EBTax and Its Integration - Regime to Rate Flow

A Self Service user Interface for defining and maintaining country specific tax rule and content tax as central repository for Tax definition and Maintenance.

Oracle EBTax is a module that provides a solution for managing transaction tax requirements, It provides a single point solution for Tax. It would deliver tax services to other modules. It comes with one application interface.  It is configurable and salable. It can handle simple and complex country specific tax legislation.

A Single System of taxation is called Tax Regime.

A Tax Regime is implemented by one or more distinct charges each such specific charge is called a Tax. A Tax Regime may include one tax or several different taxes.

The incidence of any Tax as a specific geographical area is called Tax Jurisdiction.

Regime to Rate Flow:

- Tax Regime

- Tax

- Tax Status

- Tax Jurisdiction

- Tax Rate

- Party Tax Profile.

11i Tax Vs R12.X Tax

Oracle e-Business Tax Architecture:

eBTax Solution:

Tax Determination Steps:

EBTax Setups:

• Create Tax Regime
• Register Vertex as the Service Provider
• Linking Vertex  to eBTax -  Tax, Tax Status, Tax Jurisdiction, Tax Rates, Tax Rules.

In Release 12, taxes are calculated for each line on an AR transaction.   EBTax consolidates the various attributes and uses them to determine how taxes should be derived. The following shows how this logic is performed:

1. Identifies the Operating Unit on the transaction and find Tax Regimes that are subscribed either directly or indirectly (through the Legal Entity or the operating unit owning tax content)
2. Determines if the Regime has an active subscription to Vertex in place
3. Identifies the relevant addresses(ship to, ship from, bill to, bill from, etc)
4. Converts addresses into locations or zones (zones are for zip code ranges)
5. Identifies the Jurisdiction for the location/zone
6. Identifies any relevant exemptions defined in EBTax (optionally can be defined in vertex instead)
7. Identifies the Geocode linked to the location/jurisdiction
8. Calls Vertex and passes all relevant data including (address geocodes, customer id, product code, transaction date, line amount, etc)
9. Vertex calculates the tax, considering exemptions, exceptions, location, etc
10. EBTax accepts the tax amount as a return and associates that to the generic STATE, COUNTY & CITY tax codes with null jurisdiction.  (used to derive tax accounts to be charged and support reporting)

Regime to Rate Flow Canada GST

Upgrade Impact:

Upgrade create a basic e-business tax setup, why  is  that a switch  over to a new regime is needed.

Post upgrade the upgraded regime Standard Tax Classification Code (STCC) Regime can work as 11i,  How ever there are quite a few limitations to this STCC regime.
 -  Cannot create a new Tax Regime.
 -  Cannot create new tax jurisdiction
 -  Cannot create new Taxes.
 -  Cannot create/Modify new Tax formulas.
The above limitations call for a switch over to a new regime.

Solution: 

• Setup a new Regime to rate flow.
• End date the old tax profile
• Update the tax profile with new regime.

Setups New Regime to Rate Flow:

- Define New Regime

- Define New Tax

- Define New Tax Status

- Define Tax Jurisdiction

- Define Tax recovery rates

- Define New Tax Rates.

Tax Profile is the link between an entity and the tax regime.

Make sure that you have the "Default Tax Classification" check box checked on the transaction type:

Navigation: Receivables Manager > Setup > Transactions > Transaction Types

This step is mandatory for vertex to be called during tax calculation but it should be noted that no tax classifications need be assigned to transaction lines.   This check box acts as a "taxable" flag for the transaction type.  To setup your system to not use tax classification codes in release 12, check the check box on the transaction type and then do the following:

Navigation: Tax Managers > Defaults and Controls > Enter OU and pick "Receivables" as the application > Go > Update

Remove all values from the defaulting order list and apply

This will result in no default being used on the transaction line but taxes will still calculate.

Reference : Oracle Support Note# 761438.1