Oracle eBTax – AGIS and tax/VAT calculation – what is going on?

Tax issues with Oracle intercompany including the Advanced Global Intercompany Solution (AGIS)

In my opinion, it should not matter what type of transaction is taking place, the tax should be independently calculated based on the information is has at the time and never be fed a tax rate to use! AGIS is a classic example of this. When the AR transaction is calculated, the tax should be calculated based on all the determining factors associated to the tax rules for the appropriate tax regime.
Indeed, this is what is happening but the problems start when the intercompany AP transaction is created because it does not appear that the Oracle intercompany solution can handle the processing of the tax in the right way! I have set up AGIS for many clients and the tax used to work fine, i.e. there was no tax rate from AR being forced through and why would I want this? if the AR transaction calculated French tax because it is a French entity, why would I want French VAT calculated on my AP invoice if it is a Germany entity and registered for VAT in Germany? I wouldn’t, I would want a German DE VAT tax rate. So this is what I am currently observing as being a specialist in eBTax, I am lucky to have multiple clients so I get to see multiple scenarios at the same time.

  • Some of my client (mainly those from a year ago backwards) had no issues with the tax calculation – the only issue was that Oracle was not bringing the tax classification code through from AR to AP but it was not bringing any other tax information – which is what we want.


  • A couple of my newer clients, one an upgrade and one a new install are seeing issues with AGIS in that the AP transaction is trying to pull the AR tax information through, not just the tax classification code but the actual tax rate even when the tax regimes are completely different! this is causing errors and I am in the process of trying to resolve things.


  • For those clients where the AGIS (and any intercompany) AP transaction is created without the system trying to force the tax rate from AR, the AP transaction is devoid of any ‘Ship-To’ information making it impossible to correctly calculate the tax is the operating unit has multiple ship to sites in different countries with different VAT registration numbers!

So to me, it seems that Oracle have got the entire intercompany solution wrong when it comes to VAT and rather than trying to be clever and bring the AR tax rate into AP they should back off and only bring the tax information that will allow the tax to be freshly calculated as a standalone transaction in AP. What do I mean by ‘tax information’? I am talking about the data that can be used by the determining factors such as the tax classification code, the intended use, the product type or the user defined fiscal classification code. Bring the information and the rules, if correctly setup can use that data to determine the tax rate for both AP and AR!