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Anand Naik Desh Deepak, Amit Jain, and Nigel Chapman 1.2 07-Dec-2009 27-May-2010
Contents
1. INTRODUCTION ......................................................................................................................................................3 1.1 Scope ............................................................................................................................................................3 2. SUMMARY OF CHANGES IN EU VAT PACKAGE EFFECTIVE JANUARY 1, 2010 ...........................................................4 2.1 Changes Addressed in this Note...................................................................................................................4 3. SOLUTION SUMMARY .............................................................................................................................................6 4. SAMPLE SCENARIO................................................................................................................................................7 5. SETUP IN E-BUSINESS TAX AND BILL PRESENTMENT ARCHITECTURE (BPA) ............................................................8 5.1 Setup in E-Business Tax for Order-to-Cash Transactions ............................................................................8 5.2 Setup in E-Business Tax for Payables ........................................................................................................11 5.3 Setup in Bill Presentment Architecture (BPA) .............................................................................................12 6. TRANSACTION PROCESSING IN RECEIVABLES AND PAYABLES FOR INTRA EU SERVICES .........................................14 6.1 Receivables (Order to Cash Flow) ..............................................................................................................14 6.2 Payables (Procure to Pay Flow)..................................................................................................................14 7. EUROPEAN SALES LIST (ESL) REPORT ................................................................................................................15 8. IMPORTANT POINTS AND PATCH DETAILS..............................................................................................................18
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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1. Introduction
1.1 Scope
This document includes the summary of changes for the European Union Value Added Tax (EU VAT) provisions, effective January 1, 2010. It also includes the required setups in Oracle Financials Release 12. Note: There are two similar documents that provide setup scenarios for EU VAT 2010: o o Doc ID: 974979.1 offers a solution based on Tax Rates Doc ID: 1107453.1 offers a solution based on Tax Rules
Author
EU Commission
Link
http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:044:0001:0006:EN:PD F http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:044:0011:0022:EN:PD F http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:044:0023:0028:EN:PD F
EU Commission
EU Commission
It is recommended that customers exercise due diligence and discuss these changes with their tax advisors. The summary of important changes in the VAT package is described below.
2.1.2 Legal Messages Legal message specifying that the customer of such services must self-assess the relevant tax, should be printed on Receivables (Intra EU Services) Invoices. The exact text of the message may be defined by the countryspecific legislation.
2.1.3 European Union Sales Listing (ESL) for Services As of January 1 2010, for some EU countries, services transactions, which are subject to reverse charge arrangements in the customers Member State, should be included in the existing ESL report for Goods. For other EU countries, the ESL report should be separately produced to show only such Services.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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2.1.4 Tax Point Date The tax point date is deemed to be earlier than when the service was completed or when payment was made. In the case of continuous supply of services, the tax point is linked to the end of each billing or payment period. Where no invoice or other accounting document is issued or payment is made during the year, the time of supply is the end of each calendar year.
2.2.2 VAT Refunds/Claims A new electronic VAT Refund procedure will be introduced across the EU effective January 1, 2010 to replace the current paper-based system. Businesses established in any EU country have to submit claims for overseas VAT electronically on a standardized form. This information has to be submitted to their tax authority rather than to the member state of refund
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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3. Solution Summary
Requirement Setup Summary Explained in Sections
Identify Intra EU services transaction lines and display it on the European Sales Listing (ESL) Report.
Receivables Flow Create Tax Reporting Code for Intra EU services and associate it to a zero-rated Tax Rate Code. Ensure this Tax Rate Code is determined for the Intra EU services invoice lines. Specify this Reporting Code as a selection parameter for ESL report to display the Intra EU services invoice lines. Create Tax Reporting Code for legal message and associate it to a zero-rated Tax Rate Code. Ensure this Tax Rate Code is determined for the Intra EU services invoice lines. Create a template in BPA to print the legal message on Receivables invoice/lines.
Print country-specific legal message on the Receivables invoice for Intra EU services.
Enter Tax Invoice Date on such services Receivables invoice. Create a template in BPA to print Tax Invoice Date on Receivables invoice header.
