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Copyright (c) 2023, Oracle. All rights reserved. Oracle Confidential.

How to set up EBTax So Tax Is Calculated on Payables Invoice? (Doc ID 1520430.1)

In this Document

Purpose
Details

Pre-Requisite:
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
References

APPLIES TO:

Oracle E-Business Tax - Version 12.0.1 and later

Oracle Payables - Version 12.0.1 and later
Information in this document applies to any platform.

PURPOSE

This note helps beginners to set up Oracle eBusiness Tax (EBtax) so that tax can be calculated on payable invoice.

DETAILS

NOTE:
In the images below and/or the attached document, user details / company name / address / email / telephone
number represent a fictitious sample (based upon made up data used in the Oracle Demo Vision instance).
Any similarity to actual persons, living or dead, is purely coincidental and not intended in any manner.

Pre-Requisite:

Check following Party/OU Setup:

Tax Manager/Administrator > Parties > Party Tax Profiles

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Query the following:

Party type: Operating Unit Owning Tax Content

Party name: Vision Operations (the name of OU which will calculate tax)

Click Go

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Click View Tax Profile

Confirm whether 'Use Subscription of the Legal Entity' is checked.

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 Kingdom regime.

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Enter the following:

Field Value

Tax Regime XXX UK

Code REGIME

Name XXX UK
REGIME

Regime Country
Level

Country United
Name Kingdom

Effective 10-Jan-2000
From

Parent NULL
Regime
Code

Used to Unchecked
Group
Regimes

Click on Show Controls and Defaults

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Enter settings for Controls and Defaults as follows:

Field Value

Controls:

Allow Tax Recovery Unchecked

Allow Override and Checked

Entry of Inclusive Tax
Lines

Allow Tax Exemptions Checked

Allow Tax Exceptions Checked

Defaults:

Tax Currency GBP

Minimum Accountable
Unit 0.01

Rounding Rule
Nearest

Tax Precision 2

Allow Multiple Unchecked

Jurisdictions

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Click Continue

Enter the following information:

Field Value

Party Name Operating Unit

Party Type Operating Unit

Owning Tax
Content *

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Configuration Common
for Taxes and Configuration
Rules

Configuration Common
for Product Configuration
Exceptions

Effective From
10-Jan-2000

* 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

Ensure you see confirmation message:

Step 2: Create Tax

Tax Manager/Administrator > Tax Configuration > Taxes

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Click on Create

Enter the following information:

Field Value

Tax Regime Code XXX UK REGIME (From

LOV – Regime defined in
Step 1)

Configuration Owner Global Configuration

Owner

Tax Source Create a New Tax

Tax XXX UK TAX

Tax Name XXX UK TAX

Tax Type VAT

Geography Type Country

Parent Geography Type Country

Parent Geography Name United Kingdom

Set as Offset Tax Unchecked

Set Tax for Reporting

Purposes Unchecked

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Click on Show Controls and Defaults

Enter the following information:

Field Value

Controls:

Allow Tax Inclusion Unchecked

Allow Override and Checked

Entry of Inclusive Tax
Lines

Allow Tax Rounding Checked

Override

Allow Override for Checked

Calculated Tax Lines

Use Legal Unchecked

Registration Number

Allow Multiple
Jurisdictions

Allow Mass Creation Checked

of Jurisdictions

Defaults: Checked

Allow Tax Rate Rules Checked

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Click Apply and ensure the confirmation message appears.

Step 3: Create Tax Status

Tax Manager/Administrator > Tax Configuration > Tax Statuses

Click Create

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Enter the following information:

Field Value

Tax Regime XXX UK

REGIME
(From LOV
in Step 1)

Tax XXX UK TAX

(From LOV
in Step 2)

Tax Status XXX UK

Code STATUS

Name XXX UK
STATUS

Effective 10-Jan-2000
From (Defaults)

Set as Checked
Default Tax
Status

Default 10-Jan-2000
Status *
Effective
From

* Does not default and is not required so remember to enter this.

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Click Apply

View confirmation message:

Step 4: Create Jurisdiction

Tax Manager/Administrator > Tax Configuration > Tax Jurisdiction

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Click Create (see above screenshot)

Enter the following information:

Field Value

Tax Jurisdiction XXX UK

Code JURISDICTION

Tax Jurisdiction XXX UK

Name JURISDICTION

Tax Regime XXX UK

Code REGIME (From
LOV Step 1)

Tax XXX UK TAX

(From LOV Step
2)

Geography COUNTRY
Type

Effective From 10-JAN-2000

Geography United Kingdom

Name

Default Tax
Jurisdiction
Settings:

Set as default Checked

Tax Jurisdiction

Default 10-Jan-2000
Effective From

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Click Apply

Ensure confirmation message is received.

Step 5: Create Rate

Tax Manager/Administrator > Tax Configuration > Tax Rates

Click Create (screenshot above)

Enter the following information:

Field Value

Tax Regime Code XXX UK REGIME

(From LOV Step 1)

Configuration Owner Global Configuration

Owner

Tax XXX UK TAX (From

LOV Step 2)

Tax Status Code XXX UK STATUS

(From LOV Step 3)

Tax Jurisdiction Code XXX UK

JURISDICTION (From
LOV Step 4)

Tax Rate Code XXX UK RATE

Rate Type Percentage

Rate Periods:

Percentage Rate 20

Effective From 01-Jan-2000

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Click on Rate Details button and scroll down

Enter the following:

Field Value

Set as Checked
Default Rate

Default 01-
Effective Jan-2000
Date

Click Apply

Note: This returns you to the Tax Rates page and the rate has not yet been saved, just the details for it.

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Click Apply again.

Ensure confirmation message is received

Step 6: Enter Tax Accounts

Tax Manager/Administrator > Tax Configuration > Taxes

Query XXX UK Tax

Click Go

Click Tax Accounts

Search for Vision Operations OU and click create

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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

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Click Apply a third time

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

Tax Manager/Administrator > Tax Configuration > Tax Rules

Enter the following:

Field Value

Configuration Global
Owner Configuration
Owner

Tax Regime XXX UK

Code REGIME

Tax XXX UK TAX

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Click Go to search for existing default rule

Click the pencil icon in the Set Default column to change any of the defaults defined

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Update the defaults as follows:

Field Value

Determine Place of Ship to, use bill to if

Supply ship to is not found

Determine Tax Applicable

Applicability

Determine Tax STANDARD_TB

Registration

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.

Step 8: Make Tax Available for Transaction

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Tax Manager/Administrator > Tax Configuration > Taxes

Query Tax

Click on Update Pencil Icon

Check the box 'Make Tax Available for Transactions'

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Click Apply

This warning is ok since we know we didn’t 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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Enter Invoice for Supplier with a UK Ship-To address

Enter Line information

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

Click distributions

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Enter Invoice distribution

Save

Go back to Invoices and click Calculate Tax

Tax line is created – click on Tax Details

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

Join our growing Oracle Payables Community or the EBTax Community and learn from your peers and Oracle on
how to address your unique issues in AP.

REFERENCES

NOTE:1082172.1 - How to Troubleshoot a Tax That Does Not Calculate in R12 E-Business Tax (EBTAX)
Didn't find what you are looking for?

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