Download - R12 Tax GST slides
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The eBS R12 Tax Engine
and the Australian GSTJeannie Dobney
August 2010
Updated slides can be found at www.jdobney.com
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Introduction to R12 eBSTax Application
Implementation example for Aust. GST
Tangent: Use of newLegal Entity architecture
Upgrade experiences 1
2
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This paper has been enabled by:◦ DEECD’s generously
sharing their learningwith the user community
◦ Solution Beacon’s R12 Vision instance and “Imelda” for her set-up
◦ Solution Beacon consultants for sharing their knowledge
◦ Kiran Kunderu from Oracle Support
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New product in Release 12◦ Supports international tax obligations for global
implementations
Single control point for transaction based taxes◦ No need to set up tax separately in AP, AR & GL
Components include:◦ SetUp Repository
◦ Tax Engine (Services & Service Request Mgr)
◦ Tax Record Repository & Tax Reporting Ledger
◦ Tax Simulator (for testing)
Schema ZX
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a) Non-Tax Configuration◦ 1. First Party: Legal Entity
◦ 2. Reporting and Collecting Tax Authorities
b) Tax Configuration◦ 1. Tax Authorities Party Tax Profiles
◦ 2. Tax Regimes
◦ 3. First Party Legal Entity Party Tax Profile
◦ 4. Tax
◦ 5. Tax Status
◦ 6. Tax Jurisdictions
◦ 7. Tax Rate
◦ 8. Tax Rules
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There are several “parties” involved in a transaction to which GST applies:◦ The “First Party”:
the organisation remitting the tax
◦ The Legal / Tax Authority:the organisation to which the tax is reported e.g. ATO
◦ Third Parties e.g. suppliers and customers (not applicable for Aust GST)
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The 11i Legal Entity organisation classification was essentially a placeholder for Financials
Now has its own Schema (XLE)
Set up via the Legal Entity Manager Responsibility or via GL using the Accounting SetUp Manager (the only way to assign Balancing Segment values to Legal Entities)
Bank Accounts are now owned by Legal Entities and may span Operating Units.
LE set up is also used by Intercompany
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Legal Entity◦ has rights and responsibilities under commercial law, thru
registration with the country's appropriate legal authority.
Establishment◦ 100% owned and controlled sub-units e.g. branches,
divisions. Some countries require registration with local regulatory bodies (e.g. US SIC code).
Jurisdictions / Legal Authorities◦ LE’s must be registered against a jurisdiction that is
governed by a legal authority. e.g. the tax jurisdiction for Australian GST is the country of Australia and the Authority is the ATO
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11i Organisations classified as GRE / LE’s will be migrated as Legal Entities and Main Establishments
Operating Units and Inventory Organisations associated with the GRE / LE will be migrated as Establishments
Legal Entities will also be migrated as parties in the Trading Community Architecture (TCA)
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Legal Entity Reporting now allows you to filter transaction data based on the legal entity stamped on them (for example, AP Invoices, AR Transactions, etc) or based on the ledger/balancing segment value that is associated with a legal entity.
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Image is from Chapter 2 of Oracle Financials Concepts Guide
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Legal AuthoritiesCountries, States, Local,
Agencies, Taxation,
Registrars, Regulators...
Legal EntitiesRegistered Companies,
Funds, Partnerships…
Inc. Ltd. SA. GmBH. Etc. “exist in the outside world”
Management OrgsDivisions, LOBS, Plants,
Cost Centers, Whatever =
“Decision Making Tags”
Regulates
Managed & analyzed by
Public
Company
(ultimate parent)
Public
Company
Subsidiary
Company
(regional parent)
Subsidiary
Company
(business parent)
Subsidiary
Company
Subsidiary
Company
Subsidiary
Company
Subsidiary
Company
Subsidiary
Company
• Parent companies (LEs) “own or
control” subsidiaries (LEs)• LEs create commercial transactions
Complies
Next 4 slides from a presentation by Oracle’s Mary Burns
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• LEs pay the taxes
- need tax registrations
• Trade between LEs
needs intercompany
• LEs own the money
and bank accounts
• LEs file the accounts,
take care of accounting
• LEs comply with
whatever needs
compliance: “legal” in LE
Why We Care
• Addresses, Officers, etc.
• Enabled First Party stamp
• Added Establishments:
map Registrations to
Authorities
• GRE/LE not touched
• Authorities as TCA parties
• LE Configurator
What we’ve done
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Transaction
Taxes -
Complies &
Files, Pays
Actual Registered
Companies, etc.
