ERP-Tax-Setup-Overview-Doc.pdf

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ERP Cloud Tax Set Up
Saudi Arabia
December, 2017

Program Agenda
Tax Rapid Implementation
Sample Tax Set Up for Saudi Arabia (Basic and Tax Rules)
Sample Tax Box Allocation Set Up For Saudi Arabia
Appendix: Prerequisite Set Up
1
2
3
3
4

Rapid Implementation Tax Configuration
Oracle Financials >Tax
4

Simple Tax Content Experience
Tax Rapid Implementation Upload 1
Define Tax Configuration Workbook Content
Download from Manage Tax Regimes*
*Alternatively, use tax partner, or implementer tax content.
2
Upload Tax Content & Enable Taxes
“Generate CSV File to Upload” button creates files for
upload. On successful completion, enable taxes for
transactions
3
Prepare & Upload Organization-Specific Configuration
Download the Tax Implementation Workbook for Tax Accounts,
Tax Registrations, Business Unit/Legal Entity Subscriptions

Oracle Tax Configuration Workbook
• Basic tax set up, including:
– Tax Regime
– Tax Jurisdiction
– Tax
– Tax Status
– Tax Rate Codes
– Tax Recovery Rate Codes
• Tax Rules, including:
• Tax Rate type rules
• Place of Supply type rules
• Applicability type rules
6

Rapid Implementation Approach
• The information in this presentation relates to Oracle Financials Cloud
• E-Business Suite includes similar feature to enable rapid implementation of
tax configuration content
– Initial and Recurring Data Load for Tax Content Partners: Transaction Tax
Configuration Workbook
• A similar approach to the basic Tax Set up and Tax Rules for Saudi Arabia
can be taken for EBS
Confidential – Oracle Internal/Restricted/Highly Restricted 7
E-Business Suite

Sample Tax Set up
Saudi Arabia
8

Disclaimer: Sample Tax Set Up
• The following slides and the associated spreadsheets provide sample tax
set up content, giving an example of how Oracle Tax could be configured
for Saudi Arabia
• It cannot be relied upon as ‘turnkey’ tax content solution for Saudi Arabia
• While it may serve as an initial implementation foundation or for
educational purposes, businesses must determine if there are specific tax
requirements for their business or industry
9

SA VAT Return
10

Saudi Arabia VAT Return
• Standard rated domestic sales
• Sales to registered customers in other GCC states
• Zero rated domestic sales
• Zero rated exports
• Exempt sales
• Standard rated domestic purchases
• Imports subject to VAT paid at customs
• Imports subject to VAT accounted for through the reverse charge mechanism
• Zero rated purchases
• Exempt purchases
• Corrections from previous period (up to 5,000 SAR)
11

Tax Rules Scope
• Domestic: sales / purchases– Goods & Services
– Standard Rate; Zero Rate and Exempt
• Intra GCC: sales to customers registered in other GCC
– Treated as exports until all GCC countries implemented; need before and after tax rules
• Export: sales outside GCC (Export)
– Need Tax rules for before and after all GCC countries implemented
• Import: Purchases subject to reverse charge (Intra GCC)
– Not applicable until after all GCC implemented
• Import: Purchases from outside GCC
– Applicable before GCC countries implemented, this also applies to imports from UAE
– VAT collected at customs, but also reported in VAT return
• Intra Tax Group: sales and purchases ‘not within scope of tax’ (need to add slides)
– Not included in VAT Return but can be separated out from standard for reporting
12
Saudi Arabia

Tax Rules Use Case Assumptions
• Tax Rules: cover use case where Oracle Supply Chain Cloud >Inventory is implemented
and is in use (Inventory Linked)
• Additional Tax Rules: cover use case where Inventory items are not used on invoice or
where the customer has not implemented Inventory (Non Inventory Linked)
13
Saudi Arabia

Basic Tax Set Up
• Tax Regime = SA VAT TAX
• Tax Jurisdiction = SA VAT TAX
• Tax = SA VAT TAX
• Tax Status = SA VAT TAX
• Tax Rate Codes
– SA VAT TAX STANDARD RATE (5%)
– SA VAT TAX ZERO RATE (0%)
– SA VAT TAX IMPORT RATE (5%)
– SA VAT TAX EXPORT RATE (0%)
– SA VAT TAX EXEMPT RATE (0%)
– SA VAT TAX INTRA GCC RATE (0%)
• Tax Rate Recovery Code = SA VAT STANDARD RECOVERY RATE (100% recovery)
14
Saudi Arabia

