How to Setup EBTax So Tax is Calculated on Payables Invoice

7/26/2019 How to Setup EBTax So Tax is Calculated on Payables Invoice

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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch

Step 1: Create Tax RegimeStep 2: Create TaxStep 3: Create Tax StatusStep 4: Create JurisdictionStep 5: Create RateStep 6: Enter Tax AccountsStep 7: Create Tax Rules (Populate values for all defaults)

Step 8: Make Tax Available for TransactionStep 9: Test the Tax

APPLIES TO:

Oracle E-Business Tax - Version 12.0.1 and laterOracle Payables - Version 12.0.1 and laterInformation in this document applies to any platform.

PURPOSE

This article is to help beginners setup EBtax so that a tax will be calculated on a Payables Invoice.

DETAILS

Pre-Requisite:Check how the Party/OU has been setupTax Manager/Administrator > Parties > Party Tax Profiles

Query for the following:Party Type: Operating Unit Owning Tax ContentParty Name: Vision Operations(Name of the OU you wish to setup for tax)Click Go

Click View Tax Profile

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

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If this is checked, then the OU is set to use the subscription from Legal Entity. The regime is thensubscribed (in a later step) to the First Party Legal Entity rather than the Operating Unit OwningTax Content.

This is a one time setup and the value cannot be toggled. So enable this only after you determineyou want to use this setup.

In our case, for Vision Operations OU, this is NOT checked and therefore we need to set ourTax Regime up against the Operating Unit and NOT the First Party Legal Entity. (Step 1 below)



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Step 1: Create Tax RegimeTax Manager/Administrator > Tax Configuration > Tax RegimesClick Create to enter a new Tax Regime.We are going to create a United States regime.

Enter the following:

Field Value

Tax Regime Code XXAA US REGIME

Name XXAA US REGIME

Regime Level Country

Country Name United States

Effective From 01-Jan-2014

Parent Regime Code NULL

Used to Group Regimes Unchecked

Click on Show Controls and Defaults

Enter settings for Controls and Defaults as follows:

Field Value

Controls:

Allow Tax Recovery Unchecked

Allow Override and Entry of Inclusive Tax Lines Checked



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Allow Tax Exemptions Checked

Allow Tax Exceptions Checked

Defaults:

Tax Currency USD

Minimum Accountable Unit 0.01

Rounding Rule Nearest

Tax Precision 2

Allow Multiple Jurisdictions Unchecked

Click Continue

Enter the following information:

Field Value

Party Name Operating Unit

Party Type Operating Unit Owning Tax Content *

Configuration for Taxes and Rules Common Configuration

Configuration for Product Exceptions Common Configuration


* If Use Subscription of the Legal Entity was checked in the prereq step then this would have



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been entered against the First Party Legal Entity and not the OU

Click on Finish

Ensure you see confirmation message:

Step 2: Create TaxTax Manager/Administrator > Tax Configuration > TaxesClick on Create



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Field Value

Tax Regime Code XXAA US REGIME (From LOV Regime defined in Step 1)

Configuration Owner Global Configuration Owner

Tax Source Create a New Tax

Tax XXAA US TAX

Tax Name XXAA US TAX

Tax Type VAT

Geography Type Country

Parent Geography Type Country

Parent Geography Name United States

Set as Offset Tax Unchecked

Set Tax for Reporting Purposes Unchecked

Click on Show Controls and Defaults


Field Value

Controls:

Allow Tax Inclusion Unchecked

Allow Override and Entry of Inclusive Tax Lines Checked

Allow Tax Rounding Override Checked

Allow Override for Calculated Tax Lines Checked

Use Legal Registration Number Unchecked

Allow Multiple Jurisdictions



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Allow Mass Creation of Jurisdictions Checked

Defaults: Checked

Allow Tax Rate Rules Checked

Click Apply.

