Archive for June, 2016

Oracle ebusiness tax – when to use a tax jurisdiction

Linking a tax jurisdiction to a tax rate.

Whether its R12 eTax, eBTax or Oracle Cloud (Fusion) Tax, with Oracle eBusiness Suite, every Tax created under a Tax Regime needs a ‘Tax Jurisdiction’ if it wants to be enabled for transactions. Under the Oracle tax engine, a tax jurisdiction only applies to certain types of taxes.

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What Exchange Rate To Use For Foreign Currency Invoices From Domestic Suppliers

Do I have to use the exchange rate on the supplier invoice when entering a domestic invoice with a foreign currency.

Most ERP systems, good ones at least such as Oracle and SAP, will allow you to enter and store an exchange rate to use for your foreign currency invoices so that the foreign currency will then be automatically converted to your ledger currency when posted. There are also times when you may receive a foreign currency invoice, USD is the most common scenario, from a domestic supplier and VAT is charged because the sale is within the same country.

The problem

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Oracle Cloud Tax updated for Release 11

Fusion Tax Release 11 Updates

Below is a high level overview of the new functionality available for the Oracle Cloud tax engine. As you can see, there are quite a few changes.

Estimated Tax on Sales Order now possible.

Create a rule using tax determinant which includes transaction business category = Sales Transaction

Create a UD.

Enhanced Rapid Implementation Spreadsheets:

Data related to tax rules moved from tax config workbook to tax implementation workbook.

The following worksheets are new in the implementation workbook:

  • Tax Exemptions: Create tax exemption configuration for third parties and third-party sites.
  • Party Classifications: Associate party fiscal classifications with the parties.
  • Tax Reporting Codes: Create tax reporting codes and tax reporting types for downstream use in tax reports.
  • Tax Payer Identifiers: Define specific taxpayer identifiers for third parties and third-party sites for purposes of reporting.
  • Product Fiscal Classifications: Create product fiscal classifications for subsequent use in tax rules having a product inventory linked determining factor class.
  • Tax Rules: Define rules that look for a result for a specific tax determination process, such as determining place of supply or tax registration, in relation to a tax on a transaction.

Tax registrations have moved out of party tax profiles task. Now have their own task lists of:

  • Manage Tax Registrations: Use this task to create or edit details related to Tax Registrations, Withholding Tax Registrations, and Taxpayer Identifiers.
  • Manage Tax Exemptions: Use this task to create or edit details related to Tax Exemptions and Withholding Tax Exemptions.

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How to Transfer Invoice Tax Variances in Average Costing Organization

Oracle Payables will calculate Invoice Tax Variances when there is a non-recoverable tax that has been calculated at AP invoice entry that was not included on the Purchase Order.    In an average costing organization this tax variance should be transferred to the inventory valuation to ensure that the correct item cost is calculated.     Please see attached video for a demonstration of this functionality in Oracle R12.

How do you make indirect tax interesting? Revolutionise it!

As published in the Tax Technologist – specialist newsletter.

After I had done my part on a recent Oracle R12 presales presentation, I received the comment “I usually find tax really boring but somehow Andrew made that enjoyable to listen to”.  In fact, I always get a fantastic engagement when I talk about our indirect tax solutions in Oracle ERP systems (Oracle R12 and Fusion or Oracle Cloud as it is now known). The reason for this is simple, we are trying to make a difference and change the indirect tax process status quo.

We understand indirect tax and we are experts in Oracle, so we perfectly translate between the two. The majority of solutions we see usually fall well below what should be an acceptable solution. Maybe 90% either are or are considered at risk of being non-compliant as they rely almost entirely on a manual solution. Continue Reading

Oracle eBTax – The Best Return on Investment You Will Get

As with everything, ‘if you want a better solution, you need to first have a better understanding of the problem’ and this is so true when it comes to indirect tax. Oracle’s eBTax (e-Business Tax) and Fusion Tax (or Oracle Cloud as it is now known) are probably the most powerful and certainly the most versatile tax engines on the market, but their versatility is because they are Oracle modules and not a third party product.

As published in Issue 60 of the Oracle Scene from the UKOUG – Summer 2016.

One thing I learnt many years ago (whilst on my first Oracle project), when I was trying to work out how to correctly setup transaction types, was that the best thing about Oracle is how configurable it is. Conversely, the worst thing about Oracle is how configurable it is! It’s a double-edged sword and if you know how to control the power given to you then Oracle can be configured to achieve what you need. Continue Reading

Oracle – VAT applicability between a parent company and a permanent establishment in Italy

Really this can apply to any EU country and comes under the tax engine rules for Same VAT Group and can apply to any VAT or GST based tax regime.