Tax Rule Defaults
• Manage Taxes > Tax Rule Defaults
– Applicability = Applicable
– Place of Supply = Ship From
– Registration = Bill From Party
– Tax Calculation Formula = STANDARD_TC
– Tax Basis Formula = STANDARD_TB
– Tax Jurisdiction = SA VAT TAX
– Tax Status = SA VAT TAX
– Tax Rate = SA VAT STANDARD RATE
– Tax Recovery Rate = SA VAT STANDARD RECOVERY RATE
15
Saudi Arabia

Tax Rules – Inventory Linked
Saudi Arabia
16

• Standard Rate:
• Other rates
• Purchases from non-registered
suppliers
• Default tax rate is SA VAT TAX Standard Rate
– No rules required for domestic standard rated sales and
purchases
• Tax Rate rule type: Other tax rates
– Determining factor/Conditions
• Product Inventory Linked - Product Category = category codes
– Zero : goods = SAG0101; services = SAS101
– Exempt: goods = SAG0104; services = SAS102
– Result = specific rate codes: SA VAT TAX ZERO RATE or SA
VAT TAX EXEMPT RATE
• Application rule type (P2P only)
– Determining factor/Condition
• Registration - Registration Status - Ship from not = Registered
– Result = Not Applicable
SA Tax Rules: Domestic Sale/Purchase (Goods and Services)
17

• Sales of goods to customers
registered for VAT in other GCC
country
• Needs to include legal message on
invoice (achieved by using ‘Tax Reporting Type
codes’ on Tax Rate Code)
• Tax Rates
– SA VAT TAX INTRA GCC RATE (0%)
*Applicable after all GCC countries
implemented
• Tax Rate rule type
– Determining factors/Conditions:
• Transaction Generic Class - Transaction Business
Category = Sales Transaction
• Registration - Registration status - bill to party &
bill from party = Registered in GCC
• Geography - Country = for ship from = SA and for
ship to not = SA
• User defined Geography- Economic Region> ship
to = GCC
– Result = rate codes
• SA VAT TAX INTRA GCC RATE
SA Tax Rules: Intra GCC Sales (Applicable after all GCC implemented)
18

• Export of goods and services to
countries outside SA
• Tax Rates
– SA VAT TAX EXPORT ZERO RATE (0%)
* Applies to supplies to GCC countries
before all GCC countries have
implemented VAT
• Rate rule type
• Geography - Country = ship from = SA and ship to
not = SA
– Result = SA VAT TAX EXPORT RATE
SA Tax Rules: Export Sales (*before all GCC implemented)
19

• Export of goods and services to
countries outside GCC
• Tax Rates
– SA VAT TAX EXPORT ZERO RATE(0%)
* Applies to all non GCC countries after
all GCC countries implemented
• Rate rule type
• Geography - Country = ship from = SA and ship to
not = SA
• User defined Geography - Ship to - Economic
Region not = GCC
– Result = SA VAT TAX EXPORT RATE
SA Tax Rules: Export Sales (*after all GCC implemented)
20

• Import from countries outside GCC
•VAT payable on imports into the KSA
will be collected by the Customs
Department at the time of the
import
•SA VAT TAX IMPORT RATE(5%)
* For imports from GCC countries
this rule is applicable before all GCC
countries have implemented
• Rate rule type
Category = Purchase Transaction
• Geography - Country = ship from not = SA and
ship to = SA
– Result = SA VAT TAX IMPORT RATE
SA Tax Rules: Import from Outside SA (*before GCC implemented)
21

• Import from countries outside GCC
•VAT payable on imports into the KSA
will be collected by the Customs
Department at the time of the
import
•SA VAT TAX IMPORT RATE(5%)
* Applicable after all GCC countries
implemented
• Rate rule type
Category = Purchase Transaction
• Geography - Country = ship to = SA and ship from
not = SA
• User defined Geography - Ship to - Economic
Region not = GCC
– Result = SA VAT TAX IMPORT RATE
SA Tax Rules: Imports from Outside GCC (*after GCC implemented)
22

