Using Accounting Setup Manager

Lesson 7
R12 E-Business Tax Configuration
Part 3

1
 Objectives

• After completing this module, you should be able

to:
 Understand and set up the tax configuration:
• Tax Rule Condition

2
SetupeBiz Tax
Tax Rules

3
Tax Rules

4
 SetupseBiz Tax -> Configure Tax Rules

Tax
Rule Type
Tax Tax Tax Tax
Taxes Recovery
Regime Statuses Rates Rules
Rates

1. Determine Place of
Supply

2. Determine
Applicability

3. Determine Tax
Registration/Juris
diction

4. Determine Tax
Status

5. Determine Tax
Rates

6. Determine Taxable
Basis

7. Calculate Tax
Amount
5
Step 1 eBiz Tax -> Initially Set the Tax Rules using Default
Values

Tax Default
Rules

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 Recommended Tax Defaulting Rules

Rule Type Tax

Taxes
Tax Tax
Recovery
Tax Tax
Regime Statuses Rates Rules
Rates
1. Determine Place of
Supply
use the seeded
Determining
Factors eg Ship to,
Bill to)
2. Determine Applicability
set to Applicable
Tax Default
3. Determine Tax
Registration/Jurisdiction Rules
use seeded
Determining
Factors eg Ship to,
Bill to)
4. Determine Tax Status
setup a Tax status
to be the default
status
5. Determine Tax Rates
setup a Tax Rate to
be the default rate
6. Determine Taxable Basis
use seeded
Standard_TB
7. Calculate Tax Amount
use seeded
Standard_TC

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 Step 2 Enable Tax eBiz -> Tax

Tax
Taxes
Tax Tax
Recovery
Tax Tax Make Tax Available for
Regime Statuses Rates Rules
Rates Transactions

9
 Setup eBiz Tax
Expert Tax Rules
3 Steps
1. Create Tax Determination Set (_DFS)
2. Create Tax Condition Set (_TCS)
3. Create Tax Rule Condition
(_RC)

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 SetupeBiz TaxTax Rules

Tax Tax Tax

Taxes Tax Tax
Regime Statuses Recovery
Rates Rules
Rates

A tax rule is defined by:

• Rule order - Identifies the order in which a rule is evaluated

• Determining factor set - Identifies the factors to consider when

evaluating the tax rule

• Tax condition set - Identifies the conditions (from one or more of

the determining factors) to satisfy in order evaluate a tax
condition set successfully

• Result - The value that results when the tax conditions are
satisfied.
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 SetupeBiz TaxTax Rules

Tax Tax Tax

Taxes Tax Tax
Regime Statuses Recovery
Rates Rules
Rates

Two flows for creating tax

rules:

Guided Tax Rule Entry –

The guided tax rule entry
provides a five-step flow that
lets you build determining
factors and tax conditions as
you create the tax rule

Expert Tax Rule Entry - The

expert tax rule entry
provides a concise, three-
step entry flow that makes
use of determining factor
sets and tax condition sets
that you have previously
defined

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 SetupeBiz TaxDetermining Factors

• Determining factors are the key • Each determining factor class contains
building blocks of the rules one or more determining factor names
that constitute the contents of the
• They are the variables that are passed class
at transaction time or derived from
information on the transaction. • Some determining factor classes also
contain class qualifiers
• They fall into four groups namely (4
P’s): • A class qualifier provides a more
 Party: information about the party specific classification of a determining
such as party classification, factor class, such as accounting
registration, exemptions flexfield segments or the transaction
locations of a geography or party (Ship
 Process: the types of transactions for From, Ship To)
which tax services are being
requested, e.g. Purchases, Sales.
 Product: information on the types of
goods and services on the transaction
 Place: information on the geography
of places associated with the
transactions

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 Determining Factors Commonly Used for PH Tax

