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Oracle Cloud Taxes

Compiled by DAZZY Friday


Santosh Pallerla 12/092016
Copyright 2016, DAZ Systems. All rights reserved.
Agenda

Fusion Cloud ERP - Indirect Taxes


Transaction Tax Life Cycle
Types of Indirect Taxes
Application setup/ transactional components
P2P / O2C Event Types Tax Applicability
Tax Rapid Implementation in Oracle ERP Cloud Key Setup Tasks
Implementation Considerations
Some questions to think
Fusion Tax Limitations
Third Party Tax Engine Integrations
Q&A
Copyright 2016, DAZ Systems. All rights reserved.
Fusion Cloud ERP - Indirect Taxes

One Stop shop for Indirect taxes


Fusion Cloud offers solutions for various types of Indirect taxes
including
Transaction Taxes (Sales, Use, Rental, Lease and VAT)
Withholding Taxes
Other taxes like Payroll taxes etc., are covered separately in
respective product offering
Centralized tax services across applications
Automatic Tax calculation with manual overrides
Taxes are data driven
Fusion Tax engine supports different tax regulations and
legislations (Global)

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Transaction Tax Life Cycle
Nexus, also called sufficient physical presence, is a legal
term that refers to the requirement for companies doing
business in a state to collect and pay tax on sales in that
state
Registration with Tax Authorities by companies (Legal
Entities or Business Units)
Manage Transaction taxes based on business process i.e.
Collect (O2C) or Pay (P2P) Taxes on Sales and Purchases
Verify Transaction Taxes
Reporting on Taxes (supports global tax reporting
requirements)
Filing Taxes with Tax Authorities

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Types of Taxes
Sales and Use Tax
Recoverable & Non-Recoverable Tax
Deferred Tax
Tax on Freight
Duty Tax
Tax on Intercompany Movements
Inclusive or Exclusive Tax
Offset Taxes
Reporting Taxes

Copyright 2016, DAZ Systems. All rights reserved.


Application setup/ transactional components
which drive tax applicability
Taxes and Tax configuration are data driven. Data Quality of the
setup components determine correct tax applicability
Some of the application components which drive taxes
Parties (Customer, Supplier)
Places (Locations, Ship to, Ship from, Bill to, Bill from, LEs, BUs)
Processes & Products (Sales Orders, AR Invoices, Requisitions, POs, AP
invoices, Inventory, Transaction Events like Sales or Purchases)
Regime to Rate Setups, Configuration Owner Options, Party Tax
Profiles
Exemptions (customer or Supplier), Exceptions (item), Business
Process behavior (intended use)
Defaulting Options, Rates etc
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P2P Event Types Tax Applicability

On the following P2P Events trigger Fusion Tax


Requisitions for Enterprise Tax
Purchase Orders and Agreements
Change Orders for Enterprise Tax
Standard Invoices
Prepayments
Expense Reports

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P2P Tax on Requisition

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P2P Tax on Purchase Order

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P2P Tax Lines on Purchase Order

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AP Invoice header Tax determinants

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AP Invoice Lines Taxes Region

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AP Edit Taxes

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AP Manage Tax Details

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Invoice with Withholding Taxes

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O2C Event Types Tax Applicability

On the following O2C Events trigger Fusion Tax


Sales Orders
Invoices
Credit Memo
Debit Memo

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O2C Example of Transaction Determinants on
Sales Orders

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O2C Tax on Sales Orders

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AR Invoice Header and Line Review

MEETS THE CHALLENGE OF CHANGE Confidential Copyright 2016, DAZ Systems. All rights reserved.
AR Invoice with Tax Lines

MEETS THE CHALLENGE OF CHANGE Confidential Copyright 2016, DAZ Systems. All rights reserved.
AR Tax Determinants

MEETS THE CHALLENGE OF CHANGE Confidential Copyright 2016, DAZ Systems. All rights reserved.
Other Products Tax Applicability

Events that trigger tax other than P2P and O2C:


Fusion Projects (Invoices)
Intercompany (AR and AP Invoices)
Supplier Portal Invoices (AP Invoices)
Sourcing Quotes
Inventory

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Projects Invoice - Tax

MEETS THE CHALLENGE OF CHANGE Confidential Copyright 2016, DAZ Systems. All rights reserved.
Fusion Taxes and Interfaces
Tax Functionality in Interfaces (eg: AP or Autoinvoice etc.,)
Importing invoices which allow the system to calculate taxes
after import
Importing invoices by enforcing predetermined taxes on
transactions
Important tax fields include (both on AP and AR)
Calculate Tax During Import Tax Regime Code
Tax Classification Code Tax
Ship-to Location Tax Status Code
Tax Control Amount Tax Jurisdiction Code
Location of Final Discharge Tax Rate Code
Intended use Tax Rate
Product Fiscal Classification Taxation Country
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General Tax Report Categories

Category Report Name

Business Report Tax Audit Trial Report

Business Report Tax Register


Sales Tax Liability Report

Reconciliation Report Tax Reconciliation by Taxable Account Report

Reconciliation Report Tax Reconciliation Report

Legal Reports Use Tax Liability Report

Extracts Financial Tax Register


Payables Tax by Ledger Extract
Receivables Tax by Ledger Extract

Copyright 2016, DAZ Systems. All rights reserved.


