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SETUP TAX CODES IN R12.1.

May 26,
2010

How to Setup Taxes in R12.1.2

Prerequisite:
Go To: Tax Manager > Tax Configuration > Tax Regime>Home> Create First Party Legal Entity and
Establishment
1: 1.1 Check the Create First Party: Legal Entity & Establishment

Click on Got Task:


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Enter the country name and click go

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SETUP TAX CODES IN R12.1.2

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2010

Step 1: Create the Tax Regime


The tax regime is the highest/ultimate level that taxes are rolled up to, typically, a specific country. In this step,
the Controls and Defaults must be set. The Control section outlines 4 options. Once the tax is made live, the
control options cannot be changed.
The Defaults section will default as applicable to the tax, status, jurisdictions, and tax rate levels, but they can be
changed at each level.
Go To: Tax Manager > Tax Configuration > Tax Regime
1.1: Press On create

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1.2:
- Enter Tax regime Code & Name the same
- Entry Regime level: Country
- Entry Effective date: old date EX: 1-Jan-2000
- Check Boxes: Allow Tax Recovery - Allow Tax Exemptions - Allow Override and Entry of Inclusive Tax
Lines
- Allow tax inclusion: standard inclusive handling
- Default recovery rate: immediate

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1.3:
- Click Continue Button to Assign Party Name which is the Legal Entity Name

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SETUP TAX CODES IN R12.1.2

1.4:
- Go To: Create Tax Authorities Party Tax Profile from (Parties TAB)
-- Choose party type: First party Legal Entity

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SETUP TAX CODES IN R12.1.2

May 26,
2010

- Click Update Tax Profile Yellow Pencil to assign the Tax Regime Code through Configuration Option tab
Button Note you will find it already Assigned and that step for confirmation only

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SETUP TAX CODES IN R12.1.2

1.5:
- Go To: Create Tax Authorities Party Tax Profile in Home page
- Choose party type: Operating Unit Owing Tax Content
- Choose Party name: As shown

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SETUP TAX CODES IN R12.1.2

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SETUP TAX CODES IN R12.1.2

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2010

- Click on Create Tax Profile Link

- Go to Configuration Option Button to assign the Tax Regime code with the Operating Unit Name

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SETUP TAX CODES IN R12.1.2

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2010

Go to Check the Tax Regime Code to verify the Configuration Option to view the
assignment of the Legal Entity Name & the Operating Unit Name to the Tax Regime
Code

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SETUP TAX CODES IN R12.1.2

May 26,
2010

Step 2: Create the Tax


One Tax Regime can have multiple taxes defined under it. The tax type, e.g. sales, VAT, use, is determined
when the tax is set up. Taxes can be set up by geography type, which allows for taxes at different levels... For
example, in the US, there is can be a tax levied at the State level, one at the County level, and one at the City
level.
Go To: Tax Manager > Tax Configuration > Taxes
2.1:
- Enter the required fields:
Tax Regime - Configuration Owner - Tax Source etc
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In configeration owner : choose Globale Configeration Owner to make the tax aviliable on both of legel
entity & Operating Unit

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NOTE: DOES NOT MARK ON Check Box (Make Tax Available for Transaction) till you complete the
remaining setup steps as We Going To DO
NOTE: Important Do Choose the check box ALLOW PRIMERY RECOVERY RATE determination
rules that will make duplicate tax rule and will give you error in calculation tax

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NOTE: THAT THE DEFAULT RECOVERY RATE CODE WILL BE DEFIEDN LATER SO YOU
WILL CHOOSE IT WHEN YOU ARE GOING TO FINISH AND MAKE THE TAX AVAILIABLE

Then click on TAX ACCOUNT: To determine the liability account of the tax
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Choose TAX code regime


Choose TAX name
Choose your ledger then press on create

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SETUP TAX CODES IN R12.1.2

Choose the liability account its mandatory

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SETUP TAX CODES IN R12.1.2

May 26,
2010

Step 3: Create the Tax Status


This is used primarily in the UK to define reduced rate, zero rate, etc. taxes. All taxes must have at least one tax
status defined, and one of those must have the "Set as Default Status" option checked.
Go To: Tax Manager > Tax Configuration > Tax Regime
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Complete the data and press apply

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Step 4: Create the Tax Jurisdiction


A tax jurisdiction is a geographic area for which a tax is levied, e.g. Colorado, California, Florida, El Paso
County, and Los Angeles.
There must be at least one Tax Jurisdiction for each Tax Status with the "Set as default Tax Jurisdiction"
selected and the "Default Effective Date" supplied.
Go To: Tax Manager > Tax Configuration > Tax Regime
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Complete the data as shown

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SETUP TAX CODES IN R12.1.2

May 26,
2010

Associated Juristification tax rulesConfiger it after you difine tax rate and you have to
define ti to every tax rate you will define
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Click on Apply
Click on Tax Accounts : Choose the ledger you created and enter the liability account
Click on Apply

