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Monday, September 9, 2013

Setup for EBTax on Payables Invoice in R12

Setup for EBTax on Payables Invoice in R12

EB Tax:

Purpose of EB Tax:

Use E-Business Tax to set up and maintain your transaction tax requirements in all geographic locations where you do business. You can set up tax configurations to include the rules, default values, and other information necessary for each separate tax requirement. At transaction time, E-Business Tax uses your tax configuration to determine the taxes that apply to each transaction and to calculate the tax amounts.
With E-Business Tax, you can:
• Set up and maintain a tax configuration for each tax that you are subject to.
• Set up and maintain records for your legal entities and operating units and the taxes they are subject to.
• Manage the sharing of tax configuration data by the legal entities and operating units in your organization.
• Set up and maintain tax registrations and classifications for your legal establishments and third parties.
• Set up and maintain classifications of the products that you buy and sell.
• Set up and maintain classifications for your transactions.
• Set up and maintain tax rules and default values to manage tax determination and tax recovery on your transactions:
• Set up default values and a minimum number of tax rules for simple tax requirements.
• Set up default values and a comprehensive set of tax rules to manage complex tax requirements.
• Set up and maintain tax-related records for your important transactions.
• Set up and maintain automatic accounting of all tax-related transactions.
• Manage user control of updates and overrides of tax information on transactions.
• Set up and maintain codes for tax reporting purposes.
• Run a full set of reports for your tax authority tax requirements.
• Set up and maintain access to third party tax calculation services.
You can use the E-Business Tax Home page to manage access to all parts of the E-Business Tax system for setup and maintenance. The tasks involved in setting up a tax requirement in E-Business Tax fall into three
general categories:
1. Setting up transaction taxes. 
2. Completing all of the setups and settings related to the processing of taxes on transactions. 
3. Setting up tax rules and defaults to manage tax processing.


Steps for EB Tax:

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
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.

Step 1: Create Tax Regime

Navigation : Tax Manager/Administrator > Tax Configuration > Tax Regimes

Click Create to enter a new Tax Regime.

We are going to create a United Kingdom regime.

Enter the following:
Field                                       Value
Tax Regime Code            XXX UK REGIME
Name                             XXX UK REGIME
Regime Level                  Country
Country Name                United Kingdom
Effective From                10-Jan-2000
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
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 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
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

Navigation: Tax Manager/Administrator > Tax Configuration > Taxes


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

 

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

Allow Mass Creation of Jurisdictions
Checked
Defaults:
Checked
Allow Tax Rate Rules
Checked



Click Apply and ensure the confirmation message appears.

Step 3: Create Tax Status

Tax Manager/Administrator > Tax Configuration > Tax Statuses

Click Create


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 Code
XXX UK STATUS
Name
XXX UK STATUS
Effective From
10-Jan-2000 (Defaults)
Set as Default Tax Status
Checked
Default Status Effective From
10-Jan-2000 *
* Does not default and is not required so remember to enter this.

 Click Apply

View confirmation message:



Step 4: Create Jurisdiction
Tax Manager/Administrator > Tax Configuration > Tax Jurisdiction
Click Create        (see above screenshot)
Enter the following information:

Field
Value
Tax Jurisdiction Code
XXX UK JURISDICTION
Tax Jurisdiction Name
XXX UK JURISDICTION
Tax Regime Code
XXX UK REGIME (From LOV Step 1)
Tax        
XXX UK TAX (From LOV Step 2)
Geography Type
COUNTRY
Effective From
10-JAN-2000
Geography Name
United Kingdom
Default Tax Jurisdiction Settings:

Set as default Tax Jurisdiction
Checked
Default Effective From
10-Jan-2000

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


 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.

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


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

 

 


Click Apply.

 Click Apply again

 


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 Owner
Global Configuration Owner
Tax Regime Code
XXX UK REGIME
Tax
XXX UK TAX

 

  


Click Go to search for existing default rule
  

 

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 Tax Registration
STANDARD_TB
Calculate Tax Amounts
STANDARD_TC




 

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


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






 

Enter Invoice for Supplier with a UK Ship-To address



Enter Line information




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




Click distributions
Enter Invoice distribution



Save
Go back to Invoices and click Calculate Tax


 

Tax line is created – click on Tax Details 



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

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