FAQ - Oracle Payables and EBTax Setup

1. Was the Include Tax check box replaced in the Release 12? 

The feature of having an invoice amount inclusive of tax is very much available in R12 EBTax, only the setup has been changed. While creating a regime (and at rate/PTP) levels, in the controls area you will see a dropdown called Allow Tax Inclusion with 3 options:

Standard Inclusive Handling - The price on the transaction line is inclusive of tax.
Standard Non-Inclusive Handling - The price on the transaction line is exclusive of tax. The tax amount is added to the price.
Special Inclusive Handling - Use this option for special tax handling, such as a taxable base amount based upon the line amount rather than the adjusted line amount, or based on the line amount plus another tax amount.
Note: If you do not set standard inclusive handling for the taxes in this tax regime, you can still set this option for individual parties involved in transactions.

2. From where does the tax classification code default on the invoice Line?

In R12, tax gets calculated in AP or AR workbench on the basis of set up in EBTax. The moment you save a transaction, tax gets defaulted provided you have the correct corresponding set up in EBTax.

With respect to associating tax classification code at the supplier site level: "If applicable, enter the default tax classification code to use as a determining factor in tax rules for this party or party site. E-Business Tax defaults a tax classification code to the transaction line according to the application tax options defaulting hierarchy defined for the combination of operating unit and application."

3. Should the Tax Amount field be populated in the General tab?

When you enter the required information at the general invoice and line level in AP, depending upon your set up and tax applicability, tax would automatically get defaulted the moment you click the Calculate Tax button.
If you are manually entering the tax amount then this will obviously not be the expected behavior. Before validating the invoice please see the tax details as to whether tax information is getting displayed there or not.
Also in case of self assessed tax , tax information is not showed at the header level, but only at the distributions level.

4. How to avoid tax of being created for Freight lines?

EBTax arrives at applicable the taxes, based on the locations involved in the transactions. It does not give any special treatment to a freight line unless the user explicitly defines a rule to that effect. The rules can be defined for each tax.
This is because there are certain taxes - even within the same country - for which tax may be applicable for freight, while for others it may not be applicable. You can try achieving your objective by creation of Rule.

5. What determines which tax regime will appear in the LOV of Tax Simulator?

We may have various reasons for Tax Regime availability in LOV. As regards, your query for your specific Tax Regime not appearing in the Standard Invoice, you may check the following settings.

(1) Check the country and geographical region in the transaction and the Tax regimes.

(2) Check the configuration options and third party service subscriptions settings.

(3) Check the Allow Entry of Manual Tax Lines options in Configuration Owner Tax Options and Regime to Rate flow.

6. Why the offset taxes are not available in the LOV for tax lines?

Ideally the offset tax should get defaulted on the transaction if you have proper set up. But if want to manually enter the offset tax line then you should be able to do it at the tax details.

7. What's the correct way to enter tax lines manually?

Concept wise both are the same. Only if you select the transaction at the header level and click on tax details button and enter any details then it will treated as summary tax lines. But if you do the same from the line level then it will be taken as individual tax lines. Otherwise it does not make a difference if you manually enter the tax details at the line level or at the tax details level.

8. Is it possible to not have a default tax for Payables or to ensure no tax is calculated for Payables transactions?

If you do not want any Tax for AP, you can achieve this by creating Rules.In EBTax various factors are available through which you can determine tax applicability for AP transactions.
Few suggestions are to select specific transactions only option for Rule applicability and choose Payables Event Class or use Line Class Factor in Determine Tax Applicability Rule Type.
You can make your Tax Not Applicable by default for specific AP transactions but no tax will be applied on selected AP transactions and you need to make further Rules to make Tax applicable to any specific nature of transaction.

if you don't want tax to be applicable for ANY AP transactions then there is a simple way out.
In EBTax navigate to Defaults and controls: Configuration owner Tax options.
Now query for Application name as payables and Even Class as Invoice.
If there is an already existing set up then query it or if it returns no values then click on create.
In the page that opens, scroll down to the other field and there on the right side you can see a flag called "Allow Tax Applicability".
Uncheck it.
Note: This tax will not get calculated for any of your AP transactions.

9. Is there any alternative to load Sales Tax rates for US in R12?

US Sales & Use Tax Import program is the only way of loading the content. These are the only 3 programs that you have to run in order to load the data:

a) E-Business Tax Content Upload File Load Program
b) E-Business Tax Content Upload Process Data Program
c) E-Business Tax Content Upload Post Processing Program

10.How to create records in the zx_party_tax_profile table?

There is no data load program to upload party tax profiles, navigate to Parties-> Party Tax Profile.
In the drop down you will see various attributes like legal entity, Third party/site etc.
If you enter any data for Legal Establishment then it should get displayed in the party tax profile tables.

11. Is it possible to make a tax Not Applicable, but still be able to enter a tax line manually?

In R12 also you can manually enter the tax depending on your business requirement.

You can try any of the following two options:
1. Configuration Owner Tax Option- Make Tax not applicable for AP Invoice.
Or
2. Tax Rule for Determine Tax Applicability- Make Tax Not applicable for AP Invoice.

You also need to check/do the set up as below in Regime to Rate flow for your Tax and Configuration Owner Tax Options for AP Invoice:

-Allow Override and Entry of Inclusive Tax Line
-Allow Entry of Manual Tax Lines (Tax level)
-Allow Override for Calculated Tax Lines (Tax level)
-Allow Tax Rate Override (Tax Status level)

Once this set up is done, you can go and make manual tax lines in Tax Details screen.

