Tax Setup Steps R12.1.2

SETUPTAXCODESINR12.1.
May26,2010
How to Setup Taxes in R12.1.2
Prerequisite:
Go To: Tax Manager > Tax Configuration > Tax Regime>Home> Create First Party Legal Entity and
Establishment
1:1.1ChecktheCreateFirstParty:LegalEntity&Establishment
ClickonGotTask:
Enterthecountrynameandclickgo
1 MadeBy:MohamedElhamy|TaxCodes
SETUPTAXCODESINR12.1.2
May26,2010
Step 1: Create the Tax Regime

The tax regime is the highest/ultimate level that taxes are rolled up to, typically, a specific country. In this step,
the Controls and Defaults must be set. The Control section outlines 4 options. Once the tax is made live, the
control options cannot be changed.
The Defaults section will default as applicable to the tax, status, jurisdictions, and tax rate levels, but they can
be changed at each level.
Go To: Tax Manager > Tax Configuration > Tax Regime
1.1: Press On create
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1.2:
- Enter Tax regime Code & Name the same
- Entry Regime level: Country
- Entry Effective date: old date EX: 1-Jan-2000
- Check Boxes: Allow Tax Recovery - Allow Tax Exemptions - Allow Override and Entry of Inclusive Tax
Lines
- Allow tax inclusion: standard inclusive handling
- Default recovery rate: immediate
1.3:
- ClickContinueButtontoAssignPartyNamewhichistheLegalEntityName
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1.4:
- Go To: Create Tax Authorities Party Tax Profile from (Parties TAB)
-- Choose party type: First party Legal Entity
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- Click Update Tax Profile Yellow Pencil to assign the Tax Regime Code through Configuration Option tab
Button Note you will find it already Assigned and that step for confirmation only
1.5:
- Go To: Create Tax Authorities Party Tax Profile in Home page
- Choose party type: Operating Unit Owing Tax Content
- Choose Party name: As shown
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ClickonCreateTaxProfileLink
- Go to Configuration Option Button to assign the Tax Regime code with the Operating Unit Name
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GotoChecktheTaxRegimeCodetoverifytheConfigurationOptiontoviewtheassignmentoftheLegalEntityName
&theOperatingUnitNametotheTaxRegimeCode
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Step 2: Create the Tax

One Tax Regime can have multiple taxes defined under it. The tax type, e.g. sales, VAT, use, is determined
when the tax is set up. Taxes can be set up by geography type, which allows for taxes at different levels... For
example, in the US, there is can be a tax levied at the State level, one at the County level, and one at the City
level.
Go To: Tax Manager > Tax Configuration > Taxes
2.1:
- Enter the required fields:
Tax Regime - Configuration Owner - Tax Source etc
In configeration owner : choose Globale Configeration Owner to make the tax aviliable on both of legel
entity & Operating Unit
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NOTE: DOES NOT MARK ON Check Box (Make Tax Available for Transaction) till you complete the
remaining setup steps as We Going To DO
NOTE: Important Do Choose the check box ALLOW PRIMERY RECOVERY RATE determination
rules that will make duplicate tax rule and will give you error in calculation tax
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NOTE: THAT THE DEFAULT RECOVERY RATE CODE WILL BE DEFIEDN LATER SO YOU
WILL CHOOSE IT WHEN YOU ARE GOING TO FINISH AND MAKE THE TAX AVAILIABLE
Then click on TAX ACCOUNT: To determine the liability account of the tax
Choose TAX code regime
Choose TAX name
Choose your ledger then press on create
Choose the liability account its mandatory
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Step 3: Create the Tax Status

This is used primarily in the UK to define reduced rate, zero rate, etc. taxes. All taxes must have at least one tax
status defined, and one of those must have the "Set as Default Status" option checked.
Complete the data and press apply
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Step 4: Create the Tax Jurisdiction

