Release 12 e Business Tax Engine o Aug

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Release 12

E-Business Tax Engine

Goetz Schmitz

May 2009



registered trademarks or service marks of their respective owners.2 22

Agenda

• Understanding the Past: Oracle Standard Tax

• Oracle E-Business Tax Engine

• Benefits and Features

• E-Business Tax Configurations

• E-Business Tax Third Party Integration

• E-Business Tax Reporting

• Module Integration

• Transactions Management

• Tax Simulator

• Summary




Release 12

Understanding Oracle Standard Tax




Standard Tax - Basics• US Based entities

• Lack of foreign entity controls

• Manual in nature

• Currency driven

• Rates both manual and subscription

• Common/main usage for Sales Tax

• Use Taxes are transactional afterthoughts

• Despite Multi-national organizations (multi-org), previous releases do not address full global control of taxes, taxing authorities, regulatory and governmental compliance.

• No single source for oversight and control of taxes both foreign and domestic




Release 12

Oracle E-Business Tax Engine




Full Integration with Tax

Providers

Subscribe to Vertex!




Global Control with E-Business

Tax

• Single Point Source – Service oriented architecture

• Self-Service User Interface:

– Extended control for products-based tax

– Country-specific tax content

– Simple to complex country-specific legislations

– Cross-border transactions

– Local compliance requirements (domestic)

– Constant tax changes by local jurisdictions, legislation, rates and exceptions

• Simplified Tax Configuration




Ease of Configuration and Control

• Easy to follow Setup Tasks

• Required/Not Required

• Quick Link to

Setup Task

• Global

View/Global Control




New Features with E-Business Tax

• Tax Repository

• Self-Assessment/Reverse Charge

• Tax Zone Types

• Tax Formulas

• Tax Condition Sets

• Tax Simulator:

– Simulates Tax Calculations based on “What-If” scenarios

– Parallel audit trail to review which Tax Rules were satisfied

– Can be used to replicate standard transactions for PO, Invoices,Invoices matched against PO’s, etc. typically integrated with the Tax Lines Interface

– A quick way to enter transactions to perform “what-if” scenarios on tax calculation, but not perform normal validation in the application forms.

NOTE: Tax Simulator emulates, but does not trigger real transactions.




Service Oriented Architecture

METADATA

Taxonomy

& Rules

Repository, Reports, Dashboards, etc.

Tax Regimes Place of Registration RatesTaxes Supply Taxable Basis Recovery

Validate Calculate Determine AdditionalAddress Taxes Recovery Services

Party Product Place Process

Tax

Regime

Tax Tax

Juris-diction

Tax

Status

Tax

Rate

Recove

rRate

OU Tax

Accts




E-Business Tax Definitions

Tax Regime TaxTax

JurisdictionsTax Status Tax Rate

Recovery Rate

Operating Unit Tax

Accounts

Set of Tax

rules that

determine

treatment of one or more

taxes

administered

by tax authority

The

geographical

area where a

tax is levied by a specific tax

authority or

where the

specific tax rate applies

Taxable

nature of a

product or

service in context of a

transaction

and a specific

tax (taxable, exempt, non-

taxable)

The rate

specified

for a tax

status in effect for a

period of

time

The rate of

Input Tax

that is

allowed to be

recovered

or offset

against Output Tax

Tax

Accounts

that are

associated with Tax

Rates and

Recovery

Rates Accounting

FOUNDATION FOR E-BUSINESS TAX ARCHITECTURE




Party Tax Profile - Required• “Body of

information that relates to a party’s transaction tax activities”

• Legal entities, legal establishments and operating units that have tax requirements must have tax profiles




Tax Profile Party Types

• First Party Legal Establishment

• Operating Unit Owning Tax Content

• Tax Authority

• Third Party

• Third Party Site




Tax Regimes - Required

• Term definition on setup form

• US Sales Tax is an example of a Tax Regime

• Or in our example “US Pirate Treasure Tax”




Next Step? Create Tax

• Regime is setup –what’s next?

