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Copyright © 2009 Solution Beacon, LLC All Rights Reserved
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Release 12
E-Business Tax Engine
Goetz Schmitz
May 2009
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Agenda
• Understanding the Past: Oracle Standard Tax
• Oracle E-Business Tax Engine
• Benefits and Features
• E-Business Tax Configurations
• E-Business Tax Third Party Integration
• E-Business Tax Reporting
• Module Integration
• Transactions Management
• Tax Simulator
• Summary
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Release 12
Understanding Oracle Standard Tax
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Standard Tax - Basics• US Based entities
• Lack of foreign entity controls
• Manual in nature
• Currency driven
• Rates both manual and subscription
• Common/main usage for Sales Tax
• Use Taxes are transactional afterthoughts
• Despite Multi-national organizations (multi-org), previous releases do not address full global control of taxes, taxing authorities, regulatory and governmental compliance.
• No single source for oversight and control of taxes both foreign and domestic
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Release 12
Oracle E-Business Tax Engine
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Full Integration with Tax
Providers
Subscribe to Vertex!
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Global Control with E-Business
Tax
• Single Point Source – Service oriented architecture
• Self-Service User Interface:
– Extended control for products-based tax
– Country-specific tax content
– Simple to complex country-specific legislations
– Cross-border transactions
– Local compliance requirements (domestic)
– Constant tax changes by local jurisdictions, legislation, rates and exceptions
• Simplified Tax Configuration
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Ease of Configuration and Control
• Easy to follow Setup Tasks
• Required/Not Required
• Quick Link to
Setup Task
• Global
View/Global Control
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New Features with E-Business Tax
• Tax Repository
• Self-Assessment/Reverse Charge
• Tax Zone Types
• Tax Formulas
• Tax Condition Sets
• Tax Simulator:
– Simulates Tax Calculations based on “What-If” scenarios
– Parallel audit trail to review which Tax Rules were satisfied
– Can be used to replicate standard transactions for PO, Invoices,Invoices matched against PO’s, etc. typically integrated with the Tax Lines Interface
– A quick way to enter transactions to perform “what-if” scenarios on tax calculation, but not perform normal validation in the application forms.
NOTE: Tax Simulator emulates, but does not trigger real transactions.
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Service Oriented Architecture
METADATA
Taxonomy
& Rules
Repository, Reports, Dashboards, etc.
Tax Regimes Place of Registration RatesTaxes Supply Taxable Basis Recovery
Validate Calculate Determine AdditionalAddress Taxes Recovery Services
Party Product Place Process
Tax
Regime
Tax Tax
Juris-diction
Tax
Status
Tax
Rate
Recove
rRate
OU Tax
Accts
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E-Business Tax Definitions
Tax Regime TaxTax
JurisdictionsTax Status Tax Rate
Recovery Rate
Operating Unit Tax
Accounts
Set of Tax
rules that
determine
treatment of one or more
taxes
administered
by tax authority
The
geographical
area where a
tax is levied by a specific tax
authority or
where the
specific tax rate applies
Taxable
nature of a
product or
service in context of a
transaction
and a specific
tax (taxable, exempt, non-
taxable)
The rate
specified
for a tax
status in effect for a
period of
time
The rate of
Input Tax
that is
allowed to be
recovered
or offset
against Output Tax
Tax
Accounts
that are
associated with Tax
Rates and
Recovery
Rates Accounting
FOUNDATION FOR E-BUSINESS TAX ARCHITECTURE
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Party Tax Profile - Required• “Body of
information that relates to a party’s transaction tax activities”
• Legal entities, legal establishments and operating units that have tax requirements must have tax profiles
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Tax Profile Party Types
• First Party Legal Establishment
• Operating Unit Owning Tax Content
• Tax Authority
• Third Party
• Third Party Site
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Tax Regimes - Required
• Term definition on setup form
• US Sales Tax is an example of a Tax Regime
• Or in our example “US Pirate Treasure Tax”
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Next Step? Create Tax
• Regime is setup –what’s next?