A tax jurisdiction is a geographic area for which a tax is levied, e.g. Colorado, California, Florida, El Paso
County, and Los Angeles.
There must be at least one Tax Jurisdiction for each Tax Status with the "Set as default Tax Jurisdiction"
selected and the "Default Effective Date" supplied.
Complete the data as shown
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Associated Juristification tax rulesConfiger it after you difine tax rate and you have to
define ti to every tax rate you will define
Click on Apply
Click on Tax Accounts : Choose the ledger you created and enter the liability account
Click on Apply
Step 5: Create the Tax Rate & Recovery Rate

Create specific tax rates to be applied for geography. There must be at least one default tax rate. The tax
accounts are also set up in this step.
5.1: Go To: Tax Manager > Tax Configuration > Tax Recovery Rate
For the Non Recovery tax recovery rate to make it available in tax accounts for the non recovery rate
after u define it put the AP ACCRUAL ACCOUNT
- Complete Data As Shown
- Check on tax accounts that its right from (TAX ACCOUNTS)
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- After Finish Click On Apply
5.2: Go To: Tax Manager > Tax Configuration > Tax Rate
For the Non Recovery rate to make it available in tax accounts for the non recovery rate after u define it
put the AP ACCRUAL ACCOUNT
- Complete the data
- Define the tax accounts
- After Finish Click On Apply
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Step 6: Define Tax Rules

Prerequisite:
1- Enter a Tax Determining Factor Set and Name and Click Create to Assign it later to the rules (
And this will Be done to each Regime Code you will Made ( If you Make more than one Regime )
but if you are going to make more than one regime ( You have to check on the check box named :
Allow Cross Regime Compounding )
2- DO this proceed to every rate you will define
A) Go To : Tax Manager > Advanced Setup Options > Determine Factor Set
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InsertDeterminingFactorClass:'TransactionInputFactor'(DataEntryFromYourChoose)
InsertDeterminingFactorName:'TaxClassificationCode'(DataEntryFromYourChoose)
ChooseYourTaxRegime
ChooseYourLedger
SetUsageChoose:TaxRules
InDeterminingFactorClassChoose:TransactionInputFactor
InDeterminingFactorNameChoose:TaxClassificationCode
AfterFinishClickOnApply
B) Go To : Tax Manager > Advanced Setup Options > Tax Condition Set
Enter You Tax Condition Name ( It refers To The Percentage of the Tax )
Enter Name
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Choose The Determine Factor that you Made

Choose Ledger
Choose Country
Click On Continue
ChoosetheOperator:EqualTo
ChoosetheValue/FromRange:NameofyourregimeAnditcanbeOverride
ThenClickOnFinish
3- Make This Step to Assign the Rules To Every Tax Regime you Made
Select Your Legal Entity

Select Tax Regime Code
Select Tax
Click On GO to show the rules set
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Make all the rules for each application are you going to use from event class
Set defaults for the following rule types:
Some definitions needed to know it before going to tax rules:
For every application AP & AR & PURCHASING choose: Event Class and then choose application and
then choose the event that you the tax to effect on but for SALES ORDER in the EVENT CLASS
CATEGORY CHOSSE : TAX EVENT CLASSE & EVENT CLASSE : SALES TRANSACTIONS
Direct tax rate determination:

For Example :
Choose Event Class Category :Event Class

Choose Application: Purchasing
Choose Event: Purchase Order Agreement
Complete Data As shown
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Place of Supply ( Use to assign the tax to the supply place )
Complete the data as Shown

And click Save
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Determine Tax Apllicabiltiy
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Determine tax Registration
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Taxable Basis
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Countinue the same for the all rules

