Sample ebusiness tax application workshop v 1.2

© Copyright KCI || Confidential ||
Ms. Beverley Baker-Harris
Senior Project Manager
GBT Application Design Workshop
E-Business Tax

© Copyright KCI2
Agenda
 Introductions
 Workshop Norms and Objectives
 Participant Responsibilities
 Introduction to E- Business Tax
 Initial Production Application Process
 Review – High Level Design
 Break
 Review – Design Considerations and Issues
 Interactive Discussion*
 Action Items and Next Steps
* During live Global Design Workshop sessions, interactive discussions will
be 2-3 hours with the break taken near the middle of the 4 hour
workshop block
To be done when new invitees in audience
Workshop - 4 hrs

© Copyright KCI3
Workshop Objectives
 Understand E-Business Tax and Capabilities in Oracle R12 eBS
 Understand KCI EB Tax Determinants and Rules
 Review – Design Considerations
 Review – Key Design Decisions & Issues
 Determine E-Business Tax Application Process for KCI Global
footprint

© Copyright KCI4
Key E-Business Tax Areas
 Features
 Key Concepts
 Processes
 AR Screen Changes
 Setup Considerations

© Copyright KCI5
Customer Billing - Process Overview

© Copyright KCI6
Current Tax Configurations Migrated
During Upgrade To New Objects
Tax CodesTax Codes
–AA, BBAA, BB
Tax GroupTax Group
CodesCodes
–CCCC
Tax RateTax Rate
CodesCodes
–AA, BB, CCAA, BB, CC
Output TaxOutput Tax
ClassificationClassification
CodesCodes
Tax RulesTax Rules

© Copyright KCI7
Current State - US
 Vertex Sales Tax and TDM application interacts with the following
applications/systems
Applications utilizing Vertex Sales Tax Data.
– Oracle Accounts Receivables
– Delair (Claims Billing) – highly customized to meet KCI Business Needs. The
application is totally supported internally and not by Vendor. KCI created a custom
view into Vertex to fetch tax rate.
– Oracle Order Management
– Hero
– Commissions – highly customized to meet KCI Business Needs. The application is
totally supported internally and not by a Vendor. KCI created a custom view into
Vertex to fetch zip codes for territory identification

© Copyright KCI8
E-Business Tax Integrations
Oracle E-Business Tax
Tax Services Request Manager
Services
Tax
Content
Services
Tax
Determination
Services
Tax
Administration
Services
Partner
Tax Content
Interface
Content
Repository
Record
Repository
Partner
Tax Services
Interface
Tax PartnerTax Partner
Tax ContentTax Content Tax ServicesTax Services
Oracle Receivables and other E-Business Suite Products
Transaction Tax DataTransaction Tax DataTransaction DataTransaction Data

© Copyright KCI9
E-Business Tax Components
 eBusiness Tax consists of a tax knowledge base, a variety of tax services that
respond to specific tax events, and a set of repositories for tax content and tax
recording. The components are:
– Tax Content Services – Addresses the creation, maintenance, and management of
tax content
– Tax Content Repository – Contains master and reference data
– Tax Service Request Manager – Manages access to all tax data and services
– Tax Determination Services – Made up of two sub-components:
 Tax Determination Manager – Manages tax calculation
 Tax Rules Management – Manages the setup and definition of tax rules
 Tax Record Repository – Contains the key attributes of each tax transaction
 Tax Administration Services – Manages the accounting for all tax transactions
 Tax Reporting Ledger – Manages access to the Tax Content and Tax Record
Repositories for reporting purposes

© Copyright KCI10
Key Product Features
 Allows to maintain a tax configuration for each tax that you are
subject to
 Allows to maintain records for your legal entities and operating
units and the taxes they are subject to
 Manage the sharing of tax configuration data by the legal entities
and operating units in your organization
 Maintain tax registrations and classifications for your legal
establishments and third parties
 Maintain classifications of the products that you buy and sell
 Maintain classifications for your transactions.

