Practice 1: Default Tax Setup

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1) Create a Location:

1. Navigate to Setup and Maintenance > Setup: Procurement> Enterprise Profile > Manage Locations
2. Create a new Location: Arabia Saudita location

2) Create an item:

1. Navigate to Product Management-> Product Information Management

2. Create item: Tax item 1 with category code: MISC.MISC
Press OK
3) Create a supplier: Tax Supplier 1:
1. Navigate to Procurement > 'Suppliers'
2. Click on 'Create' button

Allow tax applicability should be checked on supplier in order that tax to be calculated as below:
3.Insert address details:

4.Create a Site for this supplier.

5.Create a contact for this supplier.
6. Assign at Ship-to Location and to Bill-to Location the location created above.
This location will appear on the Purchase Order (PO) when we will choose this supplier on the PO.
7. Click on 'Save and Close' button.

4) Create a regime to rate flow:

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Tax Regime
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1. Navigate Setup and Maintenance-> Setup: Procurement > Manage Tax Regimes
2. Click on "Create" button
3. Provide 'Tax Regime Code' = Tax Regime 1
4. Provide 'Name' = Tax Regime 1
5. Set 'Regime Level' = <Country>
6. Provide 'Country Name' = <Country of the ship-to location on PO>. In this case I used Saudi Arabia
7. Provide 'Start Date From' = 01.JAN.2018
<Date effective that will be in the range of the need-by date on PO>

8. Enable the following 'Controls' options

Allow Override and Entry of Inclusive Tax Lines
9. Allow Tax Inclusion: Standard noninclusive handling and Allow tax rounding override
10. Choose the party name as the operating unit or legal entity on the PO. In this case I chosed party name as the
operating unit.
This is very important part from tax setup.
Please see this explanation:

When tax regime is subscribed to Operating unit, then the Use subscription of Legal entity checkbox in Party tax
profile screen of Business Unit tax content should not be Checked.

When tax regime is subscribed to Legal entity, then the Use subscription of Legal entity checkbox in Party tax
profile screen of Business Unit tax content should be checked.

If the checkbox values are not as per the above description, tax will not be calculated.

11. Choose the 'Configuration for Taxes and Rules'

as 'Common Configuration with Party Overrides'

12. Choose the 'Configuration for Product Exceptions'

as ' Common configuration’
13. Effective from: 01-JAN-2018
14. Click on 'Save and Close' button.

Tax
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15. Navigate to Setup and Maintenance-> Manage Taxes
16. Click on "Create" button.
17. Provide 'Tax Regime Code' = TAX REGIME 1
18. Provide 'Configuration Owner' = 'Global Configuration Owner'
19. Provide 'Tax' = Tax 1
20. Provide 'Name' = Tax 1
21. Provide 'Tax Type' = Goods
22. 'Effective From' will default from the tax regime.
Leave it at the same date.

23. Provide 'Geography Type' = COUNTRY

24. Appear like default 'Parent Geography Type' = COUNTRY after choose 'Geography Type'
25. Appear like default 'Parent Geography Name' = Saudi Arabia after choose 'Geography Type'
26. Provide 'Tax Currency' = SAR
27. Ensure 'Applied Amount Handling' is set to 'Recalculated'
Conversion Rate Type=Corporate.
When we will create POs with Currency SAR the amount will be converted in USD using Conversion Rate Type:
Corporate.

28. Set the following 'Controls' options

a. Choose 'Allow Tax Inclusion' to 'Standard noninclusive Handling'
b. 'Allow Override and Entry of Inclusive Tax Lines' to enabled
c. 'Allow Tax Rounding Override' to enabled
d. 'Allow Override for Calculated Tax Lines' to enabled
e. 'Allow Entry of Manual Tax Lines' to enabled
f. Rest of them may be enabled depending on your choice
29. Set the following 'Tax Accounts Controls'
a. Set 'Tax Accounts Creation Method'=Create tax accounts
30. Set the following 'Tax Exceptions/Exemptions Controls'
a. 'Allow Tax Exceptions' to enabled
b. 'Allow Tax Exemptions' to enabled
31. Enable:
-Allow Tax Recovery and insert Primary Recovery Type: Standard
-Allow Tax Recovery Override
32. Click on 'Save' button
DEFINE Tax Recovery Rate
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33. Navigate Tax Rule Defaults > Click on Tax Recovery Rate-> and Click Create Default.
34. Insert all information necessary for create a Tax Recovery Rate.
-Tax Recovery Rate Code: Tax Recovery 1
-Recovery Type: STANDARD
-Rate Percentage =100
-Effective Start Date= Default Start Date: 01.JAN.2018
-Check: Allow At Hoc Rate
35. Save and Close