• Previous releases we would follow the documents for each step
• Here we see “Create Tax”is next
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Tax• “Distinct
charge imposed by a government through a fiscal or tax authority”
• Notice geo structure is defined (Country and State)
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Next Step? Create Tax Status
• Notice the evolving setup hierarchies / entities / steps
• “Regime to Rate Flow”steps you through the setups
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Tax Status
• “Taxable nature of a product in the context of a transaction and a specific tax on the transaction”
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Next Step? Create Tax Rate
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Tax Rates and Accounts
• Integration with Ledger here
• Notice the “TX”jurisdiction here – this can all be populated with Vertex
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Tax Rates and Accounts
• Accountant Joy!!!! Account setups
• Notice the Ledger is the intersection with operating unit
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Next: Tax Rules
• “Guided Rule Entry”should guide you through
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Regime to Rate Flow
Integration to either
Vertex or Taxware for
current rates, and location
based tax controls
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Tax Jurisdiction – Optional..
• Geographic Region or Tax Zone where tax is levied• Tax Status must be setup• Multiple-Jurisdiction taxes can be enabled for all counties, or all
provinces for a particular type of tax within a particular region/state• One Tax Jurisdiction must be setup for a tax before transactions can
be performed on that jurisdiction
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E-Business Tax Configuration
-Legal Party
Fiscal Classification
-Registration
-Party Fiscal
-Goods and
Services
-Document
-Transaction Fiscal
Classification
-Transaction
Generic
Classification-Accounting Event
-Geography
associated with the transaction(s)
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Legal Entity Setup - Required
Mandatory or Required
setups are clearly noted
Quick link to
configurations
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Party Classifications - Optional
• Geographic Region or Tax Zone where tax is levied
• Tax Status must be setup
• Multiple-Jurisdiction taxes can be enabled for all counties, or all provinces for a particular type of tax within a particular region/state
• One Tax Jurisdiction must be setup for a tax before transactions can be performed on that jurisdiction
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EE--Business Tax Rules EngineBusiness Tax Rules Engine
Payables
Receivables
Tax
Values
4P’s
determining
factors
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Tax Rules Build - Guided
• Oracle-guided setup for building Tax Rules
• Multiple-Jurisdiction tax rules can be enabled for both foreign and domestic tax regimes
• Easily updateable
• Choice - either self or Oracle guided rule building
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Tax Rules Build – Guided (con’t)
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EE--Business Tax ServicesBusiness Tax Services
Does NOT provide services for:*Payables withholding taxes*Latin American receivables transactions*India transaction taxes
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E-Business Tax Management
XML Publisher
Order Confirmations
Fund Transfers
ReportsLabels
InvoicesChecks
Fully Integrated Solution for:Formatting, Managing and Delivering Your Business Documents
Meets Business Requirements by removing complexity normally attributed to disparate transactions both to and from source systems.
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EE--Business Tax Management Business Tax Management
ProcessProcess
RTF
HTML
XML
EDI
Excel
Tax Repository
Sub ledger Accounting
AR
AP
PA
Data Sources
Tax Reporting Ledger
XML Publisher
Publishing Engine
Output
FormatsDestination
Templates
-Printer-Fax
Letters
Funds Transfer
s
Order
Confirmations
Online Payroll
Checks
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Release 12
Third Party Integrations
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Third Party Tax Integration• E-Business Tax Engine standard package integration (Pre-bundled)
• Vertex and Taxware Integration and Configurations:
– Licensing required
– Support only for US State and Local taxes within Order To Cash cycle
– Certified prepackaged in R12 OEBS; Database objects on CD
– Auto Upgrade of existing server-side version if existing, and certify if necessary the more recent versions (compared to CD versions)
– Install scripts, profile options, lookup codes (tax exemption reasons), provider-specific tax regimes and taxes, client-side tax software, load rates, setup tax accounts (liability), turn-on address validation (make sure before creating new addresses), jurisdiction codes, validate/test provider implementation (test cases).
• Business Processes:
– Service Provider Codes definitions (Vertex=Geocodes, Taxware=Jurisdiction Code)
– Handling Exemptions
– Reconciliations and Procedures
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Vertex/Taxware Integration –
Custom Tips• Tax Calculation API from provider gathers input from this
view: (ZX_O2C_CALC_TXN_INPUT_V). This view has
extra columns not found or mapped in Oracle.