© Copyright KCI11
 Maintain tax rules and default values to manage tax
determination and tax recovery on your transactions
 Create default values and a minimum number of tax rules for
simple tax requirements
 Create default values and a comprehensive set of tax rules to
manage complex tax requirements
 Maintain tax-related records for your important transactions
 Maintain automatic accounting of all tax-related transactions

© Copyright KCI12
 Manage user control of updates and overrides of tax information
on transactions
 Maintain codes for tax reporting purposes
 Comes with a full set of reports for your tax authority tax
requirements
 Maintain access to third party tax calculation services

© Copyright KCI13
Tax Integration
 E-Business Tax provides tax services for Order to Cash and
Procure to Pay business flows in these applications:
 Advanced Global Intercompany
 Inventory
 General Ledger
 Internet Expense
 iProcurement
 iStore
 Order Capture
 Order Management
 Payables
 Projects
 Purchasing
 Receivables
 Service Contracts
 Trade Management

© Copyright KCI14
EB Tax Exclusions
 E-Business Tax does not provide tax services for these
transaction:
 Payables withholding taxes
 Latin American Receivables transactions
 India transaction taxes

© Copyright KCI15
Tax Authority Tax Regime Tax
Tax
Jurisdiction
California State
Board of Equalization
HM Customs and
Excise (U.K.)
Canadian Customs
and Revenue Agency
(Canada)
Secretaria da Receita
Federal (Brazil)
Tax Authority:Tax Authority: A government entity that regulatesA government entity that regulates
tax law, administers, and/or audits one or moretax law, administers, and/or audits one or more
taxes.taxes.
Key Concepts

© Copyright KCI16
Tax Regime: The set of tax rules that determine the
treatment of one or more taxes administered by a
tax authority.
Tax Regime Tax
Tax
Jurisdiction
Tax Authority
California State
California Sales Tax
HM Customs and
Excise (U.K.)
UK VAT
Canadian Customs
and Revenue Agency
(Canada)
Canadian Goods and
Services Tax
Federal (Brazil)
RICMS -
Regulamento do
ICMS
Key Concepts

© Copyright KCI17
Tax
Tax
Jurisdiction
Tax Authority Tax Regime
Tax: A classification of a charge imposed by a
government through a fiscal or tax authority.
California State
California Sales Tax State Sales Tax
HM Customs and
Excise (U.K.)
UK VAT UK VAT
Canadian Customs
and Revenue Agency
(Canada)
Canadian Goods and
Services Tax
GST
Federal (Brazil)
RICMS -
Regulamento do
ICMS
CMS
Key Concepts

© Copyright KCI18
Tax
Jurisdiction
Tax Authority Tax Regime Tax
Tax Jurisdiction: A geographic area where a tax is
levied by a specific tax authority.
California State
California Sales Tax State Sales Tax California (State)
HM Customs and
Excise (U.K.)
UK VAT UK VAT UK
Canadian Customs
and Revenue Agency
(Canada)
Canadian Goods and
Services Tax
GST Ontario
Federal (Brazil)
RICMS - Regulamento
do ICMS
CMS São Paulo
Key Concepts

© Copyright KCI19
Fiscal Tax Classification System
 EB Tax uses Fiscal Classifications in creation of Tax Rules for
Tax Determination
 For Inventory Items it provides a product fiscal classification using Inventory Category
Sets
 Inventory Category Sets can also be setup for ‘Product Intended Use’ of the Inventory
Item when ‘Product Intended Use’ is a factor either in Tax Determination or Tax
recovery
 For Non Inventory Items it provides a flexibility to use EB Tax Product Category
 Allows creating Party Tax Classifications
 Allows creating Transaction tax Classifications

© Copyright KCI20
Product Fiscal Classifications Flow
Item
Categories
Inventory
Items
Item
Category
Sets
Inventory
ProductFiscal
Classifications
External Components
eBTax Components
Fiscal Classif.
Types
•Product FC
•Intended Use
(inventory linked)
Regime
Association
Tax
Regimes
Fiscal Classif.
Types
•Prod. Category
•Intended Use
(non-inventory)
Fiscal
Classification
Codes
Dependency
Flows

© Copyright KCI21
Tax Rules Guided Flow
Flows
Optional Flows
• Rule Code
• Rule Name
• Law Reference
• Effective Dates
• Applicable
Applications
• Etc.
• Transaction Det.
Factors
• Party Det. Factors
• Product Det.
Factors
• Condition
Result will
depends on the
Rule Type
(I.e. Determine
Tax Status, the
result will be a
Tax Status)
• Specify which
order the rule
conditions
must be
evaluated
• Ability to re-
use existing
templates or
create new
ones
General
Rule Info
Rule
Conditions
Rule
Results
Rule
Order
Rule
Templates