Step 5: Create the Tax Rate & Recovery Rate


Create specific tax rates to be applied for geography. There must be at least one default tax rate. The tax
accounts are also set up in this step.
5.1: Go To: Tax Manager > Tax Configuration > Tax Recovery Rate
For the Non Recovery tax recovery rate to make it available in tax accounts for the non recovery rate
after u define it put the AP ACCRUAL ACCOUNT
- Complete Data As Shown
- Check on tax accounts that its right from (TAX ACCOUNTS)
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SETUP TAX CODES IN R12.1.2

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- After Finish Click On Apply

5.2: Go To: Tax Manager > Tax Configuration > Tax Rate
For the Non Recovery rate to make it available in tax accounts for the non recovery rate after u define it
put the AP ACCRUAL ACCOUNT
- Complete the data
- Define the tax accounts
- After Finish Click On Apply

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SETUP TAX CODES IN R12.1.2

May 26,
2010

Step 6: Define Tax Rules


Prerequisite:
1- Enter a Tax Determining Factor Set and Name and Click Create to Assign it later to the rules
( And this will Be done to each Regime Code you will Made ( If you Make more than one Regime )
but if you are going to make more than one regime ( You have to check on the check box named :
Allow Cross Regime Compounding )
2- DO this proceed to every rate you will define
A) Go To : Tax Manager > Advanced Setup Options > Determine Factor Set

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Insert Determining Factor Class: 'Transaction Input Factor' ( Data Entry From Your
Choose )

Insert Determining Factor Name: 'Tax Classification Code' ( Data Entry From Your Choose )

Choose Your Tax Regime

Choose Your Ledger

Set Usage Choose: Tax Rules

In Determining Factor Class Choose : Transaction Input Factor

In Determining Factor Name Choose : Tax Classification Code

After Finish Click On Apply

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SETUP TAX CODES IN R12.1.2

B) Go To : Tax Manager > Advanced Setup Options > Tax Condition Set
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Enter You Tax Condition Name ( It refers To The Percentage of the Tax )
Enter Name
Choose The Determine Factor that you Made
Choose Ledger
Choose Country
Click On Continue

Choose the Operator : Equal To

Choose the Value/From Range: Name of your regime And it can be Override

Then Click On Finish

3- Make This Step to Assign the Rules To Every Tax Regime you Made
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Select Your Legal Entity


Select Tax Regime Code
Select Tax

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SETUP TAX CODES IN R12.1.2

Click On GO to show the rules set

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SETUP TAX CODES IN R12.1.2

May 26,
2010

Make all the rules for each application are you going to use from event class

Set defaults for the following rule types:


Some definitions needed to know it before going to tax rules:
For every application AP & AR & PURCHASING choose: Event Class and then choose application and
then choose the event that you the tax to effect on but for SALES ORDER in the EVENT CLASS
CATEGORY CHOSSE : TAX EVENT CLASSE & EVENT CLASSE : SALES TRANSACTIONS

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SETUP TAX CODES IN R12.1.2

Direct tax rate determination:


For Example :
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Choose Event Class Category :Event Class


Choose Application: Purchasing
Choose Event: Purchase Order Agreement
Complete Data As shown

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SETUP TAX CODES IN R12.1.2

Place of Supply ( Use to assign the tax to the supply place )


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Complete the data as Shown


And click Save

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SETUP TAX CODES IN R12.1.2

Determine Tax Apllicabiltiy

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SETUP TAX CODES IN R12.1.2

Determine tax Registration

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SETUP TAX CODES IN R12.1.2

Taxable Basis

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2010

SETUP TAX CODES IN R12.1.2

May 26,
2010

Countinue the same for the all rules


Step 7: Make the Tax Live for Transactions
Return back to the Tax created in step 2, and select the Make Tax Available for Transactions option. If it is not
available to be checked, the tax is not set up correctly. Any missed setups will need to be completed before this
can be setup.
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Make it Available for transactions

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SETUP TAX CODES IN R12.1.2

Choose the recovery rate

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SETUP TAX CODES IN R12.1.2

May 26,
2010

- The Last step to after making the tax avaliable for


transactions you Default and controls window to make
the tax you defiend avaliable on application and the
applications can use this tax in the transactions
- Make the definations one time for legel entity and
seconde time operating unit
- Do this step for every appliaction you entend to use tax
on it

GO TO : Default and Controls > Configration TAX options

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After Finish this: GO to: Default and controls > Application Tax Options
To arrange the default hierarchy for the tax

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SETUP TAX CODES IN R12.1.2

After Finish this: GO to: Default and controls > Application Tax Options
To make the Tax Available for the country Default

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SETUP TAX CODES IN R12.1.2

After All That


You ready to use tax on application

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2010

SETUP TAX CODES IN R12.1.2

May 26,
2010

And here is Some Profile options you may need to


control tax:
eBTax: Allow Ad Hoc Tax Changes
The eBTax: Allow Ad Hoc Tax Changes profile option controls which users can make
Ad hoc tax changes on the transaction line, such as selecting a different tax status or tax
rate. The changes that a user can make also depend upon the details of the applicable
tax setups.
If the tax rate associated with a tax has the Allow Ad Hoc Rate option enabled, then
users can override the calculated tax rate on the transaction line.

