how to setup so tax is calcualted on ap invoices

8/18/2019 How to Setup So Tax is Calcualted on AP Invoices

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

Modified: Feb 16, 2015 Type: REFERENCE

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 TaxReferences

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 EBtax so that tax can be calculated on payable invoice.

DETAILS

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


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Click Create to enter a new Tax Regime.

We are going to create a United Kingdom regime.

Enter the following:

Field Value

Tax Regime

Code

XXX UK

REGIME


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Name XXX UK

REGIME

Regime

Level

Country

Country

Name

United

Kingdom

Effective

From

10-Jan-2000

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 Checked


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Entry of Inclusive Tax

Lines

Allow Tax

Exemptions

Checked

Allow Tax Exceptions Checked

Defaults:

Tax Currency GBPMinimum

Accountable Unit 0.01

Rounding RuleNearest

Tax Precision 2

Allow Multiple

Jurisdictions

Unchecked

Click Continue


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Enter the following information:

Field Value

Party Name Operating Unit

Party Type Operating Unit

Owning Tax

Content *

Configuration

for Taxes andRules

Common

Configuration

Configuration

for Product

Exceptions

Common

Configuration

Effective From10-Jan-2000

* If ‘Use Subscription of the Legal Entity’ was checked in the prereq step then this would have been entered against th

First Party Legal Entity and not the OU


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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 TAXTax 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 andEntry of Inclusive Tax

Lines

Checked

Allow Tax Rounding

Override

Checked

Allow Override for

Calculated Tax Lines

Checked

Use Legal

Registration Number

Unchecked

Allow MultipleJurisdictions

Allow Mass Creation

of Jurisdictions

Checked

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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Effective

From

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

Click Apply

View confirmation message:


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Step 4: Create Jurisdiction

Tax Manager/Administrator > Tax Configuration > Tax Jurisdiction

Click Create (see above screenshot)


Field Value

Tax Jurisdiction

Code

XXX UK

JURISDICTION

Tax Jurisdiction

Name

XXX UK

JURISDICTION

Tax Regime

Code

XXX UK

REGIME (From

LOV Step 1)

Tax XXX UK TAX

(From LOV

Step 2)

Geography COUNTRY


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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 X XX 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

Default Rate

Checked

Default

Effective

Date

01-Jan-

2000


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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.

Ensure confirmation message is received

Step 6: Enter Tax Accounts

Tax Manager/Administrator > Tax Configuration > Taxes

Query XXX UK Tax

Click 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.


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Click Apply.

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 Rules


Field Value

Configuration

Owner

Global

Configuration

Owner

Tax Regime

Code

XXX UK

REGIME

Tax XXX UK 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 found

Determine Tax

Applicability

Applicable

Determine Tax

Registration

STANDARD_TB

Calculate Tax

Amounts STANDARD_TC


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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


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Step 9: Test the Tax

Payables > Invoices : Entry > Invoices

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)


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Click distributions

Enter Invoice distribution

Save

Go back to Invoices and click Calculate Tax


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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?
https://support.oracle.com/epmos/faces/DocumentDisplay?parent=DOCUMENT&sourceId=1520430.1&id=1082172.1https://community.oracle.com/community/support/oracle_e-business_suite/e-business_taxhttps://community.oracle.com/community/support/oracle_e-business_suite/payables

how to setup so tax is calcualted on ap invoices

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