View confirmation message:



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Step 3: Create Tax StatusTax Manager/Administrator > Tax Configuration > Tax Statuses

Click Create


Field Value

Tax Regime XXAA US REGIME (From LOV in Step 1)

Tax XXAA US TAX (From LOV in Step 2)

Tax Status Code XXAA US STATUS

Name XXAA US STATUS

Effective From 01-Jan-2014 (Defaults)

Set as Default Tax Status Checked

Default Status Effective From 01-Jan-2014 *

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



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View confirmation message:

Step 4: Create JurisdictionTax Manager/Administrator > Tax Configuration > Tax JurisdictionClick Create


Field Value

Tax Jurisdiction Code XXAA US JURISDICTION



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Tax Jurisdiction Name XXAA US JURISDICTION

Tax Regime Code XXAA US REGIME (From LOV Step 1)

Tax XXAA US TAX (From LOV Step 2)

Geography Type COUNTRY


Geography Name United States

Default Tax Jurisdiction Settings:

Set as default Tax Jurisdiction Checked

Default Effective From 01-Jan-2014

Click Apply

Ensure confirmation message is received.

Step 5: Create RateTax Manager/Administrator > Tax Configuration > Tax RatesClick Create



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Field Value

Tax Regime Code XXAA US REGIME (From LOV Step 1)


Tax XXAA US TAX (From LOV Step 2)

Tax Status Code XXAA US STATUS (From LOV Step 3)

Tax Jurisdiction Code XXAA US JURISDICTION (From LOV Step 4)

Tax Rate Code XXAA US RATE

Rate Type Percentage

Rate Periods:

Percentage Rate 20


Click on Rate Details button and scroll down

Enter the following:



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Field Value

Set as Default Rate Checked

Default Effective Date 01-Jan-2000

Click Apply

Note: This returns you to the Tax Rates page and the rate has not yet been saved, just the details

for it.

Click Apply again.



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Ensure confirmation message is received

Step 6: Enter Tax AccountsTax Manager/Administrator > Tax Configuration > TaxesQuery XXAA US TaxClick Go

Click Tax Accounts



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Search for Vision Operations OU and click create

Enter the Operating Unit and populate Tax Expense and Tax Recoverable/Liability accounts.

Click Apply.



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Note this has not been saved at this point.

Click Apply again

Click Apply a third time



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Step 7: Create Tax Rules (Populate values for all defaults)Tax Manager/Administrator > Tax Configuration > Tax RulesEnter the following:

Field Value


Tax Regime Code XXAA US REGIME

Tax XXAA US TAX

Click Go to search for existing default rule



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Click the pencil icon in the Set Default column to change any of the defaults defined

Update the defaults as follows:

Field Value

Determine Place of Supply Ship to, use bill to if ship to is not foundDetermine Tax Applicability Applicable

Determine Taxable Basis STANDARD_TB

Calculate Tax Amounts STANDARD_TC

Note: Direct Tax Rate Determination is used only for upgraded taxes so this is greyed out. Thelast item, Determine Recovery Rate is also not updatable because this tax regime has not beensetup to allow recoverable taxes.

Step 8: Make Tax Available for TransactionTax Manager/Administrator > Tax Configuration > Taxes



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Query TaxClick on Update Pencil Icon

Check the box 'Make Tax Available for Transactions'Click Apply

This warning is ok since we know we didnt enter an exchange rate type.



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Click Yes and receive confirmation of changes saved

Step 9: Test the TaxPayables > Invoices : Entry > Invoices

Enter Invoice for Supplier with a US Ship-To addressEnter Line information

Ensure the SHIP TO location at the line level contains a US location (As that is how we determineplace of supply)



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Click distributionsEnter Invoice distributionSave

Go back to Invoices and click Calculate Tax



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Tax line is created click on Tax Details

You can see that the XX US REGIME has been applied and tax calculated at 20%.

How to Setup EBTax So Tax is Calculated on Payables Invoice

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