tax derived from the Determine Place of Supply and Tax Jurisdiction process, and eliminates taxes that are found to be not applicable. This step uses the Determine Tax Applicability rule type. Determine Tax Registration: Determines the party whose tax registration is used for each tax on the transaction, and, if available, derives the tax registration number. This step uses the Determine Tax Registration rule type. Determine Tax Status: Determines the tax status of each applicable tax on the transaction. This step uses the Determine Tax Status rule type. Determine Tax Rate: Determines the tax rate for each tax and tax status derived from the previous process. This step uses the Determine Tax Rate rule type. If applicable, the tax rate is modified by any exception rate and/or tax exemption that applies. The result of this process is a tax rate for each applicable tax. The rate or rates are applied to the taxable basis

An Introduction to E-Business Tax

Determine Taxable Basis: Determines the taxable base amount or quantity upon which to apply the tax rate for each applicable tax. This step uses the Determine Taxable Basis rule type. The taxable basis is typically the transaction line amount. E-Business Tax provides the default taxable basis formula taxable basis = line amount. In some cases, the taxable basis either can include another tax or is based on the tax amount of another tax. You can set up special taxable basis formulas to manage these requirements. Calculate Taxes: Calculates the tax amount for each applicable tax on the transaction. This step uses the Calculate Tax Amounts rule type. The tax is typically determined by applying the tax rate to the line amount. E-Business Tax provides the default tax calculation formula tax amount = taxable basis * tax rate. In some exceptional cases, the tax amount is altered by adding or subtracting another tax. You can set up special tax calculation formulas to manage these requirements. Tax Recovery Rate: Determines the recovery rate on Procure to Pay transactions to apply to each recovery type for each applicable tax on the transaction (Determine Recovery Rate rule type). Direct Tax Rate Determination: This is a special tax rule type that lets you specify the results of tax applicability, tax status, and tax rate for a given tax. You use this rule type with migrated tax data and the Release 11i tax model.

Default Values Default values can be set for each rule type. E-Business Tax uses the default value if no rule belonging to the rule type provides a value that applies to the transaction. For certain tax regimes, you may be able to use default values exclusively, without the need to set up tax rules. As a general rule of thumb, if you find in setting up tax rules that the tax condition results and rule results always equal the default values, then you do not need a tax rule. You only need to define a tax rule for a result that is different from the default value. The permissible default values for the rule types are as follows Determine Place of Supply: Bill From, Bill To, Point of Acceptance (Receivables transactions only), Point of Origin (Receivables transactions only), Point of Payment, Ship From, Ship To, Use Bill To as Ship To, if Ship To is not found Determine Tax Applicability: Applicable, Not Applicable Determine Tax Registration: Bill From Party, Bill To Party, Ship From Party, Ship To Party, Use Bill To, if Ship To is not available Determine Tax Status – You specify the default value when you set up the tax status. This default can be overridden. Determine Tax Rate – You specify the default value when you set up the tax rate. This default can be overridden. Determine Taxable Basis – The seeded formula STANDARD_TB (Taxable Basis = Line Amount). Calculate Tax Amounts – The seeded formula STANDARD_TC (Tax Amount = (Taxable Basis) * (Tax Rate)).

Determine Applicable Tax Regimes and Candidate Taxes

An Introduction to E-Business Tax

In my setup the first party of the transaction will be the legal entity SPLE1 / Operating Unit SPOP1. There is only one Tax Regime associated with it and only one candidate tax, GB VAT.

Determine Place of Supply and Tax Jurisdiction In my example, the default value for Place of Supply is Ship From. If the place of supply of a sale or purchase within the UK is the UK itself then Tax Jurisdiction and Candidate Tax GB VAT applies. However, in the case of services from suppliers in other countries, VAT may have to be accounted through a mechanism known as the 'reverse charge' or 'tax shift'. A reverse charge applies if the First party belongs in the UK and the supplier belongs in another EU country. If the supply is a supply of services from the EU then the default of Ship From will not allow the Tax Jurisdiction and Candidate Tax GB VAT to apply. What is required is a rule that says that if the Bill From country is in the EU (and not the UK) and the Bill To Country is the UK, then use Bill To to derive the place of supply. This allows the Tax Jurisdiction and Candidate tax GB VAT to apply. At the same time the supplier configuration needs to allow Offset tax to apply. The Rule can be setup as follows. First create a Tax Determining Factor Set that defines the factors that are considered together in the course of evaluating the rule, and a Tax Condition Set that defines the resulting value that must exist for each factor, in order for the result of the tax rule to be true.

