e-Business Tax Module
Overview of setup and
lessons learned for
Canadian Implementations
SO OAUG Presentation March 13, 2014
Presenter
Name: Dev Singh
Title: Consultant
Office Number: 416-601-6618
Email:
[email protected]Number of eBTax Implementations: 2 (1 upgrade , 1 net new implementation)
Profile:
Dev has been working with Deloittes EBS practice for almost 3 years. Though his
experiences, Dev has had hands-on experience leading the delivery of the e-Business Tax
module in both net new implementation and upgrade settings. Through his project
experiences, Dev has had the opportunity to work with modules such as Cash
Management, iexpense, Project Costing and Payables. Working with the leads of other
sub ledger modules, Dev has functionally designed custom objects for solutions that
satisfy business requirements not readily served through the use of out-of-the-box
functionality.
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Discussion Topics
1. Introduction to the eBTax Module
2. High-level overview
3. Components of the Regime to Rate Flow
a)
b)
c)
d)
e)
f)
g)
4.
5.
6.
7.
Tax Regime
Tax
Tax Status
Tax Jurisdiction
Tax Recovery Rates
Tax Rates
Tax Rules
Common Canadian Setup
Vertex
Common Maintenance Exercises
Reporting
High-level Overview
Deloitte & Touche LLP and affiliated entities.
R12 e-Business Tax
Benefits
Central location for consumption tax setups
Allows for automatic tax calculations
Out-of-the-box Tax Reports (Tax Registers)
Integration with 3rd party software
Implementation Considerations
Allocate a Tax resource to the project
Create an inventory of tax scenarios from AP/AR transactions
Create an inventory of Product exceptions & Supplier/Customer exemptions
Consolidate Tax Accounts
Components of eBTax
Deloitte & Touche LLP and affiliated entities.
Introduction of e-Business Tax
Contd
The Tax Engine uses the structure called the Regime to Rate flow which has up
to 7 different components
Tax Regime
Tax Regimes
are the
overarching
setup for all
taxes within a
larger region,
usually a
country.
Regimes can
include several
taxes but are
usually paid to
the same tax
authority.
Tax
The Tax is the
charge that is
levied by the
tax authority in
a particular
region (eg.
GST, HST,
QST, PST)
Tax Status
Tax Statuses
determine the
taxable nature
of a good or
service given
the parameters
of a
transaction
Required for VATs,
not Sales Taxes
Tax Recovery
Rate
Percentage of
taxes charged
that can be
reclaimed
Tax
Jurisdiction
Tax Rates
Tax Rules
Tax
Jurisdictions
represent the
geographical
areas where a
specific tax rate
applies (eg.
Nova Scotia,
Quebec,
Manitoba)
These Tax
Jurisdictions
relate to
locations that
are housed in
the Trading
Community
Architecture
Tax Rates are
mapped back
to Tax
Jurisdictions
and Tax
Statuses. Tax
Rates
represent the
percentage that
is charged
based on the
taxable amount
(for Canadian
Taxes)
Tax Rules refer
back to the
different
parameters for
a given
transaction to
determine
which tax rates
apply.
Components of the Regime to Rate Flow
Tax Regime
First component in the Regime to Rate flow
Setups housed in the Tax Regime are inherited by the lower level components
if set before creating them
Legal Entities are subscribed to Tax Regimes
Tax Regimes can have one or more taxes
Examples: CA GST and HST, CA PST
Components of the Regime to Rate Flow
Tax Regime Contd
Components of the Regime to Rate Flow
Tax
Taxes are the second component in the Regime to Rate Flow
Taxes must have at the very least, the following requirements:
Tax Status (including 1 default status)
Tax Jurisdiction (including 1 default jurisdiction)
Tax Rate (including 1 default Tax Rate)
Tax Rules (default tax rules)
If Tax Recovery is turned on, taxes will need to have at least one Tax Recovery
Rate
Examples: CA HST, CA GST, CA QST, CA PST
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Components of the Regime to Rate Flow
Tax Contd
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Components of the Regime to Rate Flow
Tax Status
Tax Statuses are used as a mechanism of driving a particular tax rate on a
transaction
Tax Statuses can be used in combination with tax rules to drive different tax
rates based on an item, party or other criteria within the transaction
In order for Tax Statuses to be used they should be attached to at least one tax
rate
Examples: CA HST Standard, CA GST Exempt
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Components of the Regime to Rate Flow
Tax Jurisdictions
Tax Jurisdictions are used to describe regions where tax rates apply
Tax Jurisdictions can only belong to one Tax
If a jurisdiction levies more than one tax rate, tax jurisdictions must be
created for each tax (ie. A PST tax jurisdiction for BC and a separate GST
tax jurisdiction for BC)
Tax Jurisdictions have to be mapped using an one to one relationship with
geographies held in Trading Community Architecture (TCA) per tax
Ie. There will be separate set-ups for a tax jurisdiction for BC PST and BC
GST
Examples: CA BC (GST), CA BC (PST)
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Components of the Regime to Rate Flow
Tax Jurisdictions Contd
Module: e-Business
Tax (ZX)
Module: TCA
Tax
Jurisdiction
Tax
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Existing
Geography
Components of the Regime to Rate Flow
Tax Recovery Rates**
**Mandatory for Value Added Tax (VAT) setups
If used, Tax Recovery Rates are unique to a combination of Tax and Tax
Statuses
Tax Recovery Rates are assigned to a Tax Rate in the Tax Rate Details screen
Examples: CA GST Standard Recovery Rate 100%, CA GST Meals Expense
Rate 50%