Tax Rapid Implementation in Oracle ERP
Cloud

Simple workbooks to define and upload tax configuration


Spreadsheet templates use common lingo with prebuilt validations
and instructions
Can add new configuration or download existing configuration,
update, and add changes by upload of spreadsheet templates

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Rapid Implementation Spreadsheets
Rapid Implementation Spreadsheets Transaction Workbooks
Tax Configuration Workbook (Common Taxable Transactions (Online Spreadsheets)
Configuration) Purchase Transactions
Regime to Rates Sales Transactions
Independent Spreadsheets for Tax Regimes, Bulk Import of External Transactions (Offline
Taxes, Rates, Recovery Rates Templates)
Tax Rules Transactions without tax
Tax Implementation Workbook (Organization- Transactions with tax calculated in external
Specific Configuration) systems
Tax Registrations Transaction templates allow designation of tax-
Subscriptions to Tax Regimes decision criteria
Party Tax Profiles: Including Registrations, Supports both O2C and P2P Transactions
Classifications
Tax Accounting Refer to Oracle Enterprise Repository for relevant
Incremental configuration changes to templates
Tax Jurisdictions https://docs.oracle.com/cloud/latest/financialscs_gs
Tax Rates and Recovery Rates /FAUTX/FAUTX1461348.htm#FAUTX1461347
Tax Rules

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Simple Tax Content Experience
Tax Rapid Implementation
1
Upload
Define Tax Configuration Workbook Content
Download from Manage Tax Regimes*
*Alternatively, use Oracle, tax partner, or implementer tax content.

2
Upload Tax Content & Enable Taxes
Generate CSV File to Upload button creates files for
upload. On successful completion, enable taxes for
transactions

3
Prepare & Upload Organization-Specific Configuration
Download the Tax Implementation Workbook for Tax Accounts,
Tax Registrations, Business Unit/Legal Entity Subscriptions

Copyright 2016, DAZ Systems. All rights reserved.


Key Setup Tasks: Fusion Tax Rapid Implementation

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Key Setup Tasks: Fusion Tax Rapid Implementation (continued)

Copyright 2016, DAZ Systems. All rights reserved.


RI - Do's and Do nots during data preparation

1. Date must always be entered in YYYY/MM/DD format.


2. The decimal separator is a period "."
3. The data entered is case sensitive, the data entered is validated as is and pushed
into the system. Case usage as available in the regular UI is not provided in Excel
Workbook Template.
5. Always make sure that you get the latest excel workbook template
TaxConfigurationWorkbookTemplate.xlsm shipped by oracle for uploading rapid
implementation data.
6. Data sheets gets deleted after generating the CSV file.(The worksheets are not
deleted. They get hidden with some versions of Excel)
7.You can always unhide the data in worksheet by following the below steps and
view your data.
a. Right click on any of the visible work sheets.
b. Choose "Unhide..." from the popped up list of actions
c. Click on the worksheet that you want to unhide.
7. All LOV's are provided for user convenience. Addition of new values to the LOV
by the user are supported only if they exist in the system. User must verify the
valid values by clicking on the appropriate LOV in the regular user interface before
adding to the LOV.

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Key Setup Tasks: Withholding Tax

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Implementation Assistance
Oracle Tax Content Library
Tax Content
delivered in Rapid
China Taiwan Singapore Implementation
Spreadsheets

Using Rapid
Implementation,
United Kingdom Germany Finland content is easily
extended
Canada
Belgium Netherlands Hungary Jump start tax
USA implementation in
minutes
France Austria Ireland
Reach out to
Oracle Success
Manager assigned
Portugal Denmark Luxemburg to your customer
account for
content
Poland Slovakia
Significant Predefined Tax Australia
Content Countries
Limited Predefined Tax Content
Sweden Italy
New Zealand
Countries
Documented Tax Setup Countries Spain Czech

Copyright 2016, DAZ Systems. All rights reserved.


