Tax Setup Steps R12 1 2

SETUP TAX CODES IN R12.1.
2 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:
- Enter the country name and click go
1 Made By : Mohamed Elhamy | Tax Codes

SETUP TAX CODES IN R12.1.2 May 26, 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

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

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

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

- 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

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


- Click on Create Tax Profile Link
- Go to “Configuration Option” Button to assign the Tax Regime code with the “Operating Unit Name”
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

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
- In configeration owner : choose Globale Configeration Owner to make the tax aviliable on both of legel
entity & Operating Unit

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

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
- Choose TAX code regime

- Choose TAX name
- Choose your ledger then press on create

- Choose the liability account it’s mandatory

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.
- Complete the data and press apply

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.
- Complete the data as shown

Associated Juristification tax rulesConfiger it after you difine tax rate and you have to
define ti to every tax rate you will define
- 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 it’s right from (TAX ACCOUNTS)
- 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

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

- 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
B) Go To : Tax Manager > Advanced Setup Options > Tax Condition Set
- 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
- Select Your Legal Entity
- Select Tax Regime Code
- Select Tax

- Click On GO to show the rules set

- 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

Direct tax rate determination:
For Example :
- Choose Event Class Category :Event Class

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

Place of Supply ( Use to assign the tax to the supply place )
- Complete the data as Shown

- And click Save

Determine Tax Apllicabiltiy

Determine tax Registration

Taxable Basis

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.
- Make it Available for transactions

- Choose the recovery rate

- 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

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

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

After All That

You ready to use tax on application

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.
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.
• 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.
• 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
Tax calculation data. The default value is yes.

Tax Setup Steps R12 1 2

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tax Setup Steps R12 1 2

Uploaded by

Copyright:

Available Formats

SETUP TAX CODES IN R12.1.

2 May 26, 2010

How to Setup Taxes in R12.1.2

Click on Got Task:

- Enter the country name and click go

1 Made By : Mohamed Elhamy | Tax Codes

Step 1: Create the Tax Regime

Go To: Tax Manager > Tax Configuration > Tax Regime

1.1: Press On create

2 Made By : Mohamed Elhamy | Tax Codes

- Enter Tax regime Code & Name the same

- Entry Regime level: Country

- Entry Effective date: old date EX: 1-Jan-2000

- Allow tax inclusion: standard inclusive handling

- Default recovery rate: immediate

3 Made By : Mohamed Elhamy | Tax Codes

4 Made By : Mohamed Elhamy | Tax Codes

-- Choose party type: First party Legal Entity

5 Made By : Mohamed Elhamy | Tax Codes

6 Made By : Mohamed Elhamy | Tax Codes

- Go To: Create Tax Authorities Party Tax Profile in Home page

- Choose party type: Operating Unit Owing Tax Content

- Choose Party name: As shown

7 Made By : Mohamed Elhamy | Tax Codes

8 Made By : Mohamed Elhamy | Tax Codes

- Click on Create Tax Profile Link

9 Made By : Mohamed Elhamy | Tax Codes

Step 2: Create the Tax

Go To: Tax Manager > Tax Configuration > Taxes

- Enter the required fields:

Tax Regime - Configuration Owner - Tax Source …… etc

10 Made By : Mohamed Elhamy | Tax Codes

11 Made By : Mohamed Elhamy | Tax Codes

- Choose TAX code regime

- Choose your ledger then press on create

12 Made By : Mohamed Elhamy | Tax Codes

- Choose the liability account it’s mandatory

13 Made By : Mohamed Elhamy | Tax Codes

Step 3: Create the Tax Status

Go To: Tax Manager > Tax Configuration > Tax Regime

- Complete the data and press apply

14 Made By : Mohamed Elhamy | Tax Codes

Step 4: Create the Tax Jurisdiction

Go To: Tax Manager > Tax Configuration > Tax Regime

- Complete the data as shown

15 Made By : Mohamed Elhamy | Tax Codes

Step 5: Create the Tax Rate & Recovery Rate

- Complete Data As Shown

16 Made By : Mohamed Elhamy | Tax Codes

- Check on tax accounts that it’s right from (TAX ACCOUNTS)

- After Finish Click On Apply

- Complete the data

- Define the tax accounts

- After Finish Click On Apply

17 Made By : Mohamed Elhamy | Tax Codes

Step 6: Define Tax Rules

18 Made By : Mohamed Elhamy | Tax Codes

19 Made By : Mohamed Elhamy | Tax Codes

- Choose The Determine Factor that you Made

- Choose the Operator : Equal To

- Select Your Legal Entity

- Select Tax Regime Code

20 Made By : Mohamed Elhamy | Tax Codes