Self Assessed Tax

Oracle Fusion Tax: Tax Registration Options

Tax Registration Options

Every legal entity needs to have its reporting registration options set, just like with Oracle R12.

Option

Description

Impact

Tax Regime

Enter the tax regime for this registration. This is a mandatory value in order to set up your Tax Registration. We also advise that you set a separate Tax Regime for each tax registration number you may have.

If you are using duplicate registration numbers then you need to set the Tax too, however, leave this blank if you don’t care about duplicate tax registration numbers.

The tax regime and optionally and tax are used to determine the correct tax registration at transaction and reporting time.

Registration Type

If applicable, select a classification of the tax registration. Its not mandatory but always a good idea to put one in in case a seeded report requires this information now or in the future.

The predefined tax registration types are specified by the tax authority. The tax registration types are for reporting purposes only.

Registration Number

Enter the company tax registration number assigned by the tax authority – So go ask your tax department for this number. This is the tax number, not the company number!

If you set the tax regime option to use the legal registration number as the tax registration number, then select the registration number from the legal registration numbers in the list of values.

If you set the Allow duplicate tax registration numbers option for the tax, then multiple parties and party sites can use the same tax registration number for this tax.

Oracle Fusion Tax validates the number according to tax authority validation rules, if the validation exists for that country. This means that you need to get the format correct or it may not be accepted, so remove spaces or dashes if needed.

Registration Status

Enter the party’s tax registration status. Oracle Fusion Tax provides these predefined registration statuses:

  • Agent: The party acts as a withholding agent for the tax authority for the applicable tax.

  • Registered: The party is registered for the applicable tax.

  • Not registered: The party is not registered for the applicable tax.

  • XX 123456789 Same VAT Group (eBiz Answers Setup)

Use the tax registration status as a determining factor in tax rules. This values can be added to and used in tax rules

Source

Identify if this party is:

  • Explicit: The party is registered with the local tax authority and has a tax registration number. In this case, you know that the party is registered and the details including the tax registration number.

  • Implicit: The party is not formally registered with the tax authority, but the party is considered to meet one or more requirements for reporting taxes because of the level of business conducted. In this case, you determine that the party is registered but you do not know the tax registration number.

If the source is Explicit the tax registration number is required. If the source is Implicit the tax registration number is not required.

Rounding Rule

The rule that defines how the rounding should be performed on a value involved in a taxable transaction. For example, up to the next highest value, down to the next lowest value, or nearest. We also suggest that you set the rounding rules at the regime level and do not allow rounding override.

At transaction time, the values set at the tax registration level override the values set at the party tax profile level.

Set as self-assessment (reverse charge)

Set to automatically self-assess taxes on procure-to-pay transactions. A self-assessed tax is a tax calculated and remitted for a transaction, where tax was not levied by the supplier but is deemed as due and therefore, needs to be paid by the purchaser. If you set your solution up correctly then we suggest you set this to yes by default even if you don’t currently use Self-Assement!

You can set the self-assessment option at the tax profile level to default to the tax registrations that you create for this party. You can also set it at the tax registration level or on an individual tax line.

Oracle Fusion Tax applies self-assessment to Payable invoices received by the first party according to the tax registration setting. The specific tax registration record is derived either from the Determine Tax Registration rules or from the default tax registration.

Set Invoice Values as Tax Inclusive

Our recommendation is not to use this but if you select this because your party intends to send or receive invoices with invoice line amount inclusive of the tax amount you can use this option or for better control, use rules.

At transaction time, the values set at the tax registration level override the values set at the party tax profile level. In addition, this option at the tax registration level overrides the tax inclusive handling setting at the tax level, but not at the tax rate level.

Collecting Tax Authorityand Reporting Tax Authority

Enter the name of the tax authorities for:

  • Collecting Tax Authority: The tax authority responsible for managing the administration of tax remittances.

  • Reporting Tax Authority: The tax authority responsible for receiving and processing all company transaction tax reports.

Oracle eBTax: Reverse charge taxes, do you use Offset taxes or the Self Assess solution?

What is reverse charge VAT?

“Reverse Charge” is a part of the VAT law in a growing number of European countries. It states that the VAT (Value Added Tax) for Goods and Services delivered inside the country by a foreign company is owed by the recipient of the goods and not by the foreign service provider/supplier.

VAT must not be charged on invoices to the recipient. By law, a clear statement must appear on each of these invoices indicating that the liability for the payment of VAT is reversed to the recipient. The recipient has to calculate, report and pay the VAT (it may be recoverable if the recipient is VAT registered). The foreign service provider/supplier may be entitled to a VAT refund claim for all VAT charges by local suppliers.

So, in Oracle do we use Offset or Self Assessed tax?

Continue Reading

Oracle eBTax: Examples of how Offset Tax differs from Self Assessed Tax.

This post offers examples of how Offset Tax differs from Self Assessed Tax.

There are 3 options available to you with Payables and Oracle when it comes to Tax.

Option 1 – (No special requirements)

Invoice entered for a foreign supplier so tax shown on AP invoice was 0%.
The tax calculated is a zero amount.

 

The tax calculated is as follows:

The distribution of the invoice is shown as follows – you can see that there is no value in the recoverable and non recoverable tax.

 

When the accounting has been created (what is sent to GL), the following GL entries will be made. A zero value is recorded for tax.

 

Option 2 – (Use Offset Tax)

Invoice entered for a foreign supplier so tax shown on AP invoice was 0%.
The following screen shot shows that Offset tax has been calculated, a 5% and a -5% so the net amount is 0.

The tax calculated is as follows:

The distribution of the invoice is shown as follows – you can see that both the tax and offset tax are shown.

When the accounting has been created (what is sent to GL), the following GL entries will be made. You can see the two taxes should cancel each other out (ignore the cost centre value of 0). Even though the values cancel each other out, the journal entry is made and the taxes have been recorded.

ebtax

 

Option 3 – (Use Self Assessment)

Invoice entered for a foreign supplier but when we calculate the tax, no tax line is created!

r12 ebtax

 

The tax calculated is as follows – so, even though no tax line is shown on the distributions, a tax is calculated (however it has a status of ‘Self Assessed’ in the system).

r12 etax

The distribution of the invoice reflects the entered lines – i.e. there is only one line – no recoverable or non recoverable tax shown.

The Big difference is that when the accounting has been created (what is sent to GL), the following GL entries will be made. 500 will be credited to a Self Assessed account and 500 debited to a self assessed liability account.

The major difference between offset and self assessed is what is visible on the distributions of the invoice. Both options make journal entries to account for the tax that should be charged. The account values can of course be changed so the liability account could be different if required.

 

 

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