In reference to the original article by the TMF group on VAT in Italy between a parent company and its child, I thought that i would try and explain this in terms of setting up the tax in Oracle R12 eBTax or Oracle Cloud Tax.

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eBiz Answers is taking on the big guys and winning!  Their route to 100% indirect tax compliance has won them ‘European Tax Innovator of The Year’

London, UK – June 2016.         

“Winning European Tax Innovator of the Year at the annual International Tax Review’s European Tax Awards is a huge achievement for eBiz Answers. It proves that we are making a measurable difference in terms of tax innovation” says CEO: Andrew Bohnet

Many businesses have dangerously underestimate the need for robust governance of their indirect tax, defaulting tax codes and even allowing staff to manually apply rates of their choice. Without question, this always leads to errors, incorrect reporting of VAT and an incrementally expensive burden upon the tax teams who end up processing unreliable data. Moreover, these inefficiencies sit badly with HMRC’s 2016 drive for governance and compliance; they are a clear handicap to achieving a Low Risk tax assessment; and, of course, SAO certification. When eBiz Answers carries out Indirect Tax reviews for their clients they find that most VAT issues which they uncover are invisible to the business, so tax returns are naïvely incorrect.  Andrew Bohnet explains “tax is not always recovered, of course HMRC becomes concerned and, in some circumstances, fines are issued. Our tried and tested automated Indirect Tax Solutions remove these risks and we do so at a fraction of the cost of engaging the well-known accountancy organisations, and without any need to procure an external tax engine, thereby providing further savings for our clients.” Continue Reading

Senior Account Officers say VAT is causing them most concern

Why be worried about VAT compliance when the answer is out there?

A poll conducted by one of the big 4 consultancies and outlined in their ‘SAO Toolkit‘ said that from a recent poll (no date was given so assume still recent), “over three- quarters (77%) of Senior Accounting Officers say they undertook a review of their reporting systems and nearly half (46%) of firms say VAT is the area of tax which is causing them most concern, followed by PAYE (32%), corporation tax (11%) and excise”.

With this in mind, why then do so many companies have such poorly designed VAT systems and do not invest any money in reducing the risk of non compliance around VAT?

Get in touch with us to find out how we can lead the way to achieving 100% compliance.

Oman to introduce VAT in 2018

The Omani government has announced its plans to introduce a VAT regime, previously said to be as early as 2017, it’s now believed this will come into affect on the 1st of January 2018, giving businesses more time to acclimatise.

The VAT rate is expected to come in at 5%, which although low by European standards, is expected to generate OMR250 million a year. These extra funds are needed to cover the gap caused by the recent and continued drop in oil prices which are affecting many of the Gulf states. The Omani government have also stated that they will introduce a zero rate for many essential and basic goods and services.

For more information click here (note it goes to our new Innovate Tax site)

Puerto Rico VAT Plans blocked

Puerto Rico’s plans to introduce VAT on the 1st June 2016 appear to have been scrapped.

Earlier this month legislators voted against the introduction of VAT to replace the current Sales and Use Tax, with an almost unanimous vote of 21 to 1.

However, there is still much confusion as to what will happen with Puerto Rico’s indirect tax regime as they are still in dire need of a way in which to raise funds to cover their rising debt, so a VAT regime could still be on the cards?

European Council VAT Action Plan on VAT Fraud

On 25th May 2016 the ‘Council for the European Union’ and the ‘Economic and Financial Affairs Council’ (also known as ECOFIN) agreed on an action plan to tackle VAT fraud and the ever increasing VAT gap in Europe, leading towards a single EU VAT area.

At a recent meeting in Brussels the ECOFIN reviewed the programe see the original publication here, to tackle fraud and simplify the process around VAT compliance. The plan proposes a range of measures including the extension of MOSS (Mini One Stop Shop) reporting to goods, the removal of zero rating intra-Community supplies and better co-operation between tax authorities.

The key points raised were;

• Welcomes the findings towards a single EU VAT area with the aim of tackling VAT fraud and closing the VAT gap.

• It agrees with the Action Plans call for new and radical anti-VAT fraud measures, but highlighted that more simplification is required with the aim of introducing these legislative principles in 2017. Continue Reading

Canada: Prince Edward Island PST increase

On April 19th 2016, the finance minister for the Canadian province of Prince Edward Island, announced the fiscal 2016-17 budget. Whilst it contained no new taxes or further increases to income tax, it did contain an increase to the Provincial tax part of the Harmonised Sales Tax (HST), taking this from 14% to 15%. This is made up of 10% PST and 5% GST and will be effective as of the 1st of October 2016.

This is the third province this year to announce a rise in PST, see links below to earlier announcements.

New Brunswick increase HST (published April 2016).
New Foundland and Labrador to raise HST rate (published August 2015).