Step 7: Make the Tax Live for Transactions
Return back to the Tax created in step 2, and select the Make Tax Available for Transactions option. If it is not
available to be checked, the tax is not set up correctly. Any missed setups will need to be completed before this
can be setup.
MakeitAvailablefortransactions
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Choosetherecoveryrate
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TheLaststeptoaftermakingthetaxavaliablefortransactionsyouDefault
andcontrolswindowtomakethetaxyoudefiendavaliableonapplication
andtheapplicationscanusethistaxinthetransactions
Makethedefinationsonetimeforlegelentityandsecondetimeoperating
unit
Dothisstepforeveryappliactionyouentendtousetaxonit
GOTO:DefaultandControls>ConfigrationTAXoptions
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AfterFinishthis:GOto:Defaultandcontrols>ApplicationTaxOptions
Toarrangethedefaulthierarchyforthetax
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AfterFinishthis:GOto:Defaultandcontrols>ApplicationTaxOptions
TomaketheTaxAvailableforthecountryDefault
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AfterAllThat
Youreadytousetaxonapplication
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AndhereisSomeProfileoptionsyoumayneedtocontroltax:
eBTax: Allow Ad Hoc Tax Changes
TheeBTax:AllowAdHocTaxChangesprofileoptioncontrolswhichuserscanmake
Adhoctaxchangesonthetransactionline,suchasselectingadifferenttaxstatusortax
rate.Thechangesthatausercanmakealsodependuponthedetailsoftheapplicable
taxsetups.
IfthetaxrateassociatedwithataxhastheAllowAdHocRateoptionenabled,then
userscanoverridethecalculatedtaxrateonthetransactionline.
eBTax: Allow Manual Tax Lines

TheeBTax:AllowManualTaxLinesprofileoptioncontrolswhichuserscanenter
Manualtaxlinesonthetransactionforthetaxsetupsthatallowthisupdate.
Ifthetaxconfigurationhastherelatedoptionsenabled,thenuserscanentermanualtax
Linesonthetransactionfortheapplicabletax.
Therelatedtaxsetupsare:
Taxes: AllowEntryofManualTaxLines
Configuration Owner Tax Options:
AllowEntryofManualTaxLines
AllowManualTaxOnlyLines
eBTax: Allow Override of Customer Exemptions

TheeBTax:AllowOverrideofCustomerExemptionsprofileoptioncontrolsthedisplay
OftheTaxHandlingfieldonthetransactionline.YouusetheTaxHandlingfieldto
Applyandupdatecustomertaxexemptionstotransactions.
IfyousettheeBTax:AllowOverrideofCustomerExemptionsprofileoptiontoYes,you
Mustalsocompletetherelatedsetupsfortaxexemptions.
eBTax: Allow Override of Tax Classification Code

TheeBTax:AllowOverrideofTaxClassificationCodeprofileoptioncontrolswhether
Userscanupdatethetaxclassificationcodethatisdefaultedtothetransactionline.
EBusinessTaxdefaultsthetaxclassificationcodetothetransactionlineaccordingto
Thedefaultinghierarchydefinedfortheoperatingunitandapplication.
eBTax: Allow Override of Tax Recovery Rate

TheeBTax:AllowOverrideofTaxRecoveryRateprofileoptioncontrolswhichusers
Canenterorupdatethecalculatedtaxrecoveryratesonthetransactionforthetax
Recoveryratesetupsthatallowthisupdate.
IfthetaxrecoveryrateassociatedwithataxhastheAllowAdHocRateoptionenabled,
Thenuserscanoverridethecalculatedtaxrecoveryrateonthetransaction.
Themeaningofadhocentryoftaxrecoveryratesdiffersaccordingtothesource
Applicationforthetransaction:
Payables Theusercanonlyselectanotherpreviouslydefinedrecoveryrateforthe
Tax.
Procurement Theusercaneitherselectanotherpreviouslydefinedrecoveryrate
Forthetaxorenteranewrecoveryrate.
eBTax: Inventory Item for Freight (Oracle Order Management only)

TheeBTax:InventoryItemforFreightprofileoptionletsOrderManagementusean
InventoryitemdefinedasFreight onReceivablestransactionlines.Youcanusethe
FreightInventoryitemtocontrolthetaxrateontaxablefreightamounts.
Thevaluesforthisprofileoptionare:
Freight Charge ThefreightInventoryitemappliestoexternalReceivables
Transactions.
Freight for Intercompany ThefreightInventoryitemappliestointernalReceivables
Transactionsonly.
YoumustalsosettheeBTax:InvoiceFreightasRevenueprofileoptiontoYes.
eBTax: Invoice Freight as Revenue (Oracle Order Management only)