• Previous releases we would follow the documents for each step

• Here we see “Create Tax”is next




Tax• “Distinct

charge imposed by a government through a fiscal or tax authority”

• Notice geo structure is defined (Country and State)




Next Step? Create Tax Status

• Notice the evolving setup hierarchies / entities / steps

• “Regime to Rate Flow”steps you through the setups




Tax Status

• “Taxable nature of a product in the context of a transaction and a specific tax on the transaction”




Next Step? Create Tax Rate




Tax Rates and Accounts

• Integration with Ledger here

• Notice the “TX”jurisdiction here – this can all be populated with Vertex




Tax Rates and Accounts

• Accountant Joy!!!! Account setups

• Notice the Ledger is the intersection with operating unit




Next: Tax Rules

• “Guided Rule Entry”should guide you through




Regime to Rate Flow

Integration to either

Vertex or Taxware for

current rates, and location

based tax controls




Tax Jurisdiction – Optional..

• Geographic Region or Tax Zone where tax is levied• Tax Status must be setup• Multiple-Jurisdiction taxes can be enabled for all counties, or all

provinces for a particular type of tax within a particular region/state• One Tax Jurisdiction must be setup for a tax before transactions can

be performed on that jurisdiction




E-Business Tax Configuration

-Legal Party

Fiscal Classification

-Registration

-Party Fiscal

-Goods and

Services

-Document

-Transaction Fiscal

Classification

-Transaction

Generic

Classification-Accounting Event

-Geography

associated with the transaction(s)




Legal Entity Setup - Required

Mandatory or Required

setups are clearly noted

Quick link to

configurations




Party Classifications - Optional

• Geographic Region or Tax Zone where tax is levied

• Tax Status must be setup

• Multiple-Jurisdiction taxes can be enabled for all counties, or all provinces for a particular type of tax within a particular region/state

• One Tax Jurisdiction must be setup for a tax before transactions can be performed on that jurisdiction




EE--Business Tax Rules EngineBusiness Tax Rules Engine

Payables

Receivables

Tax

Values

4P’s

determining

factors




Tax Rules Build - Guided

• Oracle-guided setup for building Tax Rules

• Multiple-Jurisdiction tax rules can be enabled for both foreign and domestic tax regimes

• Easily updateable

• Choice - either self or Oracle guided rule building




Tax Rules Build – Guided (con’t)




EE--Business Tax ServicesBusiness Tax Services

Does NOT provide services for:*Payables withholding taxes*Latin American receivables transactions*India transaction taxes




E-Business Tax Management

XML Publisher

Order Confirmations

Fund Transfers

ReportsLabels

InvoicesChecks

Fully Integrated Solution for:Formatting, Managing and Delivering Your Business Documents

Meets Business Requirements by removing complexity normally attributed to disparate transactions both to and from source systems.




EE--Business Tax Management Business Tax Management

ProcessProcess

PDF

RTF

HTML

XML

EDI

Excel

Tax Repository

Sub ledger Accounting

AR

AP

PA

Data Sources

Tax Reporting Ledger

XML Publisher

Publishing Engine

Output

FormatsDestination

Templates

-Email

-Printer-Fax

Letters

Funds Transfer

s

Order

Confirmations

Online Payroll

Checks




Release 12

Third Party Integrations




Third Party Tax Integration• E-Business Tax Engine standard package integration (Pre-bundled)

• Vertex and Taxware Integration and Configurations:

– Licensing required

– Support only for US State and Local taxes within Order To Cash cycle

– Certified prepackaged in R12 OEBS; Database objects on CD

– Auto Upgrade of existing server-side version if existing, and certify if necessary the more recent versions (compared to CD versions)

– Install scripts, profile options, lookup codes (tax exemption reasons), provider-specific tax regimes and taxes, client-side tax software, load rates, setup tax accounts (liability), turn-on address validation (make sure before creating new addresses), jurisdiction codes, validate/test provider implementation (test cases).

• Business Processes:

– Service Provider Codes definitions (Vertex=Geocodes, Taxware=Jurisdiction Code)

– Handling Exemptions

– Reconciliations and Procedures




Vertex/Taxware Integration –

Custom Tips• Tax Calculation API from provider gathers input from this

view: (ZX_O2C_CALC_TXN_INPUT_V). This view has

extra columns not found or mapped in Oracle.