Tax Determining Factor Set

To define a Tax Determining Factor Set click on the Advanced Setup Options on the Oracle E-Business Tax main page and select Tax Determining Factor Sets and Create. An example of this Tax Determining Factor Set is below.

An Introduction to E-Business Tax

Tax Condition Set And the Tax Condition Set can be defined from the same Advanced Setup Options Tab.

Rule Creation for Use in Payables Once these two sets have been defined then they can be used in a Place of Supply rule. From the Tax Rules Page I find the configuration for GB VAT and click on Expert Rule Entry for the Determine Place of Supply Rule Type.

An Introduction to E-Business Tax

The rule is given a code and a name. It can be made dependent on a particular event class, in this case the Tax Event Class Purchase Transaction. This means the rule will only apply to Purchase Transactions. The Determining Factor Set defined previously is selected.

On the next page the previously defined Condition Set is chosen, and the result to return, if the conditions are satisfied.

On the next a rule order is entered to determine in which order to process the rule (if there are multiple rules for the type), and the rule is enabled.

An Introduction to E-Business Tax

Having setup the rule above it would be nice to see it working. However there are a couple of more things will need to be done before this can be seen. These are associated with further Tax Profiles, and making the Tax available.

Create First Party Legal Establishment Party Tax Profiles First party legal establishments identify each office, service center, warehouse and any other location within the organization that has a tax requirement. The system automatically creates a legal entity establishment when a legal entity is created. For each legal establishment there can be one or more tax registrations, depending upon the tax requirements of the applicable tax authority. These are setup from the Party Tax Profile page.

An Introduction to E-Business Tax

The Main Details are pretty simple

And Tax Registration a little more detailed

An Introduction to E-Business Tax

Third Party Tax Profiles Third party tax profiles need to be setup for customers and customer sites and suppliers and supplier sites. This tax information can be part of the relevant third party maintenance flow (for example, customer and supplier maintenance). Below I’ll show examples for a Supplier, a foreign Supplier setup to use Offset Taxes, and a Customer. The Supplier

An Introduction to E-Business Tax

The Foreign Supplier setup to use Offset tax

An Introduction to E-Business Tax

The only difference being the Allow Offset flag is ticked

The Customer

An Introduction to E-Business Tax

The only difference being the Account Tax Details

Making Tax Available A tax can be enabled by ticking the Make Tax Available for Transactions box.

An Introduction to E-Business Tax

When this change is saved E-Business Tax runs a series of checks to ensure that all of the definitions related to the tax have been defined. The following has been done to ensure this will work. • Define either a default place of supply or a tax rule for the rule type Determine Place of Supply. • Define either a default tax registration or a tax rule for the rule type Determine Tax Registration. • Define either a default tax status and default tax rate, or tax rules for the rule types Determine Tax Status and Determine Tax Rate, or the rule type Direct Tax Rate Determination. • Define either a default tax formula or a tax rule for the rule type Determine Taxable Basis. • Define either a default tax formula or a tax rule for the rule type Calculate Tax Amounts. • Define a primary tax recovery rate, if you set the allow recovery option for the tax. • Define at least one tax jurisdiction for the tax. • Define an exchange rate type, if the tax is used in cross-border transactions. Once a tax available there is an annoying large number of features that can’t be changed. While not wishing to point out the obvious, it is especially wise to first do all the setup for EBusiness Tax in a test environment to ensure that it behaves in the way anticipated.