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Components of the Regime to Rate Flow
Tax Rates
Tax Rates percentages can be modified by end dating old percentages and
setting and adding a new percentage rate
Tax Rates can be deleted as long as there is a default Tax Rate assigned to the
Tax and the Tax Rate has not been used to book accounting
Examples: CA GST Standard Rate 5%
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Components of the Regime to Rate Flow
Tax Rates Tax Accounts
Tax
Regime
Tax Rate
VAT Taxes
Tax
Jurisdiction
Tax Account
Tax
Tax Status
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Tax
Recovery
Rate
Components of the Regime to Rate Flow
Tax Rules
Tax Rules are used to determine how the tax engine should calculate taxes for
transactions
At the very least, Default Tax Rules should be set before taxes can be made
available for transaction
Advanced Tax Rules are used to determine how taxes should be calculated
when they deviate from the norm
Advanced Tax Rules can be created using the Guided Rule Entry or Expert
Rule Entry options
Expert Entry Rule option is more desirable when creating the same rule within
multiple taxes
Expert Rules Use Determining Factor Sets and Condition Sets to drive an
expected result
Guided Entry Rules have the same elements of an Expert Entry Rule but is done
within the same series of screens
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Components of the Regime to Rate Flow
Tax Rules Contd
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Components of the Regime to Rate Flow
Tax Rules Contd
The Expert Rule Entry option for creating Tax Rules requires three parts:
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i.
Determining Factor Set
At a high level, the Determining Factor Set indicated what elements of
the transaction will drive a result that differs from the default rule
ii.
Condition Set
The Condition Set dictates the actual values the elements highlighted in
the Determining Factor Set must equal or not equal to drive an alternative to
the default tax rule
iii.
Result
The Result is the expected alternative outcome to the default rule that is
expected once the condition outlined in the condition set is met
Components of the Regime to Rate Flow
Tax Rules Contd
Business Requirement:
Client X would like all imported goods to be exempt of PST.
Determining Factor Set DF: Imports:
If the Ship From Country is
Condition Set CS Imports:
Not Equal to Canada
Status Result:
CA PST Exempt - BC
Rate Result:
CA PST Exempt Rate- BC
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Components of the Regime to Rate Flow
Example Setup
Tax Regime
Tax
Tax Status
Tax Rate
Tax Recovery
Tax
Jurisdiction
AB
CA GST
Standard
Rate
CA GST
Standard
CA GST and
HST
CA GST
CA GST
Exempt
CA GST
100% Rec
Rate
CA GST
Zero Rate
MB
NT
CA GST
Exempt Rate
CA GST 0%
Rec Rate
CA GST
Zero
BC
NU
QC
SK
YT
Tax Rules
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Vertex
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Deloitte & Touche LLP and affiliated entities.
What is Vertex?
The Vertex tax platform can be used in conjunction with Oracle EBS to handle
tax compliance. The software tracks tax rates by geographic region.
Due to the many combinations of State, County, City and Postal Codes which
affect how tax is applied in the United States, clients will drastically reduce
maintenance efforts by leveraging this software by:
1.
2.
Having the software create tax jurisdictions for the United States
Applying the applicable tax rates for the created US jurisdictions
The software can communicate with Oracle EBS using one of two different types
of configuration.
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Option 1 Dynamic Call
One option is have Oracle EBS interface with an external Vertex system and
have Oracle send all transactions to the tax platform through custom built
interfaces. This is referred to as the dynamic call method.
External Environment
1. Oracle sends tax jurisdiction
information on transactions to
Vertex
Interfaces
Internal Environment
2. Vertex reads the tax jurisdiction,
calculates the applicable taxes and
sends the information back to
Oracle
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Option 2 Rate File Load
The second option is to have Vertex set up tax jurisdictions and apply the
applicable tax rates by uploading the rate file. Tax lookups are done via the
Oracle e-Business Tax tables populated with Vertex data.
Internal Environment
Flat File
1. Periodic load of file into e-business tax module
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e-BTax
Common Maintenance
Exercises
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Deloitte & Touche LLP and affiliated entities.
Maintenance Exercise:
Existing tax no longer applicable in a specific region
When a region no longer charges a specific tax, the Tax Jurisdiction will need
to be modified.
Tax Jurisdictions cannot be deleted and should therefor be end-dated by entering
the populating the Default Effective To date with the date that the tax becomes
invalid in the region
This allows invoices that have an invoice date prior to the end-date to be entered
after the end-date and generate the correct Tax Calculation
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Reporting
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Deloitte & Touche LLP and affiliated entities.
Financial Tax Register
RXI Report
Customize Layout (define attribute set)
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Your thoughts.
Q&A
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