Tax Status
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36. Navigate Tax Rule Defaults > Click on Tax Status> Click on Create Default
37. Insert all information that are needed for create a tax status:
38. 'Tax Regime Code' = TAX REGIME 1 that appear like default
39. 'Configuration Owner' = 'Global Configuration Owner' that appear like default
40. 'Tax' = TAX 1 that appear like default
41. Provide 'Tax Status Code' = Tax Status 1
42. Provide 'Name' = Tax Status 1
43. ‘Start Date’ will default from the tax regime.
Leave it at the same date.
44. Enable 'Set as Default Tax Status' appear like default.
45. 'Default Start Date'=‘Start Date’
46. Enable the following options under 'Default Controls' region
a. 'Allow Tax Exemptions'
b. 'Allow Tax Exceptions'
c. 'Allow Tax Rate Override'
47. Click on 'Save and Close' button.

Tax Jurisdiction
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48. Navigate Tax Rule Defaults > Click on Tax Jurisdiction-> Create Default
49. Insert all information that are needed for create Tax Jurisdiction
50. Provide 'Tax Jurisdiction Code' = Tax Jurisdiction 1
51. Provide 'Tax Jurisdiction Name' = Tax Jurisdiction 1
52. 'Tax Regime Code' = TAX REGIME 1 appear like default
53. 'Tax' = TAX 1 appear like default
54. Provide 'Geography Type' = COUNTRY
Geography Name: <Geography where the tax will be levied>
In this case I choose: Saudi Arabia
55. Provide ' Start Date' = 1/1/18
<Date effective that will be in the range of the need-by date on PO>.
56. Set the following 'Default Tax Jurisdiction Settings':
a. 'Set as default jurisdiction' is enabled as default.
b. Set 'Default Start Date'
same as the 'Start Date' in step from above

57. Click on 'Save and Close' button:

Tax Rates
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58. Navigate Tax Rule Defaults > Click on Tax Rate->Click on Create Default button.
59. Insert all information that are needed for create a tax rate.
60. 'Tax Regime Code' = TAX REGIME 1 appear like default.
61. 'Configuration Owner' = 'Global Configuration Owner' appear like default.
62. 'Tax' = TAX 1 appear like default
63. Provide 'Tax Status Code' = TAX STATUS 1
64. Provide 'Tax Rate Code' = Rate 1
Tax Rate Type: Percentage
65. Provide 'Rate Percentage ' = 5
66. 'Effective Start Date' will default from the tax regime.
Leave it at the same date.

Click on 'Main Details' icon

67. Set the following in this region.
a. 'Set as Default Rate' option is enabled like default.
c. Enable 'Allow Tax Exemptions' option
d. Enable 'Allow Tax Exceptions' option
e. Enable 'Allow Ad Hoc Rate' option
f. Choose 'Adjustment for Ad Hoc Amounts' to 'Tax Rate'
g. Default Recovery Rate Code: TAX RECOVERY 1

68. Click on ‘Tax Accounts' icon

69. Set the following :
a. Ledger= InFusion Ledger US
Business Unit: DOO Fusion CSPS Business Unit 1

70. Click on 'Save' button.

71. Click on 'Tax Accounts' icon
72. Choose the ledger and click on 'Create' button.
73. Enter the 'Operating Unit' =
<Operating Unit where the PO transaction is happening>
74. Enter the 'Tax Recoverable/Liability' account
= <Choose any account as the Tax Recoverable/Liability account>
Tax Recoverable Account= 3231-10-21010-000-0000-3231

Tax Liability Account= 3251-10-21010-000-0000-3251

Making Tax Live
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75. Navigate Manage Tax > search this tax: TAX 1 and Enable tax for simulation and after that Enable tax for
transactions.
Place of Supply=Ship to, use bill to if shipt to is not found
Tax Applicability: Applicabile
Tax Registration: Ship to, use bill to if shipt to is not found

Save and Close

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5) Create a Po: 312 with setup created at previous steps:

76) Navigate to Purchasing, DOO Fusion CSPS Business Unit 1> Purchase Orders
> Purchase Orders. Create a PO with new location, item and supplier.
77) Go in Manage Tax and see that the new tax defaulted: 5% like Recoverable tax as we made the setup from
above.
Total=10.50, this means that the tax is not included in amount of this PO that is 10, the tax is added to amount of
PO: 10+0.5=10.5.

Unfortunately you cannot have INCLUSIVE TAX on Purchase Order, it is a known limitation of the
product.
But we have an ER open for this request: Bug 22489349 - TAX INCLUDE RULE ERROR IN PO MODULE.