Determining Factors = 4Ps

Party

Process
E-Business Product
Tax

Place

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 Determining Factor –
Party

Party

• Registration – Registration Status

eg. VAT Exempt, Zero Rated,
PEZA registered, SBMA

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 Determining Factor –
Product

Product
• Product - Inventory Linked – eg.
Tax Category (VAT or Non-VAT)

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 Determining Factor –
Place

Place

• Geography – eg. Country

(Philippines)

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 Determining Factor –
Process

Process
• Tax Event Class, – eg. Purchase
transaction, Prepayment,
Standard Invoice, Sales
transaction
• Transaction Generic Classification
– eg. Transaction Type (AR)
• Accounting Event – eg Segment
• Transaction Input Factor – eg
User Defined Classification

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 Rules in Detail Example
VAT Rules Setup (PH VAT)

• An example of how tax rules and determination

factor can be modeled in E-Business Tax includes
the following scenario:
 Tax Category will be used to classify items based on tax
category (Capital Goods, Goods, Services)
 3rd parties will be classified if tax exempt, zero rated,
PEZA registered

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Analyze Tax Requirements

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 How do I analyze my tax requirements?

Who am I? What businesses am I involved in?

- What countries do I have operations in? - What do I do? – Transactions

- Which countries am I legally registered in?
- What products do I buy or sell? – Products
- Do I have subsidiaries?
- Do I have other legal establishments? - Who are my customers & suppliers? – 3rd Parties
- Where are they registered?

- What are the 1st party legal entities

in each country I’m registered?

What taxes am I subject to?

- What systems of taxation do I need to account?

- VAT ts
- Sales / Use en
em
- Etc... uir
R eq
x
- Do I do business in any free-tax zones? Ta

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Tax Requirement Spreadsheet

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 VAT PH Setup

Process: Place: Product:

Rule is limited Party: First Party Tax Category
to ‘Purchases’ Supplier is And 3rd Suppliers is Goods
PEZA registered are registered in
PH

5.8.3 Acquisitions of Goods

If… And… Then…

you purchase goods the goods are delivered to the PH No VAT is imposed on the
from PEZA registered acquisition of the goods.
supplier
Tax Status
Rule:
IF Registration Status = PEZA
then, Tax Staus = NonVAT

Tax Rate Rule:

IF Registration Status = PEZA
Then, Tax Rate = Input 0%

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 VAT PH Setup

Process:
Rule is limited
to ‘Purchases’

Equates To:
5.8.3 Acquisitions

Tax Event Class = Purchase Transaction

If…

you purchase goods

from a registered
business in another
Determining Factor
country Operator Value

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 VAT PH Setup

Place:
Supplier is
registered in
another country

Equates To:
5.8.3 Acquisitions

Geography Country <> Philippines

If…

you purchase goods

from a registered
business in another
country Class Qualifier
Determining Factor
Operator Value

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 VAT PH Setup

Product:
Tax Category
must be Goods

Equates To:
5.8.3 Acquisitions

Product Inventory Linked Tax Category = Goods

And…

the goods are

delivered to PH

Class Qualifier
Determining Factor
Operator Value

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 VAT PH Setup

Place:
Equates To:
Goods must be Philippines
Country
Delivered into PH of Ship To =

Country Philippines
And… of Ship From =

the goods are

delivered to PH

Class Qualifier
Determining Factor
Operator Value

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 VAT PH Setup

Equates To:
Purchase Transaction
Tax Event Class =
Registration
Rule:
Bill To Party
Product Tax Category = Goods
=
Country of Ship To Philippines

Country of Ship From = Philippines

Then…
You have to account
for non VAT in the
PH on the acquisition
of the goods abroad.

