Tax Accounting Process

Tax Accounting Process
Copyright 2004, Oracle. All rights reserved.
Objectives
After completing this module, you should be able to do

the following:
Overview of the Tax Accounting Process
Define General Tax Setup Steps
Enter Tax Adjustments
Explain Tax Reporting Ledger
Agenda
Overview of the Tax Accounting Process

Defining Generic Tax Setup Steps
Entering Tax Adjustments
Explaining Tax Reporting Ledger
Order Management
Global Taxes Overview
Tax Group
Tax Code
Items
Options, Controls,
and Defaults
Customers
Sites
Sales Order with Tax

Estimate
Receivables Global Tax Overview
Tax Group
Tax Code
Revenue
Account
Items
Options, Controls, and

Defaults
Customers
Sites
Transaction with Tax

Distributions
Other Products
CRM Applications
Order Capture
Tax Engine
Projects & Order

Management
Order Management
AutoAccounting
Invoices
Global Tax Overview
Value Added Tax (VAT)
Sales Tax
Tax Overview
Input Tax
Tax paid out on

supplier invoices
Output Tax
Tax collected on
customer invoices
Amount Due to Tax Authority =

Output Tax - Recoverable Input Tax
Value Added Tax Overview
.50
.25
1.00
VAT TAX = .50 + 1.00 + .25 + .50
.50
US Sales Tax Overview
Customer pays supplier cost of

item plus sales tax
$100 item +
$10 sales tax
$10 sales
tax
State collects
sales tax
Supplier remits
sales tax to state
tax authority
US Sales Tax Example
Based on customers ship-to address:

Structure
State.County.City + Zip Code
Locations
IL.Cook.Chicago + 60601
Tax Rates
3%
2%
1.5%
= 6.5%
Tax Partner Process Overview
Tax
Information
Oracle Receivables
Tax Tables
Vertex or
Taxware
Tax Partner
Tax Rate
Tax Amount
AutoAccounting
Other Taxes in Oracle Applications
Recoverable and Non-Recoverable Input Taxes

EU Acquisition and Reverse Charge Taxes
Deferred Output Taxes
Withholding Taxes
Goods and Service Tax
Canadian Government, Provincial, and
Harmonized Sales Tax
Sales Equalization Taxes
Investment Taxes
Excise Duties
Latin and South American Tax regimes
Agenda
Overview of Tax Accounting Process

Tax Setup Steps

Select a Tax Method
Define Tax Codes & Rates
Setup Inclusive & Exclusive Taxes
Setup Tax Groups (Optional)
Setup Item or Account Method (Optional)
Tax Setup Steps Continued

Define Tax Preferences, Defaults, and Results
Define Tax Exemptions and Exceptions
Define Transaction Types
Define AutoAccounting for tax
Enable Calculation of Tax on Freight
Define Tax Profile Options
Defining Tax Codes and Rates

Select a Tax Method
Taxable Basis
Value Added Tax
Sales Tax
Effective Dates
5%
Tax Rate
Tax Accounting
Information
Tax
Controls
Setting Up Inclusive and Exclusive Tax
Item
Item
+ Tax
Item Cost + Tax = Line Cost
Inclusive Tax
Total Cost
Exclusive Tax
Inclusive Tax
Allow Inclusive Override
Tax Groups Overview
New York
City Tax
County Tax
Metro Tax
State Tax
Country Tax
Paris
Setting Up Tax Groups (Optional)
Tax Code
Tax Code
Tax Group
Tax Code
Default sources:
System Options, Billto Customer, Ship-to
Customer Site, Item,
Memo Line
Tax Codes
Tax Rates
Enter Order or
Invoice with Tax
Group
Accounting
Order or
Invoice Line
Compound Tax Example
Precedence
Line Number Number
Tax Code
Tax Rate
Tax Amount
GST
7%
7.00
PST
10%
10.70
Total:
17.70
Based on an invoice line of 100
Inclusive Tax with Compounding Example
Code
Inclusive Precedence
Rate
Taxable
Tax
Yes
20%
100
20
Yes
1.1
10%
120
12
No
10%
100
10
No
2.1
30%
110
33
Based on an invoice line of 132

(100 plus Inclusive Tax of 32 for Code A and B)
Defining Condition Sets
Use Condition and Exception Sets and Group