Payables Flow Create or use upgraded/existing Regime to Rate flow set up of the applicable Tax and associated Offset Tax. Ensure applicable Tax is calculated for Intra EU services invoice line. Associated Offset Tax gets automatically calculated. Alternatively, Self Assessed Tax can be configured instead of Offset Tax.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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4. Sample Scenario
For the ease of understanding the setups required for the EU VAT 2010 changes, let us take an example of a Business-to-Business (B2B) transaction for services provided by a Seller in the United Kingdom to a Buyer in Germany.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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5.1.1 Create Intra EU Transaction Type Tax Reporting Codes i) ii) iii) iv) v) vi) vii) viii) ix) Navigate to E-Business Tax > Defaults and Controls > Tax Reporting Types > Create. Enter appropriate Tax Reporting Type Code and Name. Select Tax Reporting Type in the Reporting Type Purpose drop down. Select Define List of Reporting Codes checkbox. Enable Reporting Type Use for Tax Rate. Any other Reporting Type Use should not be selected for Intra EU Transaction Type. Specify Minimum and Maximum Length of Reporting Codes. Regime and Tax are not mandatory parameters. If entered, Reporting codes would be specific to that Regime and Tax. Enter appropriate Tax Reporting Codes and as per users requirements. These codes are available as selection parameters for filtering transactions in the ESL report. Value entered in Description column is printed on the ESL report. Note: Reporting Codes for Triangulation transactions may not be required for all EU countries. Follow codification requirements of each country while defining the Reporting Codes and Description.
The following is a screenshot for creating sample Intra EU Transaction Type Reporting Codesi.e., Services and Triangulation Reporting Codes for United Kingdom
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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5.1.2 Create Legal Justification Tax Reporting Codes i) ii) iii) iv) v) vi) vii) Navigate to E-Business Tax > Defaults and Controls > Tax Reporting Types > Create. Enter appropriate Tax Reporting Type Code and Name. Select Legal Justification Message Type in the Reporting Type Purpose dropdown. Date Type should be Text and Define List of Reporting Codes checkbox are automatically selected. Regime and Tax are not mandatory parameters. If entered, Reporting codes would be specific to that Regime and Tax. Reporting Type Use is automatically enabled only for Tax Rate. No other reporting type use should be selected. Enter appropriate Reporting Code and Legal Justification Text. Note: Legal Justification Text (of maximum 240 characters) is printed on the invoice as per the template created in BPA.
Here are the screenshots for creating Legal Justification Reporting Type and Code.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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5.1.3 Associate Intra EU Transaction Type and Legal Justification Reporting Codes to Tax Rate Code i) ii) iii) iv) v) vi) Navigate to E-Business Tax > Tax Configuration > Tax Rates. Enter the appropriate Regime, Configuration Owner, Tax and Status information. Specify Tax Rate Code and Percentage Rate as zero (existing/upgraded Tax Rate Code can also be updated). Navigate to Rate Details -> Tax Reporting Codes -> Specify the Tax Reporting Type Code and Reporting Codes created for Intra EU Transaction Type in 5.1.1 above (UK-INTRA-EU-SERVICES). Navigate to Rate Details -> Legal Justification Message Reporting Codes -> Specify the Legal Justification Reporting Type Code and Reporting Codes created Section 5.1.2 above (UK-INTRA-EU-SERVICES). Only one effective Legal Justification Reporting Type can be associated to a tax rate.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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Heres a screenshot showing the association of the Intra EU Transaction and Legal Justification Reporting codes to Zero-Rated Tax Rate Code.
This is a screenshot of the association of Intra EU Transaction and Legal Justification Reporting codes to Zero-Rated Tax Rate Code.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
ii) Specify the Tax Rate percent (19% or the applicable Tax Rate). iii) Create the set up for associated Offset Tax. iv) For the Offset Tax Rate Code, specify the tax Rate percent equal to negative of the actual Tax Rate (-19% or the applicable Tax Rate). v) When the applicable tax is calculated, associated Offset Tax automatically gets calculated. vi) Alternatively, instead of Offset Tax, Self Assessed tax can be configured to create a reverse charge on the Payables invoice line.