Class Qualifier
Determining Factor
Operator Value

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 Rules in Detail Example Summary

Determining Determining Class Operator Condition

Factor Factor Class Qualifier
Transaction Transaction Equal To Invoice -
Generic Type Services
Factor

Registration Registration Bill From Equal To PEZA

Status Party registered
Country Geography Ship From Equal To PH
Country Geography Ship To Equal To PH

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 SetupeBiz TaxDetermining Factor Sets
• A determining factor set is a grouping
of determining factors that are
considered together in the course of
evaluating tax rules
• You can reuse a determining factor set
that you create for one rule with
another rule for a different tax or a
different rule type
• NOTE: You can create only one tax
rule for each combination of tax, rule
type, and priority
• Each rule is associated with one and
only one determining factor set
• Factors to consider when creating a
determining factor set:
 Use the minimum number of
determining factors necessary
 Create a determining factor superset
and set required to No if a factor is
not needed for some condition sets
 Use a coding and naming convention
that clearly identifies purpose
 Avoid including a determining factor
that is rendered unnecessary by
another, more specific, determining
factor
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 SetupeBiz TaxCondition Sets

• Tax condition sets

group together the tax
conditions that
constitute a tax rule

• Each tax condition in a

tax condition set
consists of:
 a tax determining
factor
 an operator
 and a value

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Setting Up Tax Rules Components

32
 Objectives

• After completing this module, you should be able

to:
 Discuss the major components of a tax rule
• Tax determining factor set (_TDFS)
• Tax condition set (_TCS)
• Tax Rule Condition (_RC)

 Use these components to build tax rules

33
 Agenda

• Create a Tax Determining Factor Set (_DFS)

• Specify Tax Condition Sets

Rule Tax Regimes Place of Registration Rates

3
Engine Taxes Supply Taxable Basis Recovery

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Tax Rules – Expert Rule Entry

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 Tax Determining Factor Set DEMO

• Create determining factor sets for:

 Geography
 Registration Status
 Product Inventory Linked Tax Category
 User Defined Fiscal Classification
 Transaction Input Factor

36
 Agenda

• Create a Tax Determining Factor Set

• Specify Tax Condition Sets (_TCS)

Rule Tax Regimes Place of Registration Rates

3
Engine Taxes Supply Taxable Basis Recovery

37
 Tax Condition Sets Setup

 Prerequisites:
• Set up determining factor sets
• Set up values for the applicable determining factor classes

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 Tax Condition Sets (_TCS) DEMO

• Tax Condition Sets

 Specify the factors to consider
 Resulting value that must exist for each factor

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Tax Rules – Expert Rule Entry

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Tax Rules – Expert Rule Entry

41
 Agenda

• Create a Tax Determining Factor Set

• Specify Tax Condition Sets
• Create Tax Rule Condition (RC)

Rule Tax Regimes Place of Registration Rates

3
Engine Taxes Supply Taxable Basis Recovery

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E-Business Tax Homepage –
Tax Rules

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Tax Rules – Expert Rule Entry

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Tax Rules – Expert Rule Entry

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Tax Rules – Expert Rule Entry

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Tax Rules – Expert Rule Entry

47
 Objectives

• After completing this module, you should be able

to:
 Understand how to translate tax regulations into a set of
tax rules for tax determination
 Incorporate determining factor sets and tax condition
sets that you have previously defined into a complete
set of tax rules for tax determination
 Set up a tax rule using the Expert Rule Entry

48
 Summary

• In this module, you should have learned how to:

 Understand how to translate tax regulations into a set of
tax rules for tax determination
 Incorporate determining factor sets and tax condition
sets that you have previously defined into a complete
set of tax rules for tax determination
 Set up a tax rule using the Expert Rule Entry

49
 Summary

• In this module, you should have learned how to:

 Discuss the major components of a tax rule
• Regime determination set
• Tax determining factor set
• Tax condition set
 Use these components to build tax rules

50
 Summary

• In this module, you should have learned how to:

 Understand and set up the basic tax configuration:
• Tax Regime
• Tax
• Tax Status
• Tax Rate
• Tax Jurisdiction
 Understand the prerequisite setup tasks in other
applications

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