Oracle R12 E-Business Tax: Impacts and Alternatives

NCOAUG Training Day February 25, 2011

Presenter Information

Dave Homiak, Vertex Inc.

Sr. Channel Manager, Oracle Solutions 11 years experience in the tax automation industry Managing the partnership with Oracle Communicating our solutions for Oracle clients

Agenda

Session Objectives Vertex-Oracle Partnership Oracle Introduces E-Business Tax with R12 Capabilities and Limitations of EBTax 3rd Party Tax Integration (Vertexs Role) Overview of Vertex O Series Integration for EBTax Success Stories EBTax Setups to Enable Vertex

Objectives

Upon completion of this session, you will be able to: Understand the concepts of E-Business Tax and Vertex O Series Understand the current Oracle R12 integration status Gain an understanding of how Vertex O Series is configured with E-Business Tax Learn through demonstration of O2C and P2P transactions where Vertex O Series calculates tax Understand Vertex O Series International tax capabilities for Oracle E-Business Suite R12

Oracle Partnership

Oracle Platinum Partner Only tax solution provider to achieve this level Executive sponsorship from Oracle required Oracle Development Partner Jointly developing tax solutions since 1992 (SalesTax/PayrollTax) Direct access to Oracle Tax Development group Only vendor selected by Oracle to test R12 tax integrations Over 800 mutual clients Mutual customers Vertex uses Oracle; Oracle uses Vertex
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Introducing E-Business Tax for Oracle R12

E-Business Tax Global Tax Management

Now

Oracle 11i

Oracle R12

Oracle eBusiness Tax

Centralized Global Tax Management Module for Oracle R12 Order to Cash and Procure to Pay Modules Ability to create simple and complex tax rules Expanded VAT functionality (Tax Content Library) Enhanced tax reporting functionality Best native tax engine among major ERP players

Tax Determination Steps

Regime Applicability Determine where the transaction is deemed to take place Determine Applicable Tax Regimes Determine Candidate Taxes Determine Place of Supply And Tax Registration Determine Applicable Taxes & Jurisdictions Determine Tax Status for each applicable Tax

Vertex Registered? Tax Applicability

Identify Status Tax Locations

Identify Attributes Tax Rate

Determine Tax Rate Evaluate Exemptions and Exceptions

Taxable Basis Call O Series

Determine Taxable Basis (normally line amount)

Record O Series Tax Calculation Calculated Tax

Calculate Tax (normally = line amount x rate)

eBTax Framework for Building Tax Rules

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eBTax Compliance Limitations

R12 customer and consultant feedback eBTax does not provide: Tax rates Situs/Place of Supply rules (e.g. modified origin) Tier tax & max tax rules Product/services taxability rules Distinction between sales tax and use tax Returns or remittance capability

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eBTax Functional Limitations

Building, maintaining and testing rules can be time consuming Does not work with disparate systems Oracle R12 only Does not provide master geography data for Address Validation

Oracle eBusiness Tax Considerations

Is my company prepared to maintain these rule changes that affect the simple tax rates? How many people will we need to track and manage changes? Once we implement R12 with eBTax, what kind of support will we get from Oracle when we call them about changes? Will we be getting support from folks that know tax or will it be coming from the standard support group? Will Oracle be in a position to respond to up to the minute business needs for complying with ever changing tax laws?

Oracle Strategy for 3rd Party Tax Integrations

Oracle Sales Tax Integration Background

Oracle 11i included standard US Sales Tax Integration Q Series embedded into 11.5.8 and above Changes need IT involvement No Standard Tax Integration on the Procure to Pay side Oracle R12 introduced eBusiness Tax Module Oracle invested a great deal in the E-Business Tax module Centralized Tax Processing Provides a tax framework or skeleton Standard Tax Integration for P2P transactions Control shifts to Tax Dept rather than IT

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eBTax Background and Basics

Oracle selected Vertex as the only testing partner Vertex was heavily involved in the design and development phases of eBTax integration Consider Vertex a trusted partner and advisor for tax system design and development for over 15 years Recognize Vertexs continued investment in research and development of tax systems Value Vertexs shared commitment to mutual customers success

