TAX - Oracle EBTax Setup and Process in Payables Invoice

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 Tax
Pre-Requisite:
Check how the Party/OU has been setup
Tax Manager/Administrator > Parties > Party Tax Profiles
Query for the following:
Party Type: Operating Unit Owning Tax Content
Party 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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TAX - Oracle EBTax Setup and Process in Payables Invoice

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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
Click 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

TAX - Oracle EBTax Setup and Process in Payables Invoice

Enter settings for Controls and Defaults as follows:

Field

Value

Controls:
Allow Tax Recovery

Unchecked

Allow Override and Entry of Inclusive Tax Lines

Checked

Allow Tax Exemptions

Checked

Allow Tax Exceptions

Checked

Defaults:
Tax Currency

USD

Minimum Accountable Unit

0.01

Rounding Rule

Nearest

Tax Precision

Allow Multiple Jurisdictions

Unchecked

Click Continue

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TAX - Oracle EBTax Setup and Process in Payables Invoice

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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 been entered
against the First Party Legal Entity and not the OU
Click on Finish

TAX - Oracle EBTax Setup and Process in Payables Invoice

Ensure you see confirmation message:

Step 2: Create Tax

Tax Manager/Administrator > Tax Configuration > Taxes
Click on Create

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TAX - Oracle EBTax Setup and Process in Payables Invoice

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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

TAX - Oracle EBTax Setup and Process in Payables Invoice

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

Allow Mass Creation of Jurisdictions

Checked

Defaults:

Checked

Allow Tax Rate Rules

Checked

Click Apply.

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TAX - Oracle EBTax Setup and Process in Payables Invoice

View confirmation message:

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Step 3: Create Tax Status

Tax 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.

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Click Apply

View confirmation message:

Step 4: Create Jurisdiction

Tax Manager/Administrator > Tax Configuration > Tax Jurisdiction
Click Create

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Enter the following information:

Field

Value

Tax Jurisdiction Code

XXAA US JURISDICTION

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.

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Step 5: Create Rate

Tax Manager/Administrator > Tax Configuration > Tax Rates
Click Create

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

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Effective From

01-Jan-2000

Click on Rate Details button and scroll down

Enter the following:

Field

Value

Set as Default Rate

Checked

Default Effective Date 01-Jan-2000

Click Apply

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TAX - Oracle EBTax Setup and Process in Payables Invoice

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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.

TAX - Oracle EBTax Setup and Process in Payables Invoice

Ensure confirmation message is received

Step 6: Enter Tax Accounts

Tax Manager/Administrator > Tax Configuration > Taxes
Query XXAA US Tax
Click Go

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Click Tax Accounts

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Search for Vision Operations OU and click create

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TAX - Oracle EBTax Setup and Process in Payables Invoice

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Enter the Operating Unit and populate Tax Expense and Tax Recoverable/Liability accounts.
Click Apply.

Note this has not been saved at this point.

Click Apply again

Click Apply a third time

TAX - Oracle EBTax Setup and Process in Payables Invoice

Step 7: Create Tax Rules (Populate values for all defaults)

Tax Manager/Administrator > Tax Configuration > Tax Rules
Enter 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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TAX - Oracle EBTax Setup and Process in Payables Invoice

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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 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. The last item,
Determine Recovery Rate is also not updatable because this tax regime has not been setup to allow recoverable
taxes.

TAX - Oracle EBTax Setup and Process in Payables Invoice

Step 8: Make Tax Available for Transaction

Tax Manager/Administrator > Tax Configuration > Taxes
Query Tax
Click on Update Pencil Icon

Check the box 'Make Tax Available for Transactions'

Click Apply

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TAX - Oracle EBTax Setup and Process in Payables Invoice

This warning is ok since we know we didnt enter an exchange rate type.

Click Yes and receive confirmation of changes saved

Step 9: Test the Tax

Payables > Invoices : Entry > Invoices

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TAX - Oracle EBTax Setup and Process in Payables Invoice

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Enter Invoice for Supplier with a US Ship-To address

Enter Line information
Ensure the SHIP TO location at the line level contains a US location (As that is how we determine place of
supply)

TAX - Oracle EBTax Setup and Process in Payables Invoice

Click distributions
Enter Invoice distribution
Save

Go back to Invoices and click Calculate Tax

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TAX - Oracle EBTax Setup and Process in Payables Invoice

Tax line is created click on Tax Details

You can see that the XX US REGIME has been applied and tax calculated at 20%.

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