Key Implementation Step before defining
Enterprise Structure
Taxes are applied based on Locations. Data Quality of
locations is key for successful tax implementations
Location data includes Customer addresses, Ship to
Locations (aka HR Locations) etc.,
If the Location elements are not setup properly then tax
will not apply accurately
Loading Geographies for US - is a best practice and key
implementation step all functionals should follow before
setting up Enterprise Structure (including Locations)
Leverage US Geographies vertex updates to populate all
address elements

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Key Implementation Step before defining
Enterprise Structure

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Key Implementation Step before defining
Enterprise Structure
Navigate to Financials>Define Common Applications for Financials>Define Enterprise
Structures for Financials>Define Geographies
On the Task List and Tasks In the search Task query Load Geographies for US.
On the submission screen add the parameters.
Validate Input Parameters and Load Geography Information
Data Source: Vertex
File Location:
/u01/APPLTOP/fusionapps/applications/thirdparty/hcm/vertex/data/
File Name: oramast.txt
Run Pre Process
No parameters
Run Post Process
Data Source: Vertex
File Location:
/u01/APPLTOP/fusionapps/applications/thirdparty/hcm/vertex/data/
File Name: oramast.txt
Hit the Submit button and allow the process to complete successfully before
continuing. This will take a while to complete all stages/processes.
Copyright 2016, DAZ Systems. All rights reserved.
Implementation Considerations

Configuration & Subscription Options Withholding Tax Setup

1. Internal 1. Available from the Payables


Global Configuration Owner, to share tax setup tasks (or)
setup across all Enterprise entities, with 2. Common configuration
overriding capabilities
Regional Configuration Owner, to share tax
setup with other enterprise entities, typically Tax Reporting
in the same region, also with overriding
capabilities 1. Generic box-oriented Tax
Local Configuration Owner, not sharable tax Reports
setup, only used by a specified Legal Entity or 2. Common Reports applicable
Business Unit for all countries
2. External - Tax partner integration 3. Legislative / Country specific
infrastructure: reports
Tax Content
Tax Calculation Services
Copyright 2016, DAZ Systems. All rights reserved.
Implementation Considerations
Enable Geography elements in Address Formats to enforce
input of validated City, County, State and Zip code
information
Make sure Third party (vertex, CCH) tax content is updated
every month for accurate tax calculations
RI Plan your setup data properly if its Voluminous based
on the relevant upload sheet to be used.
Advise client on transactional issues (eg Rounding etc.,)
which impact invoice validation
Be proactive on latest legislative changes which impacts
clients business (ex: GST uptake in India)

Copyright 2016, DAZ Systems. All rights reserved.


Job Roles & Associated Duty Roles
Job Role Description

Tax Manager Defines the tax policies and most efficient tax configuration. Sets
up relatively stable entities that seldom require updates, such as
tax regimes and taxes.
Tax Administrator Sets up technical areas and the integration with tax service
providers.

Tax Accountant Prepares and files tax returns and reports for an enterprise,
including country, federal, state, and local corporate, payroll, and
transaction taxes.
Tax Specialist Maintains tax configuration, especially the variable entities that
require periodic updates, such as tax rates and tax jurisdictions.

Reporting Parent Roles Associated Duty Roles

Tax Manager, Tax Tax Reporting Duty


Accountant, Tax Specialist, VAT Setup Administration Duty
Tax Administrator EMEA Tax Reporting Duty
Global Tax Reporting Duty

Copyright 2016, DAZ Systems. All rights reserved.


Some Questions to think
Can we use DFFs for defining Tax rules?
Can we use SQL to write tax rules
Existing tax determination factors and contents sets are
sufficient to meet client business needs?
For international tax implementation does fusion offers any
Localization features?
Can we switch tax content of different providers after
implementation?
Can we integrate third party tax engines like Vertex, CCH etc.,
When to choose third party Tax engine during
implementations?
Tax Simulator will it give expected results

Copyright 2016, DAZ Systems. All rights reserved.


Fusion Tax Solution and its limitations
Fusion Tax has a robust design to meet tax requirements of all major
regions of the world and is very powerful
However, it provides limited tax content
You must configure it from scratch. For complex tax regimes, configuring
taxation rules and maintaining them can be very time consuming. Testing
each scenario is time consuming
Highly dependent on TCA, Inventory, Legal Entity models for tax
calculation. Cannot be called externally
Defining rules based on additional extensible attributes is not supported
May be difficult to get enhancements prioritized
Need to implement localizations for local reporting requirements
Need to keep checking for rules / rate changes and there is always risk of
missing some tax law changes which might put you in Audit risk
Does not provide master geography data
Copyright 2016, DAZ Systems. All rights reserved.
Why Third Party Tax Engine Integration?
To get out of the box tax content
To avoid continuously monitoring tax law changes
Automated tax content updates
Better audit support
Single solution for Oracle and non Oracle systems
Meet local reporting needs
Access to tax research of the provider
Get out of the box return / support for major
countries

Copyright 2016, DAZ Systems. All rights reserved.


Useful Resources

http://docs.oracle.com/cloud/latest/financialscs_gs/FAUTX/toc.htm

https://sites.google.com/site/oracler12ebtax/ - My blog contains various


implementation concepts and worked out solutions for US and Global
Implementations

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Q&A

Copyright 2016, DAZ Systems. All rights reserved.