Et Cetera, 11i
Maintains
its Subledger
Documents
in many OUs
Default Legal
Context (DLC)Accounts
for itself
in a Ledger
or BSVs
Legal
Entity
Ledger
Business
Group
GRE/LE
Operating
Units
Registrations
with AuthoritiesFiles
Files
Establishments
Registrations
with Authorities
Legal Entity:
Vehicle for compliance
Exists
Locally
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Let’s put LEs to work
• Isolate legal compliance from management needs
• Track your registered companies
• Make your compliance flow more easily
Accounting Setup ManagerAssign books, bookkeeping rules and currency
management to your registered companies
eBusiness TaxHave your registered companies calculate, file, and pay the
transaction taxes they owe
IntercompanyDo business between and across your registered
companies with full legal documentation
Bank ModelHave your registered companies use their money to pay
their bills, et cetera
This and the last 4 slides are from Oracle’s Mary Burns’ presentation:
“Overview of the New Financial Architecture in Oracle E-Business Suite Release 12”
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Image from http://davidhaimes.wordpress.com/2008/01/28/
defining-intracompany-balancing-rules/
There is no longer a
direct relationship
between LE and OU.
The Relationship is
derived from the OU
assigned and the LE
mapped to the Ledger
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Ledger
Legal Entities BSV’s assigned
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Reading the fine print:◦ David Haimes confirms that non-US architecture
should be 1:1:1 (i.e. Ledger: Op Unit: Legal Entity)
Refer: http://www.orafaq.com/forum/t/70130/2/on 15 January 2008, and
http://davidhaimes.wordpress.com/2007/11/21/how-do-i-define-my-legal-entities/
◦ Oracle Support confirmed that eBus Tax was designed based on the assumption of this 1:1:1 architecture
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Concept Meaning Value Used
Tax Authority Gov’t Entity that regulates tax ATO
Tax Regime Country of Taxation Australia / country
Tax Tax imposed GST
Tax Jurisdiction Area where tax is levied Australia / country
Tax Status Applicability of tax Standard
Tax Rates 10% and 0%
Recovery rates Full or partial reclaim of taxes
paid on the purchases
Full
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4 steps performed by the tax engine◦ Applicability
Determine tax regime and candidate taxes
Determine place of supply and tax registrations
Determine applicable tax and jurisdiction
◦ Status Determine tax status for each applicable tax
◦ Tax rate Determine tax rate
Evaluate exemptions and exceptions & thresholds
◦ Tax calculation Calculate tax
Evaluate thresholds
Perform rounding
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Use a Default, or
Let the system guide you through creating one (Guided Rule Entry) or
Just create the rule (Expert Rule entry)
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Determining Factor◦ Class: Transaction Input Factor
◦ Name: Tax Classification Code
Condition◦ Operator: Equal To
◦ Value: Will be the same as your tax names e.g. GST 10%
Tax Rules ◦ Combine the Determining Factors with the
Conditions
◦ (see next slide for screen image)
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11i 12
AP / AR Tax Types Tax Regime Code
Tax Code Tax Code & Rate Code
All Tax Codes Tax Status “Standard”
Tax Rate Details Tax Rate record% rate, dates etc
Location based rates TCA geographies,Tax Jurisdictions
Tax Calc details Tax Classification Codes
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Every 11i tax rate created it’s own ◦ R12 tax
◦ R12 tax status
◦ R12 tax Classification code
The Upgrade process applies STCC as the Regime Determination Set (see next slide)
It worked…
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Oracle’s Recommendation:◦ Replace the upgraded configuration with a fresh
R12 implementation
But consider:◦ On going reporting.
Can you obtain the reporting you need? Especially if you upgrade mid-month.
◦ Defaults from existing suppliers, customers etc
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The Tax Reporting Ledger consists of tax information recorded in each of the related Applications (i.e. AP, AR, GL).
The tax extract simply copies the original accounting data from each application and stores it in an interface table without performing any calculations or derivations on it.
The Tax Reporting Guide describes each of the many columns (100’s) in the single reporting view ZX_REP_EXTRACT_V
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Tax Reporting is not mature or robust…
The Financial Tax Registeris the key report, it is an RXi report, it must be run from the Forms interface and offered limited flexibility.
Based on the view ZX_REP_EXTRACT_V
Other standard reports include:◦ Tax Register
◦ Tax Reconciliation by Taxable Account
◦ Tax Reconciliation
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Business Requirements◦ Produce BAS input (summary data)
◦ A mechanism for reconciling the summary data against transaction detail and account details
Our Solution Proposal:◦ Produce 2 custom reports based on the view used
by this report i.e. ZX_REP_EXTRACT_V – one summary level grouped by tax code and one with transaction detail for each tax code
◦ Use the Account Analysis (with sub ledger details) report as it might provide a reconciliation solution for the tax account.
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MOS # 1117544.1
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If you have questions and comments about the Australian GST, contact Michael D’Ascenzo (ATO)
Other questions and comments:[email protected]
Updated slides can be found at jdobney.com