Constraints to specify one or more conditions for
each tax code
Optionally define actions for each condition set
Example: If ship-to country is Canada and ship-to
province is Ontario, use this tax code.
Example: If ship-to province is not found, display
system error message
Select a Tax Control Method
Item Method
Account Method
Revenue
Accounts
Inventory
Item
Ship To
Country
Tax Code
Setting Up Account Method (Optional)

Assign Tax Code to
Natural Account
Segment of Revenue
Account
In General Ledger Tax
Options Window:
In Receivables
System Options
Window:
Validation
Allow Tax Code

Override
Set Revenue Accounts

Hierarchy to 1
Enforce Tax
Assigning Tax Codes to Items

Use the Tax Code field in the Invoicing region of the
Master Item window to assign a tax code or a tax
group to inventory items.
List of Values
Tax Group
Tax Code
Attribute
Tax Group
Pick One
Tax Code
Tax Code
Tax Code
Defining Tax Preferences,

Defaults, and Rules
In System Options Window:
Tax
lts
u
a
ef es
D
l
Tax d Ru
an
Tax
Rules
Tax
Preferences
Tax
Defaults
Defining Tax Exemptions
Select the Exempt check box on the tax code.

Define Exemptions and Exceptions in the
corresponding forms.
For customer exemptions, assign tax code to
customers at either the customer or site level.
For product exemptions, assign tax code to
products in the Master Item window.
Tax Code
Defining Transaction Types

Calculate Tax on
All Invoices
Tax Calculation Check Box
Customer Sites Not Subject to Tax
Assign
Exempt
Tax Code
Defining AutoAccounting for Tax
AutoAccounting
In the AutoAccounting Window

enter:
Tax in the Type Field
Segment Names
Value used to derive the

Account
01-110-7340-0000-000
General
Ledger
Enabling Calculation of Tax on Freight
Create freight amounts as regular invoice lines.

Use an inventory item to define freight services
and enable AutoAccounting to distinguish between
freight and regular line items.
AutoAccounting
Defining Tax Profile Options
Tax: Allow Manual Tax Lines

Tax: Allow Ad Hoc Tax Changes
Tax: Allow Override of Customer Exemptions
Tax: Allow Override of Tax Code
5%
Profile
Options
For Order Management Profile Options

Profile Option
Setting
Reason
Tax: Invoice
Freight as
Revenue
Yes
Enables freight amounts entered in

Oracle Order Management to be
passed to Oracle Receivables as
taxable line items.
Tax: Inventory
Item for
Freight
Freight
(Inventory
Item)
Lets Oracle Order Management

identify an inventory item on a
transaction line imported into
Oracle Receivables via the
Receivables Interface program.
Agenda

Tax Accounting Overview

Set up Tax Accounting Information for Tax
Codes and Receivables Activities
Miscellaneous
Cash
Deferred Tax
Earned
Unearned
Adjustments
Finance Charges
Discounts
Setting Up Tax Accounting

for Deferred Tax
Tax Collected
Deferred Tax
Deferred
Tax
Tax Code
5%
Tax &
Interim Tax
Accounts
Tax Rate
Defining Receivables Activities

To set up Receivable
Activities for Tax Accounting:
1. Define GL Account
2. Select Tax Code Source
3. Check Recoverable
or Non Recoverable
4. Enter Tax Code if Tax Code
Source Option is
the Activity
Changing Tax Transactions

Transactions or Transactions Summary
Profile
Option
Tax Code
Tax: Allow Override of Tax Code

With AutoAccounting
Rerun Review
Accounting
To Update the
Tax Account
Adjusting Tax on Invoices

Adjustment
entry with
Receivables
Activity
Validation
process
Approval limit
$500
Approved
or Pending
Tax Credit Memo
Customer
Account
Credit
Memo
OR
Amount
Percent
Agenda

Tax Reporting Ledger Overview

Global Tax Management
General Ledger
Receivables
Tax Registers
RXi
Reporting
Payables
Tax Extract Overview

RXi
Oracle
Reports
RX
Calls
Payables
Documents
Tax
Extract
Receivables
Documents
Populates
General Ledger
Tax Journals
Interface Table
Global Descriptive
Flexfields
RXi Attribute
Sets
Formats
Tax
Report
Sources of Data
Payables
Standard
invoices
Prepayments
Credit and
debit memos
Expense
report
invoices
Receivables
Other
Invoices, credit and

