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Oracle E-Business Tax Overview
Release 12 Migration
Copyright © 2007, Oracle. All rights reserved.

Objectives
After completing this module, you should be able to:

• Describe and use the new features in Release 12 of
Oracle E-Business Tax
• Set up the new features in Release 12 of Oracle
E-Business Tax
1-2 Copyright © 2007, Oracle. All rights reserved.

Agenda
• Oracle E-Business Tax (eBTax) Description

• Business Needs that eBTax Meets
• Key Concepts
• Architecture
• Process Flow
• User Interface
• Upgraded and New Features

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

What is Oracle E-Business Tax (eBTax)
Oracle E-Business Tax (eBTax) is a new product that:

• Provides the infrastructure for tax knowledge
management
• Provides tax service to all E-Business Suite business
flows
• Uses a global system architecture
• Is configurable and scalable
• Is a single point solution
• Is a one-application interface

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

Business Requirements Met by eBTax
• Sales and Use Tax in Procurement

• Self-Assessed Tax in Payables
• Multiple Registrations
• Deferred Tax in AP
• Enhanced Handling of Tax on Freight
• Enhanced Exemptions and Exceptions
• Multiple Inclusive, Compounding
• Quantity Based Rates in Procurement

Business Needs Solutions
Business Need Solution
• Seeding of basic tax content setup for some

countries
• Service integration and data upload from
Need for Automation
Vertex and Taxware in the United States
• Integrity checks when defining tax content
setup
• Most of tax content setup is date effective

• Tax Rules flow makes it easy to change
Constant Changes in Tax
Laws and Regulations existing rules and/or create new ones
• Tax Simulator allows simulation of tax setup,
rules, transactions entry and respective tax
rules results
• Tax Registrations, Tax Reporting Codes
• Tax Lines capture all relevant information
Need for Local Compliance
used to determine applicable taxes
• Tax Reporting templates can be modified and
extended

Business Need Solution
• Tax Lines capture all relevant information

used to determine applicable taxes
• Oracle E-Business Tax fully integrates and
makes use of common infrastructure available
within E-Business Suite such as:
Information Fragmentation • TCA’s Geography Model
• TCA’s Party Classification Model
• Legal Entity Model
• Inventory Item Categorization Model
• Accounting Event Classes
• Tax services for payments transactions can

Deferred Tax in Payables be enabled at Configuration Owner Tax
Options flow
• Tax services for applicable transactions with

Tax on Freight
freight can be enabled at Configuration Owner
Tax options flow

Business Needs Solution
• Complete Sales and Use Tax setup hierarchy

can be defined in Regime to Rates flow
• Tax services for applicable transactions can
be enabled at Configuration Owner Tax
Sales and Use Tax Options flow
in Procurement • Tax rules can apply to generic or specific
transactions
• Tax Jurisdictions can be defined for very
precise geographical areas where taxes are
applicable
• Tax setup allows creation of Quantity Based
Duty Tax Handling
tax rates
Cash and Accrual Basis  Tax Lines will capture necessary information
Reporting for Tax  Tax Reporting allows specific selection
• Tax services for applicable transactions can
Tax on Inter-company
be enabled at Configuration Owner Tax
Movements
options flow
1 - 10 Copyright © 2007, Oracle. All rights reserved.

Business Needs Solution
• New Tax Registrations flow allows multiple tax

Multiple Tax Registrations registrations for the same party and/or party
site
• Any number of Tax Reporting Types and

Tax Reporting Codes Codes can be defined and associated to
various entities within Oracle E-Business Tax

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

Key Concepts: Tax Authority
Tax Authority: A government entity that regulates tax

law, administers, and/or audits one or more taxes.
Tax Tax
Tax Regime Tax
Authority Jurisdiction
California State Board

of Equalization
HM Customs and
Excise (U.K.)
Canadian Customs
and Revenue Agency
(Canada)
Secretaria da Receita
Federal (Brazil)