TheeBTax:InvoiceFreightasRevenueprofileoptioncontrolswhethertoconsider
Freightamountsastaxablelineitems.
SettheeBTax:InvoiceFreightasRevenueprofileoptiontoyes,ifyouarerequiredto
Taxfreightamounts.ThefreightamountsenteredintheOrderManagementShip
ConfirmwindowarethenpassedtoReceivablestransactionsastaxablelineitems.
IfyousettheeBTax:InvoiceFreightasRevenueprofileoptiontoYes,youmustalsoset
TheeBTax:InventoryItemforFreightprofileoption.
eBTax: Read/Write Access to GCO Data

TheeBTax:Read/WriteAccesstoGCODataprofileoptioncontrolswhetheruserscan
Setuptaxconfigurationdatafortheglobalconfigurationowner.
IfyousettheeBTax:Read/WriteAccesstoGCODataprofileoptiontoYes,thenthe
Setting Up Applications for Oracle E-Business Tax 2-7
Applicableuserscansetuptaxesandrelatedconfigurationdatafortheglobal
Configurationowner.Legalentitiesandoperatingunitscanthensharetheglobal
Configurationownertaxsetups.
See:ConfigurationOptionsinOracleEBusinessTax,Oracle E-Business Tax User Guide
Formoreinformation.
eBTax Taxware: Service Indicator

TheeBTaxTaxware:ServiceIndicatorprofileoptionindicateswhethertaxesare
Calculatedonserviceorarentaltransactions.
TheTaxwareAPIparameterthatacceptsthisprofileoptionvalueisJurLink.ServInd.
Service Servicetransaction.
Rental Rentaltransaction.
Space Nonservicetransaction.
eBTax Taxware: Tax Selection

TheeBTaxTaxware:TaxSelectionprofileoptionindicateswhetherTaxwareuses
Jurisdictionleveljurisdictioncodestocalculatetaxes.
TheTaxwareAPIparameterthatacceptsthisvalueisTaxSelParmofTaxfn_Tax010.
Tax only Taxwarecalculatestaxbasedontheshiptoaddressonly.
Jurisdiction and Tax Taxwarecalculatestaxbasedonalljurisdictioninformation,
Includingshipto,shipfrom,pointoforderorigin(POO),andpointoforder
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acceptance(POA).
eBTax Taxware: Use Nexpro

TheeBTaxTaxware:UseNexproprofileoptionindicateswhetherTaxwareusesthe
Nexprofunctionality.Ifyouenablethisoption,additionalconfigurationisrequiredon
TheTaxwaresideoftheintegrationtoachievenexusbasedtaxation.
TheTaxwareAPIparameterthatacceptsthisvalueisTaxLink.UseNexproInd.
eBTax Vertex: Case Sensitive

TheeBTaxVertex:CaseSensitiveprofileoptionenablescasesensitivesearchesofVertex
Taxcalculationdata.Thedefaultvalueisyes.
May26,2010

Tax Setup Steps R12.1.2

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Tax Setup Steps R12.1.2

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SETUPTAXCODESINR12.1.

How to Setup Taxes in R12.1.2

Step 1: Create the Tax Regime

Step 2: Create the Tax

Choose the liability account its mandatory

Step 3: Create the Tax Status

Complete the data and press apply

Step 4: Create the Tax Jurisdiction

Complete the data as shown

Step 5: Create the Tax Rate & Recovery Rate

- After Finish Click On Apply

Step 6: Define Tax Rules

Choose The Determine Factor that you Made

Select Your Legal Entity

Click On GO to show the rules set

Direct tax rate determination:

Choose Event Class Category :Event Class

Place of Supply ( Use to assign the tax to the supply place )

Complete the data as Shown

Determine Tax Apllicabiltiy

Determine tax Registration

Countinue the same for the all rules

eBTax: Allow Manual Tax Lines

eBTax: Allow Override of Customer Exemptions

eBTax: Allow Override of Tax Classification Code

eBTax: Allow Override of Tax Recovery Rate

eBTax: Inventory Item for Freight (Oracle Order Management only)

eBTax: Invoice Freight as Revenue (Oracle Order Management only)

eBTax: Read/Write Access to GCO Data

eBTax Taxware: Service Indicator

eBTax Taxware: Tax Selection

eBTax Taxware: Use Nexpro

eBTax Vertex: Case Sensitive

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