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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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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
Effective From 01-Jan-2014
* If Use Subscription of the Legal Entity was checked in the prereq step then this would have
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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
Enter the following information:
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
Enter the following information:
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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
Enter the following information:
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
View confirmation message:
Step 4: Create JurisdictionTax Manager/Administrator > Tax Configuration > Tax JurisdictionClick Create
Enter the following information:
Field Value
Tax Jurisdiction Code XXAA US JURISDICTION
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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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
Effective From 01-Jan-2014
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
Enter the following information:
Field Value
Tax Regime Code XXAA US REGIME (From LOV Step 1)
Configuration Owner Global Configuration Owner
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
Effective From 01-Jan-2000
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
Step 7: Create Tax Rules (Populate values for all defaults)Tax Manager/Administrator > Tax Configuration > Tax RulesEnter the following:
Field Value
Configuration Owner Global Configuration Owner
Tax Regime Code XXAA US REGIME
Tax XXAA US TAX
Click Go to search for existing default rule
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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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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How To Setup EBTax So Tax Is Calculated on Payables Invoice Raju Ch
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%.