Key Concepts: Tax Regime
Tax Regime: The set of tax rules that determine the

treatment of one or more taxes administered by a tax
authority.
Tax Tax
Tax Regime Tax
California State Board California Sales Tax

of Equalization
HM Customs and UK VAT
Excise (U.K.)
Canadian Customs Canadian Goods and
and Revenue Agency Services Tax
(Canada)
Secretaria da Receita RICMS - Regulamento
Federal (Brazil) do ICMS

Key Concepts: Tax
Tax: A classification of a charge imposed by a

government through a fiscal or tax authority.
Tax Tax
Tax Regime Tax
California State Board California Sales Tax State Sales Tax

of Equalization
HM Customs and UK VAT UK VAT
Excise (U.K.)
Canadian Customs Canadian Goods and GST
(Canada)
Secretaria da Receita RICMS - Regulamento CMS

Key Concepts: Tax Jurisdiction
Tax Jurisdiction: A geographic area where a tax is

levied by a specific tax authority.
Tax Tax
Tax Regime Tax
California State Board California Sales Tax State Sales Tax California (State)
of Equalization
HM Customs and UK VAT UK VAT UK
Excise (U.K.)
Canadian Customs Canadian Goods and GST Ontario
(Canada)
Secretaria da Receita RICMS - Regulamento CMS São Paulo

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

Architecture Overview
E-Business Suite
Transaction Data Transaction Tax Data

Tax Services Request Manager
Services
Content
Repository Tax Tax Tax
Content Determination Administration
Services Services Services
Record
Repository Partner Tax Partner Tax
Content Services
Interface Interface
Tax Partner Tax Content Tax Services

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

Processing Taxes for Transactions
Single Interface for Transactions

Determine Applicable
Purchasing Parties
Regimes Taxes
Places
Products
Receivables Calculate
Tax Status Taxable
Tax
Processes & Rate Basis
Amount
Payables Transparent Integration with Tax

Partner Services
Sales
Tax Taxes,
… Transactions Rules

Tax Determination Services Example
A default value or a
rule indicates the
Place of Supply
Tax
Regimes
are
identified
based
on the
countries
of the
parties
involved

Party classification
can be used as a tax
determining factor in
any rule type
A default party type

value or a rule
determines from
which party to
evaluate tax
registration status

Product Classification (Qty * Unit Price) is

can be used as a tax the default seeded
determining factor in Taxable Basis
any rule type formula, but other
formulas can be
defined

(Tax Rate *
Taxable Basis) is
the default
seeded Tax
Amount formula,
but other
formulas can also
be defined

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

User Interface

Agenda

• Key Concepts
• Architecture
• Process Flow
• User Interface

Upgraded and Redesigned Features
• Tax Definition Hierarchy

• Tax Configuration Ownership
• Tax Defaulting Hierarchy
• System Options for Tax
• Tax Groups
• Tax Jurisdiction Handling
• Tax Compounding
• Tax Inclusiveness
• Tax Recovery
• Tax Rounding

Upgraded and Enhanced Features
• Profile Options for Tax

• Tax Overrides
• Offset Taxes
• Party Tax Attributes
• Tax Registrations
• Tax Exemptions
• Tax Exceptions
• Tax Formulas
• Global Descriptive Flexfields (Tax Related)
• Transaction Tax Upgrade

Tax Definition Hierarchy
• Tax Setup “Backbone”

• Also known as “Regimes to Rates” flow
• Mainly comprised of Regime, Tax, Status and Rates,
but also Tax Jurisdictions and Tax Recovery Rates
• Parent-Child Relationships form a Hierarchy which is
easy to visualize, navigate and maintain
• Setup can normally be shared across all applicable
applications, Legal Entities and Operating Units

Tax Configuration Ownership
• 11i Tax Codes, Tax Groups, System Options and

Defaulting Hierarchy are defined in the context of an
Operating Unit with data replicated for different OUs
• Though R12 target entities support data sharing across
OUs, the upgrade process creates a tax setup in the
context of Content Owner that is equivalent to OU. This
ensures no data loss during upgrade.
• Configuration Ownership is defined at the Tax Regime
level and is a new feature offered in R12

