28270993 tax accounting process

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Tax Accounting Process


Objectives

After completing this module, you should be able to do the following:• Overview of the Tax Accounting Process• Define General Tax Setup Steps• Enter Tax Adjustments• Explain Tax Reporting Ledger


Agenda

• Overview of the Tax Accounting Process• Defining Generic Tax Setup Steps• Entering Tax Adjustments • Explaining Tax Reporting Ledger


Order ManagementGlobal Taxes Overview

Sales Order with Tax Estimate

Options, Controls, and Defaults

Items Customers SitesTax Code

Tax Group


Receivables Global Tax Overview

Options, Controls, and Defaults

Items Customers Sites

Transaction with Tax Distributions

Revenue Account

Tax Code

Tax Group


Other Products

Order Management

Projects & Order Management

CRM Applications Order Capture

Tax Engine

AutoAccounting Invoices


Global Tax Overview

Value Added Tax (VAT) Sales Tax


Tax Overview

Input Tax Output Tax

Tax paid out onsupplier invoices

Tax collected oncustomer invoices

Amount Due to Tax Authority = Output Tax - Recoverable Input Tax


Value Added Tax Overview

.50

1.00

.25

.50

VAT TAX = .50 + 1.00 + .25 + .50


US Sales Tax Overview

Supplier remits sales tax to state

tax authority

State collects sales tax

Customer pays supplier cost of item plus sales tax

$100 item + $10 sales tax

$10 sales tax


US Sales Tax Example

State.County.City + Zip Code

Tax Rates

Locations IL.Cook.Chicago + 60601

3% 2% 1.5% = 6.5%

Structure

Based on customer’s ship-to address:


Tax Partner Process Overview

Oracle ReceivablesTax Tables Tax Partner

Tax Information

Tax RateTax Amount

AutoAccounting

Vertex or Taxware


Other Taxes in Oracle Applications

• Recoverable and Non-Recoverable Input Taxes• EU Acquisition and Reverse Charge Taxes• Deferred Output Taxes• Withholding Taxes• Goods and Service Tax• Canadian Government, Provincial, and

Harmonized Sales Tax• Sales Equalization Taxes• Investment Taxes • Excise Duties• Latin and South American Tax regimes


Agenda

• Overview of Tax Accounting Process• Defining Generic Tax Setup Steps• Entering Tax Adjustments • Explaining Tax Reporting Ledger


Tax Setup Steps

Select a Tax Method

Define Tax Codes & Rates

Setup Inclusive & Exclusive Taxes

Setup Tax Groups (Optional)

Setup Item or Account Method (Optional)


Tax Setup Steps Continued

Define Tax Preferences, Defaults, and Results

Define Tax Exemptions and Exceptions

Define Transaction Types

Define AutoAccounting for tax

Enable Calculation of Tax on Freight

Define Tax Profile Options


Defining Tax Codes and Rates

Select a Tax Method

Tax Rate

Taxable Basis

Effective Dates

Tax Controls

Tax Accounting Information

Value Added Tax Sales Tax

5%


Setting Up Inclusive and Exclusive Tax

Inclusive Tax Exclusive Tax

Allow Inclusive Override

Inclusive Tax

Item Cost + Tax = Line Cost

Item

Item

+ Tax

Total Cost


Tax Groups Overview

• City Tax• County Tax• Metro Tax• State Tax• Country Tax

New York

Paris


Tax Code

Tax Code

Tax Code

Tax Group

Default sources:System Options, Bill-to Customer, Ship-to Customer Site, Item, Memo Line

Order or Invoice Line

Enter Order or Invoice with Tax

Group

Tax Codes

Tax Rates

Accounting

Setting Up Tax Groups (Optional)


Compound Tax Example

Line Number

1

2

Tax Amount

7.00

10.70

17.70

Tax Rate

7%

10%

Total:

Precedence Number

1

2

Tax Code

GST

PST

Based on an invoice line of 100


Inclusive Tax with Compounding Example

CodeABCD

InclusiveYesYesNoNo

Precedence1

1.12

2.1

Rate20%10%10%30%

Taxable100120100110

Tax20121033

Based on an invoice line of 132 (100 plus Inclusive Tax of 32 for Code A and B)


Defining Condition Sets

• Use Condition and Exception Sets and Group Constraints to specify one or more conditions for each tax code

• Optionally define actions for each condition set• Example: If ship-to country is Canada and ship-to

province is Ontario, use this tax code.• Example: If ship-to province is not found, display

system error message


Select a Tax Control Method

Account Method

Inventory Item Ship To

Country

Revenue Accounts

Tax Code

Item Method


Setting Up Account Method (Optional)

Assign Tax Code to Natural Account

Segment of Revenue Account

In Receivables System Options Window:

Validation

Enforce Tax

Set Revenue Accounts Hierarchy to 1

Allow Tax Code Override

In General Ledger Tax Options Window:


Assigning Tax Codes to Items

Use the Tax Code field in the Invoicing region of the Master Item window to assign a tax code or a tax group to inventory items.