© Copyright KCI22
Processing Taxes on Transactions
 The tax determination process derives the taxes that apply to a transaction and the tax
amounts charged on the transaction by evaluating the factors of the transaction according to
the rules that you define. These taxability factors are:
– Place - The places involved in the transaction, including the ship from and ship to
locations, and the bill from and bill to locations
– Party - The parties of the transaction. This can include:
 First party legal entities.
 Ship from/ship to parties; bill from/bill to parties.
 Tax registrations and registration statuses of each party
 Type or classification of a party
– Product - The products transacted. This can include:
Designation of physical goods or services.
Type or classification of a product
– Process - The kind of transaction that takes place. This can include:
 Procure to Pay transactions, such as purchases, prepayments, and requisitions
 Order to Cash transactions, such as sales, credit memos, and debit memos.
 Type of sale or purchase: retail goods, manufactured goods, intellectual property and
re-sales.

© Copyright KCI23
Tax Rules Guided Flow
Flows
Optional Flows
• Rule Code
• Rule Name
• Law Reference
• Effective Dates
• Applicable
Applications
• Etc.
• Transaction Det.
Factors
• Party Det. Factors
• Product Det.
Factors
• Condition
Result will
depends on the
Rule Type
(I.e. Determine
Tax Status, the
result will be a
Tax Status)
• Specify which
order the rule
conditions
must be
evaluated
• Ability to re-
use existing
templates or
create new
ones
General
Rule Info
Rule
Conditions
Rule
Results
Rule
Order
Rule
Templates

© Copyright KCI24
• Determine Tax Regimes and Candidate Taxes
• Determine Place of Supply And Tax Registration
• Determine Applicable Taxes & Jurisdictions
• Determine Tax Status for each applicable Tax
• Determine Taxable Basis
• Evaluate Thresholds
• Determine Tax Rate
• Evaluate Exemptions and Exceptions
• Calculate Tax
• Perform Rounding
Tax
Applicability
Tax Status
Tax Rate
Taxable
Basis
Tax
Calculation
Tax Determination Service Flow

© Copyright KCI25
ProcessProcess ProductProduct
PartyParty
PlacePlace
Determining Factors = 4P’sDetermining Factors = 4P’s
TaxTax
ContentContent
Determining Factors

© Copyright KCI26
Example of US Sales Tax in 12.0
Tax
Regime
Tax
Tax
Status
Tax
Rate
Operating
Unit Tax
Accounts
Regime Tax Jurisdiction Status Rate Account
US Sales
Tax
State Sales Tax
California State
Sales Tax
Standard 7.25% 01.005.004.033
US Sales
Tax
County Sales
Tax
San Mateo
County Sales Tax
Standard 1.0% 01.005.004.033
US Sales
Tax
City Sales Tax
Belmont City
Sales Tax
Standard 0% 01.005.004.033
Tax
Jurisdiction
Flows Optional Flows

© Copyright KCI27
Example of UK VAT Tax in 12.0
Flows
Optional Flows
Tax
Regime
Tax
Tax
Status
Tax
Rate
Regime Tax Jurisdiction Status Rate Recovery
UK VAT UK VAT UK VAT Standard 17.5% 100%
UK VAT UK VAT UK VAT Reduced 8.0% 100%
UK VAT UK VAT UK VAT Zero Rated 00%
UK VAT UK VAT UK VAT Exempt 00%
Tax
Jurisdiction
Operating
Unit Tax
Accounts
Recovery
Rate

© Copyright KCI28
Tax Reporting Types
 Use tax reporting types to capture additional tax information on transactions for your
tax reports. You can use tax reporting types for your internal reporting needs and to
fulfill country-specific reporting requirements
 A tax reporting type identifies a specific unit of information, such as a date or a text
comment, to associate with a specific tax usage, such as a fiscal classification or tax
jurisdiction. You can also create a group of tax reporting codes for a tax reporting type,
to provide additional granularity for tax reporting. You can add tax reporting codes to a
tax reporting type at any time
 A tax reporting type region appears on the corresponding page of each E-Business Tax
entity that you associate with tax reporting types. If applicable, the selection is limited
o the tax reporting types associated with the corresponding tax regime and associated
entities.