Practice 1 Overview:
Creating a Regime to Rate Tax Model
This practice covers the following topics:

• Creating a Tax Regime
• Creating a Tax
• Creating a Tax Status
• Creating a Tax Rate
• Creating a Tax Jurisdiction

Tax Defaulting Hierarchy
• 11i Tax Codes/Group codes that are used on taxable lines are
upgraded as Tax Classification Codes lookups
• 11i Tax Codes associated with defaulting hierarchy sources
(Customers, Suppliers, Items, Accounts, etc.) are maintained
as Tax Classification Codes
• 11i Defaulting Hierarchies from AR/AP/PO/PA system options
are upgraded as ‘Tax Classification Code’ defaulting
hierarchy in Application Tax Options in the context of OU and
application product (AR/AP/PO/PA).

System Options for Tax
• 11i Financials System Options for Tax such as

Rounding Rule, Precision, Minimum Accountable Unit,
Default Tax Code, Default Recovery Rate, etc. are
upgraded to Configuration Owner Tax Options and Tax
Attributes
• 11i Payables System Options for Tax such as Enforce
Tax from Account, Enforce Tax from Reference
Document, etc. also upgrade to Configuration Owner
Tax Options and Tax Attributes

Tax Groups
• Tax group codes are upgraded only as tax

classification codes
• 11i Tax Group Constraints are upgraded to Condition
Sets
• 11i Tax Codes Conditions and Exceptions are
upgraded as Conditions and Exceptions at
Process Results level

Tax Jurisdiction Handling
• Location Values are upgraded to TCA’s Geography

model as legislative geography elements (state/county /
city/postal code) and Tax Zones (a combination of
geographical elements) .
• The upgrade process creates Tax Jurisdictions in the
context of Tax Regime, Tax, and Tax Zone.
• The upgrade process creates tax rates as Jurisdiction
Rate Codes (codes associated with rate %) in the
context of Regime, Tax, Tax Status, and Tax
Jurisdiction.

Creating Tax Zones

• Creating a Tax Zone Type
• Creating a Tax Zone

Tax Compounding
• For every tax code defined in AR, the upgrade process

checks the compounding precedence defined for the
tax code across different tax groups and assigns the
compounding precedence to the corresponding Tax
Regime and tax.
• The upgrade process also defines the taxable basis
formula to indicate which taxes are to be compounded.
– For the taxable basis formula, the upgrade process
creates taxable basis determination rules to indicate
when such a formula is applicable

Tax Inclusiveness
• The Upgrade process carries the AP system option

level inclusive tax flag to each Tax under AP OU
equivalent content owner to indicate whether tax
support inclusiveness.
• The Supplier level inclusive tax flag is upgraded to
party tax profile in the context of ‘Third Party’ party
type and Supplier associated TCA party.
• The Supplier site level inclusive tax flag is maintained
‘as is’ and it is displayed in the context party tax profile
that is equivalent to supplier associated
TCA party site.

Tax Recovery
• Recovery Rate % is upgraded to eBTax by creating

Recovery Rate codes in the context of Tax Regime and
tax that is associated with tax (rate) code to which
recovery rate % is associated in 11i.
• Recovery rate codes in eBTax also carry the context of
recovery type. The upgrade process stamps recovery
type as ‘Standard’ for each recovery rate code
• 11i Recovery Rules are upgraded as Recovery rate
determination rules indicating recovery rate code as
result of the rule.

Tax Rounding
• Rounding options in 11i are upgraded as rounding

attributes for the Party Tax Profile associated to these
3rd parties
• Rounding Rule and Allow Tax Rounding Override setup
are available at Regime and Tax levels
• Depending upon the event class, the rounding party
hierarchy is stamped during the upgrade. The Default
Rounding Level is also available at this level.