You can make manual tax lines in AP Invoice - R12 also even if the Tax is not applicable as created by you in Rules.

12. How to proceed when the "Allow Tax Rate Override" flag is protected?

Please understand the concept of defaults and controls first. At the Regime level whatever fields come under "Controls" will be carried forward at the subsequent level (Tax, Status etc) only if they are checked at the regime itself.
In your case in order for the "Allow Tax Rate Override" to be active at the status level, please first check "Allow Override and Entry of Inclusive Tax Lines" at the regime level. Then check the "Allow Override for Calculated Tax Lines" at the Tax level. Now the "Allow Tax Rate Override" will be enabled at the Status level.

You can refer the following pages from the User Guide-Release 12 to understand the functionality:

Create Tax. Check the Set as Offset Tax box if you are creating an offset tax.
Setting this option disables the Controls and Defaults region and clears any values that were entered in this region.
Create Tax Status. Do not check the Allow Tax Rate Override box if this tax status is for offset taxes.

13. Why the system looks for setup even if Allow Tax Applicability = NO?

In AP workbench when we press calculate tax, AP calls EBTax which in turn calculate taxes. EBTax internally sees if tax is applicable or not and returns the resultant values. If at the Configuration Owner Tax Option level Tax is set as not applicable then, the tax engine will not return any values.

14. How to update employee type supplier site for tax exemption?

Firstly, for Employee Type suppliers, we don't allow the creation of Party Sites (addresses).  As such the address for employee type supplier is maintained only in HR records. This is not allowed due to various legal reasons.
Secondly for Third Parties (Supplier Type), we don't have Exemption options in PTP.
It is only available for Third Parties (Customer Type).

15. How to make the system calculate only the taxes from the regime code, which the supplier is registered.

Use Tax applicability rule for the Tax based on Registration Status.

To be specific:
Tax 1:
Make tax Applicable by default in Tax Rule (Rule Type- Determine Tax Applicability).
Make tax Not Applicable based on Party Registration Status for the Tax Regime/Tax.
Tax 2:
Make tax Not Applicable by default in Tax Rule (Rule Type- Determine Tax Applicability).
Make tax Applicable based on Party Registration Status for the Tax Regime/Tax.

16. Is it possible to have specific transactions NOT to be taxed e.g. Prepayment Invoices, Expense Report Invoices or Freight and Misc Line Types?

(1) For the exceptions,

You can use Configuration Owner Tax Option to make Tax not Applicable for - Prepayment Invoice Type and Expense Report Invoice Type.
I suggest to create Rules of Non Applicability in Direct Tax Rate Determination Rule Type based on user defined fiscal classification for - Invoice Line Types: Freight and Miscellaneous and selected invoice lines that are non-taxable.
Please note user will have to manually provide classification in the transaction for such lines.

(2) Verify the set up in Configuration Owner Tax Option for Prepayment and Expense Report Event Class as regards options of Allow Tax Applicability and Regime Determination Set.

(3) As regard system profile for Miscellaneous type is concerned, as suggested above you may create a rule based on user defined fiscal classification.

17. How to manually override or adjust the tax amount in the AP invoice distributions?

You can also change the Tax Amount in Tax Details Screen of AP Invoice.
Please check your Allow Override for Calculated Tax Lines checkbox.

18. What is the flag "Enable Tax to be Applicable" used for? How to enable it?

There are 2 flags for migrated taxes. LIVE_FOR_PROCESSING_FLAG and LIVE_FOR_APPLICABILITY_FLAG.

LIVE_FOR_APPLICABILITY_FLAG is the Enable Tax to be Applicable flag. This flag is not visible for other upgraded or newly created taxes where by default they are set to Y in back end. However for migrated USE TAXES and migrated LOCATION TAX it is set to N as they are not calculated. As in 11i, USE taxes are not visible on the AP workbench but as are displayed in the USE TAX LIABILITY REPORT. Also during migration of location based AR taxes in addition to STATE, COUNTY and CITY tax, a dummy LOCATION TAX is also created for rule transactional input factor rule evaluation of other 3 taxes.

LIVE_FOR_PROCESSING_FLAG is the Make live for transactions flag which comes as checked for upgraded taxes. For newly created taxes this has to be explicitly checked. The flag cannot be and should not be enabled.

19. Why isn't it possible to select a Tax to create a manual tax line?

Please perform the following checks: -
1) Ensure that Allow override and entry of manual tax lines is checked at the tax / Rate level
2) If you are giving the tax jurisdiction then ensure that there is a tax rate under that jurisdiction.

20. How to use the tax rate defined for the tax jurisdiction?

A tax jurisdiction tax rate is a rate that is distinct to a specific geographic region for a specific tax.
Generally, the default tax rate for Tax Jurisdiction should be picked for tax calculation in case you are providing the concerned Tax Jurisdiction in the transaction.
The jurisdiction that applies to a transaction line is further dependent on the place of supply. The place of supply is the location where a transaction is determined to take place for a specific tax and will be dependent on the determine Place of Supply Rule.
If you are not getting the tax jurisdiction specific tax rate in the transaction, I suggest you to again check the set up for the Tax Jurisdiction and associated Tax Rate (check you have default rate for the tax jurisdiction) based on above note.
Please also note that E-Business Tax evaluates, in order of priority, the tax rules that have defined against the tax configuration setup and the details on the transaction. Your defaults will be considered only when you do not have any valid Rule for the transaction.