eBTax: Allow Manual Tax Lines


The eBTax: Allow Manual Tax Lines profile option controls which users can enter
Manual tax lines on the transaction for the tax setups that allow this update.
If the tax configuration has the related options enabled, then users can enter manual tax
Lines on the transaction for the applicable tax.
The related tax setups are:
Taxes: Allow Entry of Manual Tax Lines
Configuration Owner Tax Options:
Allow Entry of Manual Tax Lines
Allow Manual Tax Only Lines

eBTax: Allow Override of Customer Exemptions


The eBTax: Allow Override of Customer Exemptions profile option controls the display
Of the Tax Handling field on the transaction line. You use the Tax Handling field to
Apply and update customer tax exemptions to transactions.
If you set the eBTax: Allow Override of Customer Exemptions profile option to Yes, you
Must also complete the related setups for tax exemptions.

eBTax: Allow Override of Tax Classification Code


The eBTax: Allow Override of Tax Classification Code profile option controls whether
Users can update the tax classification code that is defaulted to the transaction line.
E-Business Tax defaults the tax classification code to the transaction line according to
The defaulting hierarchy defined for the operating unit and application.

eBTax: Allow Override of Tax Recovery Rate


The eBTax: Allow Override of Tax Recovery Rate profile option controls which users
Can enter or update the calculated tax recovery rates on the transaction for the tax
Recovery rate setups that allow this update.
If the tax recovery rate associated with a tax has the Allow Ad Hoc Rate option enabled,
Then users can override the calculated tax recovery rate on the transaction.
The meaning of ad hoc entry of tax recovery rates differs according to the source
Application for the transaction:
Payables - The user can only select another previously defined recovery rate for the
Tax.
Procurement - The user can either select another previously defined recovery rate
For the tax or enter a new recovery rate.

eBTax: Inventory Item for Freight (Oracle Order Management only)


The eBTax: Inventory Item for Freight profile option lets Order Management use an
Inventory item defined as Freight on Receivables transaction lines. You can use the
Freight Inventory item to control the tax rate on taxable freight amounts.

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The values for this profile option are:
Freight Charge - The freight Inventory item applies to external Receivables
Transactions.
Freight for Intercompany - The freight Inventory item applies to internal Receivables
Transactions only.
You must also set the eBTax: Invoice Freight as Revenue profile option to Yes.

eBTax: Invoice Freight as Revenue (Oracle Order Management only)


The eBTax: Invoice Freight as Revenue profile option controls whether to consider
Freight amounts as taxable line items.
Set the eBTax: Invoice Freight as Revenue profile option to yes, if you are required to
Tax freight amounts. The freight amounts entered in the Order Management Ship
Confirm window are then passed to Receivables transactions as taxable line items.
If you set the eBTax: Invoice Freight as Revenue profile option to Yes, you must also set
The eBTax: Inventory Item for Freight profile option.

eBTax: Read/Write Access to GCO Data


The eBTax: Read/Write Access to GCO Data profile option controls whether users can
Set up tax configuration data for the global configuration owner.
If you set the eBTax: Read/Write Access to GCO Data profile option to Yes, then the
Setting Up Applications for Oracle E-Business Tax 2-7

Applicable users can set up taxes and related configuration data for the global
Configuration owner. Legal entities and operating units can then share the global
Configuration owner tax setups.
See: Configuration Options in Oracle E-Business Tax, Oracle E-Business Tax User Guide
For more information.

eBTax Taxware: Service Indicator


The eBTax Taxware: Service Indicator profile option indicates whether taxes are
Calculated on service or a rental transactions.
The Taxware API parameter that accepts this profile option value is JurLink.ServInd.
The values for this profile option are:
Service - Service transaction.
Rental - Rental transaction.
Space - Non-service transaction.

eBTax Taxware: Tax Selection


The eBTax Taxware: Tax Selection profile option indicates whether Taxware uses
Jurisdiction-level jurisdiction codes to calculate taxes.
The Taxware API parameter that accepts this value is TaxSelParm of Taxfn_Tax010.
The values for this profile option are:
Tax only - Taxware calculates tax based on the ship-to address only.
Jurisdiction and Tax - Taxware calculates tax based on all jurisdiction information,
Including ship-to, ship-from, point of order origin (POO), and point of order
acceptance (POA).

eBTax Taxware: Use Nexpro


The eBTax Taxware: Use Nexpro profile option indicates whether Taxware uses the
Nexpro functionality. If you enable this option, additional configuration is required on
The Taxware side of the integration to achieve nexus-based taxation.
The Taxware API parameter that accepts this value is TaxLink.UseNexproInd.

eBTax Vertex: Case Sensitive


The eBTax Vertex: Case Sensitive profile option enables case-sensitive searches of Vertex

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SETUP TAX CODES IN R12.1.2


Tax calculation data. The default value is yes.

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