Oracle EBS Tax - Setup

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How to set up EBTax So Tax Is Calculated on Payables Invoice? (Doc ID 1520430.1)
In this Document
Purpose
Details
Pre-Requisite:
Step 1: Create Tax Regime
Step 2: Create Tax
Step 3: Create Tax Status
Step 4: Create Jurisdiction
Step 5: Create Rate
Step 6: Enter Tax Accounts
Step 7: Create Tax Rules (Populate values for all defaults)
Step 8: Make Tax Available for Transaction
Step 9: Test the Tax
References
APPLIES TO:
Oracle E-Business Tax - Version 12.0.1 and later

Oracle Payables - Version 12.0.1 and later
Information in this document applies to any platform.
PURPOSE
This note helps beginners to set up Oracle eBusiness Tax (EBtax) so that tax can be calculated on payable invoice.
DETAILS
NOTE:
In the images below and/or the attached document, user details / company name / address / email / telephone
number represent a fictitious sample (based upon made up data used in the Oracle Demo Vision instance).
Any similarity to actual persons, living or dead, is purely coincidental and not intended in any manner.
Pre-Requisite:
Check following Party/OU Setup:
Tax Manager/Administrator > Parties > Party Tax Profiles
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Query the following:
Party type: Operating Unit Owning Tax Content
Party name: Vision Operations (the name of OU which will calculate tax)
Click Go
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Click View Tax Profile
Confirm whether 'Use Subscription of the Legal Entity' is checked.
If this is checked, then the OU is set to use the subscription from Legal Entity. The regime is then subscribed (in a
later step) to the First Party Legal Entity rather than the Operating Unit Owning Tax Content.
This is a one time setup and the value cannot be toggled. So enable this only after you determine you want to use
this setup.
In our case, for Vision Operations OU, this is NOT checked and therefore we need to set our Tax Regime
up against the Operating Unit and NOT the First Party Legal Entity. (Step 1 below)
Step 1: Create Tax Regime
Tax Manager/Administrator > Tax Configuration > Tax Regimes
Click Create to enter a new Tax Regime.
We are going to create a United Kingdom regime.
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Enter the following:
Field Value
Tax Regime XXX UK

Code REGIME
Name XXX UK
REGIME
Regime Country
Level
Country United
Name Kingdom
Effective 10-Jan-2000
From
Parent NULL
Regime
Code
Used to Unchecked
Group
Regimes
Click on Show Controls and Defaults
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Enter settings for Controls and Defaults as follows:
Field Value
Controls:
Allow Tax Recovery Unchecked
Allow Override and Checked

Entry of Inclusive Tax
Lines
Allow Tax Exemptions Checked
Allow Tax Exceptions Checked
Defaults:
Tax Currency GBP
Minimum Accountable
Unit 0.01
Rounding Rule
Nearest
Tax Precision 2
Allow Multiple Unchecked

Jurisdictions
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Click Continue
Enter the following information:
Field Value
Party Name Operating Unit
Party Type Operating Unit

Owning Tax
Content *
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Configuration Common
for Taxes and Configuration
Rules
Configuration Common
for Product Configuration
Exceptions
Effective From
10-Jan-2000
* If ‘Use Subscription of the Legal Entity’ was checked in the prereq step then this would have been entered against
the First Party Legal Entity and not the OU
Click on Finish
Ensure you see confirmation message:
Step 2: Create Tax
Tax Manager/Administrator > Tax Configuration > Taxes
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Click on Create
Field Value
Tax Regime Code XXX UK REGIME (From

LOV – Regime defined in
Step 1)
Configuration Owner Global Configuration

Owner
Tax Source Create a New Tax
Tax XXX UK TAX
Tax Name XXX UK TAX
Tax Type VAT
Geography Type Country
Parent Geography Type Country
Parent Geography Name United Kingdom
Set as Offset Tax Unchecked
Set Tax for Reporting

Purposes Unchecked
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Click on Show Controls and Defaults
Field Value
Controls:
Allow Tax Inclusion Unchecked
Allow Override and Checked

Entry of Inclusive Tax
Lines
Allow Tax Rounding Checked

Override
Allow Override for Checked

Calculated Tax Lines
Use Legal Unchecked

Registration Number
Allow Multiple
Jurisdictions
Allow Mass Creation Checked

of Jurisdictions
Defaults: Checked
Allow Tax Rate Rules Checked
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Click Apply and ensure the confirmation message appears.
Step 3: Create Tax Status
Tax Manager/Administrator > Tax Configuration > Tax Statuses
Click Create
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Field Value
Tax Regime XXX UK

REGIME
(From LOV
in Step 1)
Tax XXX UK TAX

(From LOV
in Step 2)
Tax Status XXX UK

Code STATUS
Name XXX UK
STATUS
Effective 10-Jan-2000
From (Defaults)
Set as Checked
Default Tax
Status
Default 10-Jan-2000
Status *
Effective
From
* Does not default and is not required so remember to enter this.
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Click Apply
View confirmation message:
Step 4: Create Jurisdiction
Tax Manager/Administrator > Tax Configuration > Tax Jurisdiction
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Click Create (see above screenshot)
Field Value
Tax Jurisdiction XXX UK

Code JURISDICTION
Tax Jurisdiction XXX UK

Name JURISDICTION
Tax Regime XXX UK

Code REGIME (From
LOV Step 1)
Tax XXX UK TAX

(From LOV Step
2)
Geography COUNTRY
Type
Effective From 10-JAN-2000
Geography United Kingdom