Tax Overrides
• Responsibility Level Profile Options such as Allow

Override of Customer Exemptions are maintained ‘as
is,’ and Allow Override of Tax Codes are upgraded as
Allow Override of Tax Classification Codes profile
option
• A new flag, “Allow Override of Inclusive Tax Lines”
supported at Configuration Owner Tax Options level
provides the choice to control the override for different
event classes.

Offset Taxes
• Both offset and regular tax codes are upgraded under

the same Tax Regime but different taxes.
– The offset flag is stamped for taxes that have offset rate
codes upgraded from 11i.
• The association of regular rate codes and offset rate
codes is upgraded ‘as is’ to eBTax.
• The offset functionality is offered only for backward
compatibility purposes in R12. Oracle E-Business Tax
offers a more complete functionality called
Reverse Charge/Self-Assessment of taxes

Party Tax Attributes
• Party Tax Profile records are upgraded for every TCA

Party and Party Site.
– Party Tax Profile records created during the upgrade hold
tax attributes for first as well as third parties.
• Tax attributes for first parties are carried to party tax
profile in the context of LE or Establishment or they are
stamped to each tax defined in the context of first party
(OU) equivalent content owner

Creating a First Party Tax Profile

• Creating a Legal Entity
• Creating a First Party Tax Profile

Multiple Tax Registrations
• Tax Registration setup is upgraded as Default

Registration Number and Default Registration Type for
the Party Tax profile created for each correspondent
party or party site
• If different tax registration numbers are associated with
HR Location / AR System Option / Financial System
Option levels for the same first party:
– The HR location level registration number is carried to
‘first party’ party tax profile
– The other two registration numbers are carried as
reporting codes of the ‘first party’ party tax profile.

Tax Exemptions
• The Use Customer Exemptions flag is upgraded to

Application Tax Options in the context of AR OU and
receivables application.
– The same flag value is also carried to each Tax, Tax
Status, and Tax Rate code, providing more granular
controls
• In 11i, if higher (state) level exemptions were applicable
for lower level (County / City) level taxes, then during
upgrade, Tax Exemption Creation Method is
appropriately stamped on lower level taxes
at ‘Tax’ Level

Tax Exceptions
• Tax Rate Exceptions are upgraded as Item Exceptions

in R12. Exceptions UI flow is located under Products
tab.
• 11i Exemptions that are defined without the context of
party (customer) are also upgraded as Item Exceptions
in R12
• In most cases, a product item (or fiscal classification)
will have a tax exception by having a special
(differentiated) tax rate assigned to it

Tax Formulas
• 11i tax codes that are defined with a Before/ After

Discount/ Quantity taxable basis are upgraded to create
a taxable basis formula.
– The taxable basis formula is associated with tax rate
codes as default taxable basis formula, overriding the
standard line amount taxable basis indicated at
corresponding tax level.
• The Taxable basis formula created during the upgrade
indicates that a discount needs to be applied prior to
the tax amount computation.

Global Descriptive Flexfields
• During upgrade, tax codes are upgraded as tax rate

codes, and GDFs are considered for deriving values for
the associated Tax Regime/Tax /Tax Status.
• Tax code level GDFs that are used primarily for
reporting are upgraded as reporting codes with
reporting type as GDF segment name and they are
created in the context of upgraded tax rate code.
• Third party LE related tax GDFs such as tax payer ids
from Third Parties (Suppliers / customers /
TCA Parties) are maintained ‘as is’.