General Ledger
debit memos
manual journal
Line, tax, and invoice
entries
Global
adjustments
Payment applications
descriptive
for deferred tax
flexfields
Earned and unearned
discounts
Finance charges
Miscellaneous
receipts and payments
Bills receivable
Tax Ledger Reporting Options

Set Reporting Level on the MO: Top Reporting Level
Profile Options with the following Reporting Contexts
to achieve the desired Tax Ledger Report Content.
Reporting Level
Reporting Context
Report Content
Set of Books
Set of books defaults
All operating units

in the set of books
Legal Entity
Select legal entity
All operating units

in your legal entity
Operating Unit
Select operating unit
Only the operating

unit associated with
your responsibility
Matrix Reporting
Show a single line in the Tax Reporting
Ledger for two or more tax amounts.
Input Tax
Up To Two Taxes split

between Recoverable and
Non-Recoverable
Output Tax
Up to Four Taxes
RXi Report Steps
Design content and

layout of reports
Extract Data
Meet reporting
requirements
Publish reports in
different formats
Modifying Attribute Sets
Displayed
columns
Page
Formatting
Column Details
Defining Summary Details

Use the Summary Details window to define columns as
summary columns in a report.
Page Total
Running Page Total
Previous Page Total
Report Total
Publish RXi Reports
Select Publish Report
View Output
Add Attribute
Set
Submit
Managing Access
to RXi Reports and Attribute Sets
To limit user access to RXi reports, perform the
following tasks:
Assign each RXi report to a request group.
Assign the request group to one or more
responsibilities.
Assign each RXi report attribute set to a
responsibility.
Summary
In this module, you should have learned how to:
Define General Tax Setup Steps
Enter Tax Adjustments
Explain Tax Reporting Ledger

Tax Accounting Process

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Tax Accounting Process

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Tax Accounting Process

Copyright 2004, Oracle. All rights reserved.

After completing this module, you should be able to do

Copyright 2004, Oracle. All rights reserved.

Overview of the Tax Accounting Process

Copyright 2004, Oracle. All rights reserved.

Sales Order with Tax

Copyright 2004, Oracle. All rights reserved.

Receivables Global Tax Overview

Options, Controls, and

Transaction with Tax

Copyright 2004, Oracle. All rights reserved.

Projects & Order

Copyright 2004, Oracle. All rights reserved.

Global Tax Overview

Value Added Tax (VAT)

Copyright 2004, Oracle. All rights reserved.

Tax paid out on

Amount Due to Tax Authority =

Copyright 2004, Oracle. All rights reserved.

Value Added Tax Overview

VAT TAX = .50 + 1.00 + .25 + .50

Copyright 2004, Oracle. All rights reserved.

US Sales Tax Overview

Customer pays supplier cost of

US Sales Tax Example

Based on customers ship-to address:

State.County.City + Zip Code

Copyright 2004, Oracle. All rights reserved.

Tax Partner Process Overview

Copyright 2004, Oracle. All rights reserved.

Other Taxes in Oracle Applications

Recoverable and Non-Recoverable Input Taxes

Copyright 2004, Oracle. All rights reserved.

Overview of Tax Accounting Process

Copyright 2004, Oracle. All rights reserved.

Tax Setup Steps

Define Tax Codes & Rates

Setup Inclusive & Exclusive Taxes

Setup Tax Groups (Optional)

Setup Item or Account Method (Optional)

Copyright 2004, Oracle. All rights reserved.

Tax Setup Steps Continued

Copyright 2004, Oracle. All rights reserved.

Defining Tax Codes and Rates

Value Added Tax

Setting Up Inclusive and Exclusive Tax

Copyright 2004, Oracle. All rights reserved.

Tax Groups Overview

Copyright 2004, Oracle. All rights reserved.

Setting Up Tax Groups (Optional)

Copyright 2004, Oracle. All rights reserved.

Compound Tax Example

Based on an invoice line of 100

Copyright 2004, Oracle. All rights reserved.

Inclusive Tax with Compounding Example

Based on an invoice line of 132

Copyright 2004, Oracle. All rights reserved.

Defining Condition Sets

Use Condition and Exception Sets and Group

Copyright 2004, Oracle. All rights reserved.

Select a Tax Control Method

Copyright 2004, Oracle. All rights reserved.