Name
Default Tax
Jurisdiction
Settings:
Set as default Checked

Tax Jurisdiction
Default 10-Jan-2000
Effective From
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Click Apply
Ensure confirmation message is received.
Step 5: Create Rate
Tax Manager/Administrator > Tax Configuration > Tax Rates
Click Create (screenshot above)
Field Value
Tax Regime Code XXX UK REGIME

(From LOV Step 1)
Configuration Owner Global Configuration

Owner
Tax XXX UK TAX (From

LOV Step 2)
Tax Status Code XXX UK STATUS

(From LOV Step 3)
Tax Jurisdiction Code XXX UK

JURISDICTION (From
LOV Step 4)
Tax Rate Code XXX UK RATE
Rate Type Percentage
Rate Periods:
Percentage Rate 20
Effective From 01-Jan-2000
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Click on Rate Details button and scroll down
Field Value
Set as Checked
Default Rate
Default 01-
Effective Jan-2000
Date
Click Apply
Note: This returns you to the Tax Rates page and the rate has not yet been saved, just the details for it.
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Click Apply again.
Ensure confirmation message is received
Step 6: Enter Tax Accounts
Query XXX UK Tax
Click Go
Click Tax Accounts
Search for Vision Operations OU and click create
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Enter the Operating Unit and populate Tax Expense and Tax Recoverable/Liability accounts.
Click Apply.
Note this has not been saved at this point.
Click Apply again
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Click Apply a third time
Step 7: Create Tax Rules (Populate values for all defaults)
Tax Manager/Administrator > Tax Configuration > Tax Rules
Field Value
Configuration Global
Owner Configuration
Owner
Tax Regime XXX UK

Code REGIME
Tax XXX UK TAX
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Click Go to search for existing default rule
Click the pencil icon in the Set Default column to change any of the defaults defined
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Update the defaults as follows:
Field Value
Determine Place of Ship to, use bill to if

Supply ship to is not found
Determine Tax Applicable

Applicability
Determine Tax STANDARD_TB

Registration
Calculate Tax
Amounts STANDARD_TC
Note: Direct Tax Rate Determination is used only for upgraded taxes so this is greyed out. The last item, Determine
Recovery Rate is also not updatable because this tax regime has not been setup to allow recoverable taxes.
Step 8: Make Tax Available for Transaction
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Query Tax
Click on Update Pencil Icon
Check the box 'Make Tax Available for Transactions'
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Click Apply
This warning is ok since we know we didn’t enter an exchange rate type.
Click Yes and receive confirmation of changes saved
Step 9: Test the Tax
Payables > Invoices : Entry > Invoices
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Enter Invoice for Supplier with a UK Ship-To address
Enter Line information
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Ensure the SHIP TO location at the line level contains a UK location (As that is how we determine place of supply)
Click distributions
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Enter Invoice distribution
Save
Go back to Invoices and click Calculate Tax
Tax line is created – click on Tax Details
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You can see that the SAM UK REGIME has been applied and tax calculated at 20%.
Join our growing Oracle Payables Community or the EBTax Community and learn from your peers and Oracle on
how to address your unique issues in AP.
REFERENCES
NOTE:1082172.1 - How to Troubleshoot a Tax That Does Not Calculate in R12 E-Business Tax (EBTAX)
Didn't find what you are looking for?
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Copyright (c) 2023, Oracle. All rights reserved. Oracle Confidential.

How to set up EBTax So Tax Is Calculated on Payables Invoice? (Doc ID 1520430.1)

Oracle E-Business Tax - Version 12.0.1 and later

Check following Party/OU Setup:

Tax Manager/Administrator > Parties > Party Tax Profiles

Query the following:

Party type: Operating Unit Owning Tax Content

Click View Tax Profile

Confirm whether 'Use Subscription of the Legal Entity' is checked.

Step 1: Create Tax Regime

Tax Manager/Administrator > Tax Configuration > Tax Regimes

Click Create to enter a new Tax Regime.

We are going to create a United Kingdom regime.

Enter the following:

Tax Regime XXX UK

Click on Show Controls and Defaults

Enter settings for Controls and Defaults as follows:

Allow Tax Recovery Unchecked

Allow Override and Checked

Allow Tax Exemptions Checked

Allow Tax Exceptions Checked

Tax Currency GBP

Allow Multiple Unchecked

Enter the following information:

Party Name Operating Unit

Party Type Operating Unit

Ensure you see confirmation message:

Step 2: Create Tax

Tax Manager/Administrator > Tax Configuration > Taxes

Enter the following information:

Tax Regime Code XXX UK REGIME (From

Configuration Owner Global Configuration

Tax Source Create a New Tax

Tax XXX UK TAX

Tax Name XXX UK TAX

Tax Type VAT

Geography Type Country

Parent Geography Type Country

Parent Geography Name United Kingdom

Set as Offset Tax Unchecked

Set Tax for Reporting

Click on Show Controls and Defaults

Enter the following information:

Allow Tax Inclusion Unchecked

Allow Override and Checked

Allow Tax Rounding Checked

Allow Override for Checked

Use Legal Unchecked

Allow Mass Creation Checked

Allow Tax Rate Rules Checked

Click Apply and ensure the confirmation message appears.

Step 3: Create Tax Status

Tax Manager/Administrator > Tax Configuration > Tax Statuses

Enter the following information:

Tax Regime XXX UK

Tax XXX UK TAX

Tax Status XXX UK

* Does not default and is not required so remember to enter this.

View confirmation message:

Step 4: Create Jurisdiction

Tax Manager/Administrator > Tax Configuration > Tax Jurisdiction

Click Create (see above screenshot)