Transaction Tax Upgrade
• Tax Lines in the context of AR transactions are

upgraded to eBTax tax lines carrying AR transaction
key
• AP tax distributions are upgraded to eBTax with item
distribution allocation information, detail and summary
tax lines are also created during the upgrade
• PO tax distributions are upgraded to eBTax with item
distribution allocation information and detail tax lines
are also created with shipment line allocation
information

Creating Transactions with Applicable Tax

• Entering an Invoice in Payables
• Entering an Invoice in Receivables

New Features
• Content and Services Subscription

• Events and Configuration Owner Options
• Tax Jurisdictions
• Tax Rules
• Fiscal Classifications (Product, Party, Transactions)
• Tax Repository
• Tax Simulator
• Guided Configuration

Content and Services Subscription
• Regime Configuration Options allow the user to define

for first party legal entities or Operating Unit:
– Whether to centralize or decentralize the maintenance of
tax content
– Whether to subscribe to Oracle E-Business Tax services
or to 3rd party tax vendors, per tax regime
• Example: UK VAT calculated by Oracle E-Business Tax
and US Sales tax calculated by Vertex.

Events and Configuration Owner Options
• Defined at Tax Regime level

• Defined for Legal Entities or Operating Units
• Configurations Options are:
– Common
– Common with Party Overrides and
– Party Specific
• Common Configuration with Party Overrides is allowed
for Tax and Rules but not for Product Exceptions

Tax Jurisdictions
• Jurisdictions are defined for a given geography,

regime, tax and tax authority (the latter is optional)
• Tax jurisdictions can also be defined for areas inside
city limits, which are usually indicated in the address
• Tax Zones are defined in TCA’s model but via Oracle E-
Business Tax menu option
• Data upload routines used to upload US Sales Tax data
from Vertex and Taxware populate data into both
Geography Hierarchy and Tax Jurisdiction
models

Tax Rules
• Tax rules are a powerful and flexible mechanism used to

meet tax legislation requirements
• Tax rules are date effective
• Rules are defined by Rule Types:
– Direct Tax Rate Determination
– Determine Place of Supply
– Determine Tax Applicability
– Determine Tax Status
– Determine Tax Rate
– Determine Taxable Basis
– Calculate Tax Amount
– Determine Recovery Rate

Setting Up Tax Rule Defaults

• Creating Default Rules

Fiscal Classifications: Product
• Important tax determining factor for certain taxes

• Product Classifications can be inventory linked or non-
inventory linked
• Inventory linked classifications are based on the
Inventory’s Item Categorization model

Fiscal Classifications: Party
• Important tax determining factor for certain taxes

• Party Fiscal Classifications are fully integrated with
TCA’s Party Classification model
• The association between party classification codes and
parties can be performed in TCA or using Oracle E-
Business Tax’s Party Classification flows

Fiscal Classifications: Transaction
• A classification usually defined by a tax authority, to

categorize a transaction for a tax. There could be more
than one by tax.
• For example, for Brazil, three classifications are
required:
– Transaction nature, such as free sample, demonstration,
consignment, donation;
– Transaction classification, such as the sale of products
previously acquired, the sale of products that have been
manufactured by the company; and
– Operation classification, such as ship from - ship to
relationship, (e.g., intrastate sale).

Tax Repository
• Single source of transactional tax information (tax

lines)
• Support for tax reporting, tax accounting and tax
reconciliation processes
• Underlying infrastructure for users to view and/or
modify (override) tax lines

Creating Tax Accounts

• Creating Tax Accounts

Tax Simulator
• Tax Simulator helps on audit trail with respect to which

Tax Rules were satisfied in calculating a particular Tax
• Tax Simulator can act as a light-weight transaction for
entering Purchase Orders, Invoices, Invoices matched
against PO, etc.. that is integrated with Tax Lines User
Interface
• It is a fast way to enter transactions with fewer
validations to perform what-if scenarios on tax
calculation

Practice 7 Overview: Reviewing Tax
Configuration Results Using the Tax Simulator

• Entering a Payables Invoice Using the Tax Simulator

Guided Configuration
• Guides the user, step by step, during the configuration

of the different types of tax rules available in the
system. Users can also specify default values for most
of those rule types
• Makes it easy to select default values for most tax rule
types
• Generates all necessary setup behind the scenes