• Customizable Functions: ARP_TAX_VIEW_TAXWARE and ARP_TAX_VIEW_VERTEX
• Use of Descriptive Flexfields predefined to enter “ship-from”
information: HR_LOCATIONS_V
• User-defined Descriptive Flexfields to store tax information: AR_RECEIVABLES_TRX (ATTRIBUTE15) and
RA_CUST_TRX_TYPES_ALL (ATTRIBUTE1)
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Release 12
Relationship Flow
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Tax Relationship Flow - Detail
Definition
Setup
Configuration Rules
Engine
Services Tax
Mgt.
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Release 12
Tax Management Reporting
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Tax Reporting Ledger
• Single reporting solution to address complex global tax requirements from P2P transactions in a summary format of tax information from AR, AP and the GL.
• Tax Extract copies the data to the interface tables
• Use Oracle Reports, XML Publisher, or RXi tools to specify which data columns to use and what format you want.
• Supports Deferred Output Tax Register, Recoverable/Non-Recoverable Tax Register, Single Cross Product Tax Register, Standard Input and Output Tax Registers
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E-Business Tax Reporting Setups
and Programs
• Common Report Parameters:– Reporting Level (multi-org access)
– Reporting Context (reporting level=ledger, OU, etc)
– Company Name
– Accounting Status (accounted, unaccounted, both)
– Currency
– GL Date
– Transaction Date
• XML Publisher Reports generation
• E-Business Tax Transactions Upgrade On Demand
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E-Business Tax Reports -
Examples• Customers with 0 VAT and no VAT Registration
Number
• Financial Tax Register
• Intra-EU Audit Trail Report
• Tax Received
• Tax Reconciliation/ by Taxable Account
• Tax Register
• Tax Audit
• Tax-Only Open Invoices Report
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E-Business Special Tax Reports• EMEA VAT reporting: Oracle Financials for
Europe, using E-Business tax data extracts to retrieve VAT for EMEA.
• EMEA VAT reports are XML reports
• Latin America Tax Reporting: Makes use of the Latin Tax engine for country-specific reports
• Asia Pacific Tax Reporting: Makes use of both Payables and Receivables tax transactions for reporting requirements
• Some Asia Pacific Tax Reports are XML reports
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Release 12
Module Integration
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4747
Standard Applications Flow
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Application Integrations
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Release 12
Transactions Management
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E-Business Tax Handling of Common
Transactions• Tax calculated on transactions based on legal entity and/or
operating unit setups
• Tax Configurations and Tax Rules Setups
• Transactions Tax Used = Tax Regime = LE/OU
• Tax Rates Used and Derived are based upon:– 1st Party of the transaction = LE/OU
– Tax Registrations of 1st and 3rd parties
– Tax Configuration Setup
– Tax Rules for Configuration Owner and Taxes
– Application Event Class Option Settings
– Customer Tax Exemptions
– Product Tax Exceptions
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E-Business Tax Common Transactions
• Order to Cash transactions from PA and AR
• Procure to Pay transactions from PO and AP
• Other transactions from “Source Applications” (Applications that feed data to AP and AR – Trade Management)
• Payables Invoices Matched to Purchase Orders
• Prepayment Invoices
• Debit and Credit Memos
• Intercompany Transactions
• Tax Only Lines
• Etc.
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Release 12
Tax Simulator – What If?
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Simulation Key Functionality
• Ability to test tax changes and rules
• Test bed for entering PO’s, Invoices, Invoices
matched against PO’s integrated with Tax Lines
Interface
• Create What-If scenarios on tax calculations
without affecting environment with real
transactions
• Ability to enter transactions with fewer
validations to test your What-If scenarios
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Simulation Example - Receivables
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Release 12
E-Business Tax Engine - Summary
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Summary – Global Benefit
• Greater Efficiencies through automated processes
• Improved Consistencies utilizing global tax rules, allowing the business to conform to governmental
requirements both foreign and domestic.
• Allowing Better Control of the decision-making process through increased global visibility of the enterprise
• Ease of configurability and usage
• Ability to test/pre-determine taxable scenarios
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