Heres a screenshot of a Sample Template to Print the Tax Invoice Date on the Invoice Header.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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This is a screenshot of a Sample Template to Print the Legal Message on the Invoice Footer.
If required, users can create a similar template for printing legal message at the line level. Note: If an invoice has multiple lines with the same Tax Rate Code that has an associated Legal Justification Text, the message is only printed once.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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This is a screenshot of the Additional Tax Determining Factors UI. This is where you will enter the Tax Date
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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Steps for Extracting European Sales Listing Report for Intra EU Services Navigate to E-Business Tax -> Request -> European Sales Listing i) After entering the mandatory parameters, specify the Intra EU Tax Reporting Type Code and Reporting Code (UK-INTRA-EU-SERVICES - Created in Section 5.1.1 above). ii) Users can also enter other Reporting Codes to include Goods and Triangulation transactions. Note: This is a XML based report in a generalized format. Oracle will not deliver country specific electronic files. Customized report layouts can be built using the Tax Reporting Ledger (TRL) and Business Intelligence (BI) Publisher. Lastly, the report displays only cross border Intra EU transactions.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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Detail/Summary/Both Tax Date From Tax Date To Default for Tax Date (if Null) Site Reported
Rounding Rule
Description List contains registration numbers for all the First Party Legal Establishments. This is used to filter and display data related to only that registration number. Users must ensure that tax registration number is specified for the relevant Legal Establishment before entering such transactions. Users can decide to produce a Detail or Summary listing. If users select Both, report generates two sections one for summary and another for the detailed. Select start tax date for the report. Select end tax date for the report. List contains two values, namely, Transaction Date and GL Date. If Tax Date is not provided on the invoice, then to display data on the report, system picks up value from that source which is selected in this parameter. List contains two values, namely, Bill To and Ship To. Choose the site whose Country Code is to be displayed on the report when tax registration number does not have first two characters as the country code. List contains two values, namely, Yes and No. Determine whether to show out of period adjustments and credit memos. Select Yes to separately display adjustments, which are created in the selected reporting period, but are related to transactions that are reported in a different period. Select No for adjustment to be included in the regular totals. List has four values, namely, No, Up, Down and Nearest. If No is selected, then no rounding is done. If Up is selected, then the amounts are rounded up. If Down is selected, then the amounts are rounded down. If Nearest is selected, then the amounts are rounded off to the nearest level. Enter a minimum accountable unit. This is the smallest unit used for the functional currency amounts. List contains all Tax Reporting Type Codes defined in E-Business Tax. Select the appropriate Intra EU Transaction Tax Reporting Type created in 5.1.1 above. List contains all Reporting Codes defined under the Tax Reporting Type Code selected above. Users should specify the Reporting Code created for goods here. It should be kept null if goods transactions are not to be included in the report. List contains all Reporting Codes defined under the Tax Reporting Type Code selected above. Users should specify the Reporting Code created for services here. List contains all Reporting Codes defined under the Tax Reporting Type Code selected above. Users could specify (if required) Reporting Code created for triangulation of goods or goods and services as necessary. List contains all Reporting Codes defined under the Tax Reporting Type Code selected above. Users could specify (if required) Reporting Code created for triangulation of goods or goods and services as necessary.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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The report output has a column named Country. The value for this column is derived based on the first two characters of the tax registration number specified on the Site Reported parameter. If they match the VAT member state code of the country/territory, then that is taken as Country. It is advised to always prefix the tax registration number with the country code. If the tax registration number specified for the site reported does not have the first two characters as country code or it does not match with the VAT member state code of the country/territory, then the country code of the address for the site reported (ESL report selection parameter) is printed on the report. Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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The patches will allow users to perform the above setups. They will also allow the user to do the following: Create Legal Justification Tax Reporting Type, Create template in BPA to print Tax Invoice Date at the header region of Receivables invoice, Create template in BPA to print Legal Message at footer/ line region of Receivables invoice, Extract Summary and Detailed ESL report in the format explained above. Customers are advised to leverage the solution explained in this note to meet legislative obligations, beginning January 1, 2010.
Oracle Financials Release 12 Setups for 2010 EU VAT Package My Oracle Support Doc ID 974979.1
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