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eBTax Background and Basics

Tax Options for R12 EBTax engine and Sales Tax Rate File
ORAMAST file format US content only Requires manual construction and maintenance of rules

Vertex Q Series
Leverages old 11i interface structure Limited functionality for Consumer Use Tax and VAT

Vertex O Series
Validated Integration using supported Oracle interface All sales, use and international tax rules included

Oracle eBTax Partner Integration Overview

eBusiness Suite/eB Tax
Transaction Data Transaction Data

Tax Services Request Manager Services

Content Repository Tax Content Services Tax Determination Services Partner Tax Content Interface Tax Administration Services Partner Tax Services Interface

Record Repository

Vertex O Series
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eBTax 3rd Party Integration

Impact on Vertex Completely different integration structure compared to 11i 3rd party tax integration to Procure to Pay Modules Integration Timeline Integration design and development began in 2006 O2C integration completed in 2008 P2P integration completed in 2009 VAT extension completed in 2010 Validations achieved in 2010

eBTax and Vertex O Series Client Benefits

Following the Oracle development standards leveraging the eBTax framework means:
The integration is supported by Oracles Support Center Synchronization of versions when applying new RUPs

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Modules and Financial Events Transactions Impact on Tax

Procure to Pay (P2P)
Accounts Payable Purchasing Expense Report Projects
Oracle Payables Invoice Payables Credit/Debit Memo Purchase Order Purchase Transaction Quote Purchase Requisition Purchase Prepayment

Order to Cash (O2C)

Order Management Receivables Service Contracts Quote
Sales Transaction Quote Receivables Invoice Sales Credit/Debit Memo Sales Adjustment

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Integration Availability

US Order to Cash Available since 2008 20 clients US Procure to Pay Available since 2009 14 clients International VAT Input and Output Available since 2010 5 clients Brazil, India and China available 2011

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Oracle Validation

Oracle has validated O Series 5.0 and 6.0 for R12

Order to Cash Modules Procure to Pay Modules

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Oracle R12 O Series Clients

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EBTax Setup for Vertex O Series

EBTax Required Setups

Creating Tax Regime Registering Vertex as the Service Provider Linking Vertex to EBTax Setups
Tax Tax Status Tax Jurisdiction Tax Rates Tax Rules

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Tax Determination Steps

Regime Applicability Determine where the transaction is deemed to take place Determine Applicable Tax Regimes Determine Candidate Taxes Determine Place of Supply And Tax Registration Determine Applicable Taxes & Jurisdictions Determine Tax Status for each applicable Tax

Vertex Registered? Tax Applicability

Identify Status Tax Locations

Identify Attributes Tax Rate

Determine Tax Rate Evaluate Exemptions and Exceptions

Taxable Basis Call O Series

Determine Taxable Basis (normally line amount)

Record O Series Tax Calculation Calculated Tax

Calculate Tax (normally = line amount x rate)

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Tax Determination Steps Using Vertex O Series

Regime Applicability Determine where the transaction is deemed to take place Determine Applicable Tax Regimes

Vertex Registered?

Determines if the Applicable Tax Regime is Subscribed to Vertex Determines relevant locations (Bill_to, Ship_to, etc) Identifies Tax Exemptions sourced in Oracle Identifies other Tax Attributes (product category, etc)

Identify Locations

Identify Attributes

Call O Series

Call is made to O Series to Calculate Tax

Record O Series Record O Series Calculated Tax Calculated Tax

Tax and attributes set by O Series are recorded on the transaction

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Service Subscription Designation

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Service Provider Confirmation

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Tax Regime Creation

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Tax Regime Tax Levels Covered

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Tax Regime Code Possible Taxes

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Tax Status Creation

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Vertex and Oracle R12 EBTax: Summary

Questions/Answers

Presenter Contact Information

Dave Homiak, Vertex Inc.

Sr. Channel Manager, Oracle Solutions 610-651-5361 dave.homiak@vertexinc.com

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