© Copyright KCI29
Tax Zones
 Use tax zones to group existing geographical regions that share the same tax
requirement. You can use tax zones with tax regimes, to identify tax requirements for a
special geographic area and to create parent tax regimes that represent a related
grouping of geographic regions for tax reporting purposes. You can also use tax zones
with tax rules, to create tax rules that refer to a specific geographic location
 The use of tax zones is optional and depends on your overall tax setup planning. For
example, if a separate economic community exists in part of a country only, you can
either set up a tax zone and corresponding tax regime for the applicable geographic
area, or set up a country tax regime and use applicability rules to exclude the parts of
the country where the tax requirement does not apply

© Copyright KCI30
Integration and Extensions
 Confirm Interfacing systems to/from process
 Confirm Metrics / KPIs
 Identify Any Dependencies / Barriers to Implementation

© Copyright KCI31
Third Party Service Subscriptions
 External Service Providers
– Taxware
– Vertex
 Prerequisites
– Before you can set up service subscriptions, you may need to complete one or more of
these tasks:
– Set up tax regimes. (mandatory)
– Set up party tax profiles. (mandatory)
– Set up configuration options. (mandatory)

© Copyright KCI32
Tax Simulator
 E-Business tax comes with a Simulator that allows you to enter transactions in
order to simulate the tax determination process without creating live data. The
Oracle Tax Simulator lets you preview the workings of your tax configuration
before you enter transactions in an application, such as the Payables or
Receivables workbench. In this way a tax manager or implementation consultant
can simulate transactions to test the entire tax and related configuration. The
Oracle Tax Simulator provides immediate verification that the tax configuration
and tax rules were created and applied according to your requirements

© Copyright KCI33
Noteworthy Points – Legal Entity and Ship to
– Legal Entity is required on all transactions and receipts
 Defaulted from transaction type, batch source, organization
 Credit memos default legal entity from target transaction
 Adjustments assume legal entity from target transactions
 Receipts default legal entity from remittance bank account
– Ship to customer and address information can now be recorded at the line-
level
 Ship to is now an optional grouping rule for transactions
 A transaction can have multiple ship-to addresses

© Copyright KCI34
E-Business Tax Design Consideration
 How many different Tax Authorities per legal entity are required?
 Are there multiple Tax Regimes per Tax Authority? For example City Tax and
State Tax governed by State Authority
 Do you have multiple tax codes, and taxing methods? For example
percentage, compound taxes, deferred taxes
 What are the different tax jurisdictions under the Tax Authorities?
 What are the different supply points, and Tax Registrations?
 What is the frequency of change for Tax Rates?
 Are the Tax rates changes done manually?
 Do you require Tax content to be loaded on regular basis ?
 What is the frequency of the Tax Rates upload?
 Do you recover Tax at the time of Invoicing or Deferred?
 If you use Deferred Taxes, what is interim tax account to be used for Deferred
Taxes?

© Copyright KCI35
 Do you Transactions with inclusive Tax?
 Do you allow customer tax exemptions?
 Do you have Product Tax exceptions?
 Do you have Taxes that apply to Multiple Jurisdictions?
 What are the different types of Offset taxes and its recovery rates?
 What are the Tax Accounts to be used for the following?
– Payables Tax Expense
– Tax Recoverable/Liability
– Interim Tax
– Finance Charge Tax Liability (An account that records tax amounts on finance charges that are
used as a deduction against overall tax liability)
– Non- Recoverable tax Accounts (Accounts that record tax amounts on earned and
unearned discounts and adjustments that you cannot claim as a deduction against tax
liability)

© Copyright KCI36
 What tool will be used for compiling and filing Sales Tax Returns? For
example, Oracle Reports, Vertex or third party software
 Are the customer address streamlined with the Tax Software's? For example
in US the Address Validation for customer address must meet the State,
County, City and Zip Code + 4 for correct determination of Tax Rates

Sample ebusiness tax application workshop v 1.2

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