• Customizable Functions: ARP_TAX_VIEW_TAXWARE and ARP_TAX_VIEW_VERTEX

• Use of Descriptive Flexfields predefined to enter “ship-from”

information: HR_LOCATIONS_V

• User-defined Descriptive Flexfields to store tax information: AR_RECEIVABLES_TRX (ATTRIBUTE15) and

RA_CUST_TRX_TYPES_ALL (ATTRIBUTE1)




Release 12

Relationship Flow




Tax Relationship Flow - Detail

Definition

Setup

Configuration Rules

Engine

Services Tax

Mgt.




Release 12

Tax Management Reporting




Tax Reporting Ledger

• Single reporting solution to address complex global tax requirements from P2P transactions in a summary format of tax information from AR, AP and the GL.

• Tax Extract copies the data to the interface tables

• Use Oracle Reports, XML Publisher, or RXi tools to specify which data columns to use and what format you want.

• Supports Deferred Output Tax Register, Recoverable/Non-Recoverable Tax Register, Single Cross Product Tax Register, Standard Input and Output Tax Registers




E-Business Tax Reporting Setups

and Programs

• Common Report Parameters:– Reporting Level (multi-org access)

– Reporting Context (reporting level=ledger, OU, etc)

– Company Name

– Accounting Status (accounted, unaccounted, both)

– Currency

– GL Date

– Transaction Date

• XML Publisher Reports generation

• E-Business Tax Transactions Upgrade On Demand




E-Business Tax Reports -

Examples• Customers with 0 VAT and no VAT Registration

Number

• Financial Tax Register

• Intra-EU Audit Trail Report

• Tax Received

• Tax Reconciliation/ by Taxable Account

• Tax Register

• Tax Audit

• Tax-Only Open Invoices Report




E-Business Special Tax Reports• EMEA VAT reporting: Oracle Financials for

Europe, using E-Business tax data extracts to retrieve VAT for EMEA.

• EMEA VAT reports are XML reports

• Latin America Tax Reporting: Makes use of the Latin Tax engine for country-specific reports

• Asia Pacific Tax Reporting: Makes use of both Payables and Receivables tax transactions for reporting requirements

• Some Asia Pacific Tax Reports are XML reports




Release 12

Module Integration




4747

Standard Applications Flow




Application Integrations




Release 12

Transactions Management




E-Business Tax Handling of Common

Transactions• Tax calculated on transactions based on legal entity and/or

operating unit setups

• Tax Configurations and Tax Rules Setups

• Transactions Tax Used = Tax Regime = LE/OU

• Tax Rates Used and Derived are based upon:– 1st Party of the transaction = LE/OU

– Tax Registrations of 1st and 3rd parties

– Tax Configuration Setup

– Tax Rules for Configuration Owner and Taxes

– Application Event Class Option Settings

– Customer Tax Exemptions

– Product Tax Exceptions




E-Business Tax Common Transactions

• Order to Cash transactions from PA and AR

• Procure to Pay transactions from PO and AP

• Other transactions from “Source Applications” (Applications that feed data to AP and AR – Trade Management)

• Payables Invoices Matched to Purchase Orders

• Prepayment Invoices

• Debit and Credit Memos

• Intercompany Transactions

• Tax Only Lines

• Etc.




Release 12

Tax Simulator – What If?




Simulation Key Functionality

• Ability to test tax changes and rules

• Test bed for entering PO’s, Invoices, Invoices

matched against PO’s integrated with Tax Lines

Interface

• Create What-If scenarios on tax calculations

without affecting environment with real

transactions

• Ability to enter transactions with fewer

validations to test your What-If scenarios




Simulation Example - Receivables




Release 12

E-Business Tax Engine - Summary




Summary – Global Benefit

• Greater Efficiencies through automated processes

• Improved Consistencies utilizing global tax rules, allowing the business to conform to governmental

requirements both foreign and domestic.

• Allowing Better Control of the decision-making process through increased global visibility of the enterprise

• Ease of configurability and usage

• Ability to test/pre-determine taxable scenarios




Free Consultation

Take the Risk Out of Complex Issues

• Upgrade vs. Re-implementation

• Change in business structure

• Consolidation of instances or

orgs

• Acquisition integration

• Inventory costing method

change

• Chart of Accounts modifications

• Calendar Change

• Optimize project timeline

• Globalization of the business

• Significant customizations

• Significant changesin functionality

• Data integrity problems, data archiving

• Extensive third-party systems

• Significant gap between releases

• Changes in configuration

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