Tax Code

Tax Code

Tax Code

Tax Group

Tax Code Attribute

…

Tax Group

List of Values

Pick One


Defining Tax Preferences,Defaults, and Rules

In System Options Window:

Tax Defaults

and Rules

Tax Preferences

Tax Defaults

Tax Rules

Tax


Defining Tax Exemptions

• Select the Exempt check box on the tax code.• Define Exemptions and Exceptions in the

corresponding forms.• For customer exemptions, assign tax code to

customers at either the customer or site level.• For product exemptions, assign tax code to

products in the Master Item window.

Tax Code


Defining Transaction Types

Exempt Tax Code

Assign

Customer Sites Not Subject to Tax

Tax Calculation Check Box

Calculate Tax on All Invoices


Defining AutoAccounting for Tax

In the AutoAccounting Window

enter:• Tax in the Type Field• Segment Names• Value used to derive the

Account

AutoAccounting

01-110-7340-0000-000

General Ledger


Enabling Calculation of Tax on Freight

• Create freight amounts as regular invoice lines.• Use an inventory item to define freight services

and enable AutoAccounting to distinguish between freight and regular line items.

AutoAccounting


Defining Tax Profile Options

• Tax: Allow Manual Tax Lines• Tax: Allow Ad Hoc Tax Changes• Tax: Allow Override of Customer Exemptions• Tax: Allow Override of Tax Code

Profile Options

5%


For Order Management Profile Options

Profile Option

Tax: Invoice Freight as Revenue

Tax: Inventory Item for Freight

Reason

Enables freight amounts entered in Oracle Order Management to be passed to Oracle Receivables as taxable line items.

Lets Oracle Order Management identify an inventory item on a transaction line imported into Oracle Receivables via the Receivables Interface program.

Setting

Yes

Freight (Inventory Item)


Agenda

• Overview of Tax Accounting Process• Defining Generic Tax Setup Steps• Entering Tax Adjustments• Explaining Tax Reporting Ledger


Tax Accounting Overview

Set up Tax Accounting Information for Tax Codes and Receivables Activities

Earned

Unearned

Adjustments Discounts

Miscellaneous Cash

Finance Charges

Deferred Tax


Setting Up Tax Accountingfor Deferred Tax

Tax Code

Tax Rate

5%

Deferred Tax

Deferred Tax

Tax Collected

Tax & Interim Tax Accounts


Defining Receivables Activities

To set up ReceivableActivities for Tax Accounting:

1. Define GL Account 2. Select Tax Code Source3. Check Recoverable

or Non Recoverable4. Enter Tax Code if Tax Code

Source Option isthe Activity


Changing Tax Transactions

Transactions or Transactions Summary

Profile Option

Tax: Allow Override of Tax Code

Tax Code

With AutoAccounting

Rerun Review Accounting To Update the

Tax Account


Adjusting Tax on Invoices

Adjustment entry with

Receivables Activity

Approval limit$500

Validationprocess Approved

or Pending


Tax Credit Memo

Credit Memo

Customer Account

Amount Percent

OR


Agenda

• Overview of Tax Accounting Process• Defining Generic Tax Setup Steps• Entering Tax Adjustments• Explaining Tax Reporting Ledger


Tax Reporting Ledger Overview

Payables

Global Tax Management

Receivables

General Ledger

RXi ReportingTax Registers


Tax Extract OverviewOracle

ReportsRXi RX

Global DescriptiveFlexfields

General Ledger Tax Journals

ReceivablesDocuments

PayablesDocuments

Interface Table

RXi AttributeSets

Tax Extract

TaxReport

Calls

Populates

Formats


Sources of Data

Payables

• Standard invoices

• Prepayments• Credit and

debit memos• Expense

report invoices

Other

• General Ledger manual journal entries

• Global descriptive flexfields

Receivables

• Invoices, credit and debit memos

• Line, tax, and invoice adjustments

• Payment applications for deferred tax

• Earned and unearned discounts

• Finance charges• Miscellaneous

receipts and payments• Bills receivable


Tax Ledger Reporting Options

Set Reporting Level on the MO: Top Reporting Level Profile Options with the following Reporting Contexts to achieve the desired Tax Ledger Report Content.

Reporting Level

Set of Books

Legal Entity

Operating Unit

Report Content

All operating units in the set of books

All operating units in your legal entity

Only the operating unit associated with your responsibility

Reporting Context

Set of books defaults

Select legal entity

Select operating unit


Matrix Reporting

Show a single line in the Tax Reporting Ledger for two or more tax amounts.

Input Tax Output Tax

Up To Two Taxes split between Recoverable and

Non-Recoverable

Up to Four Taxes


RXi Report Steps

Publish reports in different formats

Extract DataDesign content and layout of reports

Meet reporting requirements


Modifying Attribute Sets

Displayed columns

Column DetailsPage Formatting


Defining Summary Details

Use the Summary Details window to define columns as summary columns in a report.

Running Page Total

Page Total

Report Total

Previous Page Total


Publish RXi Reports

Select Publish Report Add Attribute Set

SubmitView Output


Managing Accessto RXi Reports and Attribute Sets

To limit user access to RXi reports, perform the following tasks:• Assign each RXi report to a request group.• Assign the request group to one or more

responsibilities.• Assign each RXi report attribute set to a

responsibility.


Summary

In this module, you should have learned how to:• Overview of Tax Accounting Process• Define General Tax Setup Steps• Enter Tax Adjustments• Explain Tax Reporting Ledger