E-Business Tax Setup - Results Displayed in Payables If I enter an Invoice for my English supplier as below

An Introduction to E-Business Tax

And click on Calculate Tax I get the result

The tax amount is 15 because the Invoice date falls in the period when the 15% standard rate applied. If I look at the Tax Details I see the following

An Introduction to E-Business Tax

If I enter a similar Invoice for my Foreign Supplier where Offset Tax is applicable, I get the following result.

Success!!

I’m now going to go back some steps and look at some other examples of how rules can be made to work, this time based on Products for use in Accounts Receivable.

An Introduction to E-Business Tax

Fiscal Classifications
Fiscal classifications provide tax determination values for situations where the parties, products, or transactions are factors in tax determination. A fiscal classification type identifies a category of fiscal classification that has a potential tax implication. Fiscal classification types can be assigned to tax regimes and taxation countries. Fiscal classification codes are set up under a fiscal classification type to provide additional granularity to a particular fiscal classification category. When creating tax rules fiscal classification types are used as determining factors and fiscal classification codes as condition set values. Their use is optional, and depends upon the overall scheme for managing tax determination and tax calculation requirements. They are setup under three general categories: Party fiscal classifications - Classify the first parties, the various parts of the organisation, and the third parties, the customers and suppliers and their locations, for use in tax determination. Product fiscal classifications - Classify the products and services for use in defining rules for tax determination. These can be split into three areas, Inventory based, Non-Inventory based, and Intended Use classifications Transaction fiscal classifications - Classify the nature of a transaction itself, and the details that must accompany a transaction, according to its tax requirements. I am going to run through examples of Inventory and Non-Inventory based Product Fiscal Classifications.

Inventory Based Product Fiscal Classification Rule Definition

From the Task List I can go to the Product Fiscal Classification page.

An Introduction to E-Business Tax

and query some data defined for UK Product Fiscal Classification.

When I review this data I can see the Category codes that have been defined for the Oracle Inventory Category Set ‘GB VAT PRODUCT CLASSIFICATION’.

An Introduction to E-Business Tax

One of these Category codes has been assigned to my Inventory Item ‘Booster Seats’

An Introduction to E-Business Tax

The category code assigned is GBG0103 – Reduced Rate Goods.

A Determining Factor Set has been setup that uses the Fiscal Classification Type

And a Tax Condition Set setup that sets the required condition to being equal to ‘GBG0103 Reduced Rate Goods’

An Introduction to E-Business Tax

A Determine Tax Status Rule ‘STATUS1’ has been created for the Event Class ‘Sales Transaction’

That returns the Tax Status ‘GB VAT REDUCED’ when the Tax Condition is satisfied.

An Introduction to E-Business Tax

Non-Inventory Based Product Fiscal Classification Rule Definition From the Product Fiscal Classification Types page I can display the Product Classification Source of Oracle E-Business Tax and review the Product Category fiscal classification type code.

Here I can see the Fiscal Classification Code ‘RATE 1’

An Introduction to E-Business Tax

In Receivables I have created a Memo Line for ‘Books’ and assigned it the Tax Product Category ‘Fiscal Classification Code/Rate 1’.

I have a Determining Factor Set that uses the Product Category as the determining factor.

An Introduction to E-Business Tax

And a Condition Set setup that sets the required condition to being equal ‘Fiscal Classification Code/Rate 1‘.

And a Determine Tax Status Rule ‘STATUS2’ that has been created for Event Class ‘Sales Transaction’ that returns the Tax Status ‘GB VAT ZERO’ when the condition is satisfied.

E-Business Tax Setup - Results Displayed in Receivables

An Introduction to E-Business Tax

If I enter an Invoice in Receivables with 3 lines, a ‘direct’ line, an Item Line and a Memo line I get the following results.

And the tax details

An Introduction to E-Business Tax

Another Success!!

SUMMARY

It is always good to quit while you are ahead. Which is what I shall do here, hopefully having in some way achieved what I set out to do.

What I set out to do was to break down E-business Tax, and to present the simplest of cases, thus demonstrating how it works, and how it can be made to work in more complicated scenarios.

An Introduction to E-Business Tax

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