Profile Options for Tax
• Profile options are similar to those in 11i, however,

more granular control can be achieved
– For example, a profile option can be set to “Allow Manual
Tax Lines”. At the tax level, for a certain tax, manual
creation can be disallowed.
• There is a new profile option, “Read/write Access to

Common Configuration data” provided to restrict
access to persons creating or modifying
installation-level configuration

Upgrade Considerations
• 11i Tax Codes and Rates (AP Tax Codes and AR VAT
Taxes) are upgraded as Regimes, Tax, Status and Rates
• 11i Tax Codes are also upgraded as Tax Classification
lookups
• Tax Classification lookups are used in Direct Rate
Determination Rules to reach the appropriate Tax Rate
• 11i Tax Type, plus the country of the owning operating
unit, are used to name the R12 Tax Regimes (I.e. UK
VAT)

Implementation Information
• Oracle E-Business Suite Release 12 Rapid Install is

required for both new and upgrade customers.
• Procurement Options:
– Download from Oracle E-Delivery.
– Purchase CD/DVDs on the Oracle Store.
• Refer to Oracle MetaLink for:
– Oracle Applications Release Notes
– Installing Oracle Applications
– Upgrading Oracle Applications
• Oracle Applications Documentation is available
through the Online Documentation CD and Oracle
MetaLink.

Summary
In this module, you should have learned how to:

• Describe and use the new features in Release 12 of
• Set up the new features in Release 12 of Oracle
E-Business Tax

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Oracle E-Business Tax Overview

Copyright © 2007, Oracle. All rights reserved.

After completing this module, you should be able to:

1-2 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1-3 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1-4 Copyright © 2007, Oracle. All rights reserved.

Oracle E-Business Tax (eBTax) is a new product that:

1-5 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1-6 Copyright © 2007, Oracle. All rights reserved.

• Sales and Use Tax in Procurement

1-7 Copyright © 2007, Oracle. All rights reserved.

Business Need Solution

• Seeding of basic tax content setup for some

• Most of tax content setup is date effective

1-8 Copyright © 2007, Oracle. All rights reserved.

Business Need Solution

• Tax Lines capture all relevant information

• Tax services for payments transactions can

• Tax services for applicable transactions with

1-9 Copyright © 2007, Oracle. All rights reserved.

Business Needs Solution

• Complete Sales and Use Tax setup hierarchy

1 - 10 Copyright © 2007, Oracle. All rights reserved.

Business Needs Solution

• New Tax Registrations flow allows multiple tax

• Any number of Tax Reporting Types and

1 - 11 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1 - 12 Copyright © 2007, Oracle. All rights reserved.

Tax Authority: A government entity that regulates tax

California State Board

1 - 13 Copyright © 2007, Oracle. All rights reserved.

Tax Regime: The set of tax rules that determine the

California State Board California Sales Tax

1 - 14 Copyright © 2007, Oracle. All rights reserved.

Tax: A classification of a charge imposed by a

California State Board California Sales Tax State Sales Tax

1 - 15 Copyright © 2007, Oracle. All rights reserved.

Tax Jurisdiction: A geographic area where a tax is

1 - 16 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1 - 17 Copyright © 2007, Oracle. All rights reserved.

Transaction Data Transaction Tax Data

Oracle E-Business Tax

Tax Partner Tax Content Tax Services

1 - 18 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1 - 19 Copyright © 2007, Oracle. All rights reserved.

Single Interface for Transactions

Payables Transparent Integration with Tax

1 - 20 Copyright © 2007, Oracle. All rights reserved.

1 - 21 Copyright © 2007, Oracle. All rights reserved.

A default party type

1 - 22 Copyright © 2007, Oracle. All rights reserved.

Product Classification (Qty * Unit Price) is

1 - 23 Copyright © 2007, Oracle. All rights reserved.

1 - 24 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description

1 - 25 Copyright © 2007, Oracle. All rights reserved.

1 - 26 Copyright © 2007, Oracle. All rights reserved.

• Oracle E-Business Tax (eBTax) Description