Tier EB Tax

Oracle E-Business Suite
Release 12 E-Business Tax
Ed Eichler
Vice President of Consulting Services
Tina Tyson
Senior Oracle Applications Consultant
May 21, 2010
Page 1
Tier1 Confidential and Proprietary
Agenda
 EB Tax Basics
 New Functionality
 Modules Impacted
 Major Setup Steps
 Party Tax Profiles
 Regime to Rate Flow
 TCA Geography Hiearchy
Page 2
EB Tax
 E-Business Tax provides a single point solution
for managing your transaction-based tax
requirements.
 Continued support by Vertex/Taxware for US
state and local sales taxes only within the order-to-
cash business flows.
 Replaces Global Tax Engine (OM) and
Automatic Tax Calculation (PO) in Release 11i
Page 3
Modules that use EBTax
 Advanced Global  Oracle Order Management
Intercompany System  Oracle Payables
 Consigned Inventory  Oracle Projects
 Oracle General Ledger  Oracle Purchasing
 Oracle Internet Expenses  Oracle Receivables
 Oracle iProcurement  Oracle Services Contracts
 Oracle iStore  Oracle Trade Management
 Oracle Order Capture
Page 4
Major EB Tax Setup Steps
 Create Party Tax Profiles
 Legal Entity
 Legal Establishments
 Operating Unit
 Location Based Tax Setup
 TCA Geography Hierarchy
 Tax Rules
Page 5
Party Tax Profiles
 A Party Tax Profile is the profile for the party involved in tax
transactions that are set up through Legal Entity and Trading
Community Architecture.
 Party tax profiles contain all of the tax information for each party,
including tax registrations and party fiscal classifications.
 Created for each Legal Entity and each ‘Establishment’
 Establishment is a new EB Tax concept - a legal establishment record
is set up for each office, service center, warehouse and any other
location within the company that requires a registration with a tax
authority for one or more taxes.
Page 6
Assign Party to Tax Regime
Page 7
Creation of Legal Establishment
Tax Profile
Page 8
Party Tax Profile for OU
Page 9
Default Legal Entity to OU for
Tax Profile
Page 10
Regime to Rate Setup
TAX REGIME - The set of laws and regulations that
determines the treatment of one or more taxes.
Example: US Sales and Use Tax
TAX - A classification of a charge imposed by a

government through a fiscal or tax authority.
Example: State, County, City
TAX STATUS- The taxable nature of a product in the

context of a transaction for a tax.
Example: Standard
TAX JURISDICTION - The geographic area where a tax is

levied by a specific tax authority.
Example: Pennsylvania
TAX RATE - The rates specified for a tax status for a

given time period. The tax rate is expressed as a
percentage, a value per unit quantity, or a fixed sum per
transaction.
Example: 6%
Page 11
Tax regime
Page 12
Tax
Page 13
Tax Status
Page 14
Tax Jurisdiction
Page 15
Tax Rate
Page 16
Tax Rate (cont’d)
Page 17
TCA Geography Hierarchy for
US
Page 18
TCA Geography Setup
Page 19
TCA Hierarchy Structure for US
Page 20
TCA Hierarchy Validations
Page 21
Tax Rules
 Used to include or exclude specific:
 Jurisdictions
 Items
 Line Types
 Customers
 Examples
 Tax Exempt Customers
 Tax Exempt Sales Transaction Types
 Exemption of Freight Transactions
Page 22
Default Tax Rules
Page 23
Default State Tax Rules
Page 24
Tax Determination
 How the EB Tax engine works:
 Determine Place of Supply - Determines the location where a transaction is
considered to have taken place for a specific tax.
 Determine Tax Applicability - Determines the taxes that apply to a given
transaction.
 Determine Tax Registration - Determines the tax registration status for the
applicable taxes of the parties involved in the transaction.
 Determine Tax Status - Determines the tax status of each applicable tax to use on
the transaction.
 Determine Tax Rate - Determines the tax rate for each applicable tax status to use
on the transaction.
 Determine Taxable Basis - Determines the amount to use upon which to calculate
the tax rate.
 Calculate Tax Amounts - Calculates the tax and displays the calculation results.
Page 25
Upgrading from 11i
 Replaces
 Order to Cash - Global Tax Engine
 Procure to Pay − Automatic Tax Calculation
 Oracle describes the upgrade as ‘fully automated’ – what is
present in 11i will automatically migrate to R12 in the
standard upgrade process
 Experience is that 11i to R12 upgrade does require some
configuration of R12 EB Tax for proper functionality
 EB Tax configurations should be validated post upgrade to
ensure tax determination engine operates as expected
Page 26
EB Tax Setup Lessons Learned
 A default for each level of tax configuration is required – Tax Status,
Tax Jurisdiction, Tax Rate, and Tax Rules
 Tax rules are limited and controlled by the subscription of the Legal
Entity/OU
 TCA Geography Hierarchy for Address Validations is required
 Location based taxes require that Customer and Supplier addresses be
correct down to the City/State/County/Zip – many existing
implementations will not have County information
 EB Tax is setup intensive – each configuration must be correct for the
proper tax determination to occur
 Support can be challenging
Page 27
Questions
Page 28

Tier EB Tax

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Tier EB Tax

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Oracle E-Business Suite

Release 12 E-Business Tax

May 21, 2010

TAX - A classification of a charge imposed by a

TAX STATUS- The taxable nature of a product in the

TAX JURISDICTION - The geographic area where a tax is

TAX RATE - The rates specified for a tax status for a

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