• Purchases subject to reverse charge
(self assessment)
• Must be accounted and declared as
both Input and Output VAT
• Tax Rate = applicable standard rate
– SA VAT STANDARD RATE (5%)
Note: ’Self Assessed’ must be checked on LE
Reporting Unit Tax Profile
* Not applicable until all GCC countries implemented
• Registration rule type
• Transaction Generic Class - Transaction Business Category = Purchase
Transaction
• Registration - Bill From - Registration status = Registered
• Geography - Country = for ship from no = SA and for ship to = SA
• User defined Geography - Ship from - Economic Region = GCC
– Result = bill to party
• Place of Supply rule type
– Determining factors/Conditions
• Transaction Generic Class - Transaction Business Category = Purchase
Transaction
• Registration - Bill From - Registration status = Registered
• Geography - Country = ship from not = SA and ship to = SA
• User defined Geography - Ship from - Economic Region = GCC
Result = Ship to, use bill to if ship to not found
SA Tax Rules: Imports from GCC Countries (*after GCC implemented)
23

Tax Rules – Non Inventory Linked
Saudi Arabia
Confidential – Oracle Internal 24

Tax Rules for Non-Inventory Linked Sales
• Place of Supply in AP transactions is derived from vendor site address and
do not require additional tax rules
• Place of Supply in AR transactions is derived from ‘warehouse’
– Where Inventory Items not used there is no warehouse on the AR transaction
– ‘Place of Supply’ needs to be switched from the default of ‘Ship From’ to ‘Bill From’
• Tax Rate default is SA VAT TAX STANDARD RATE
– Tax rate needs to be switched for Zero Rate; Exempt Rate; Intra EU and Export Sales
• Rules based on use of Tax Classification Codes in AR invoices
– Selected manually on transaction or defaulted from Standard Memo Line
25
Saudi Arabia

Tax Rules Scope - Non-Inventory Linked
• Different tax rules for sales transactions are required where Inventory is
not implemented
• Rules
– Domestic: sales / purchases– Goods & Services
• Standard Rate; Zero Rate and Exempt
– Intra GCC: sales to customers registered in other GCC
• Treated as exports until all GCC countries implemented; need before and after tax rules
– Export: sales outside GCC (Export)
• Need Tax rules for before and after all GCC countries implemented
26
Saudi Arabia

• Non Inventory Linked Sales:
– Domestic sales
• Tax Rate
(Note: Current set up has Default POS = Ship From. For AR
transactions the ‘Ship From’ POS is derived from the
Inventory Org. For non-inventory linked transactions we
need a POS rule to switch place of supply to ‘Bill From’)
• Place of Supply Rule
Category = SALES_TRANSACTION
• Transaction Input Factor – Tax Classification Code
= SA VAT TAX STANDARD RATE or SA VAT TAX ZERO
RATE or SA VAT TAX EXEMPT RATE
– Result = Bill From
• Rate rule
• Transaction Generic Classification> Level 1> Transaction Business Category
= SALES_TRANSACTIONS
• Geography > Bill from> Country = SA
• Geography> Bill to > Country = SA
• Transaction Input Factor = Tax Classification Code = SA VAT TAX STANDARD
RATE or SA VAT TAX ZERO RATE or SA VAT TAX EXEMPT RATE Result = SA
VAT TAX ZERO RATE or SA VAT TAX EXEMPT RATE
27
SA Tax Rules: Non Inventory Linked Domestic Sales

– Intra GCC Sales
• Tax Rate
– SA VAT TAX INTRA GCC (0%)
• Transaction Generic Class - Transaction Business Category =
SALES_TRANSACTION
• Transaction Input Factor – Tax Classification Code = SA INTRA
GCC SALES
• Rate rule
• Transaction Generic Classification> Level 1> Transaction Business Category
= SALES_TRANSACTIONS
• Registration> Bill to> Registration Status = REGISTERED
• Registration> Bill from> Registration Status = REGISTERED
• Geography > Bill from> Country = SA
• Geography> Bill to > Country not = SA
• User defined Geography> Bill to>Economic Regions = GCC
• Transaction Input Factor = Tax Classification Code = SA INTRA GCC SALES
– Result = SA VAT TAX INTRA GCC
28
SA Tax Rules: Non Inventory Linked Intra GCC Sales

– Export of to countries outside GCC
• Tax Rates
* Applicable before all GCC countries implemented
SALES_TRANSACTION
• Transaction Input Factor – Tax Classification Code = SA EXPORT
• Rate rule
– Transaction Generic Classification> Level 1> Transaction Business
Category = SALES_TRANSACTIONS
– Geography > Bill from> Country = SA
– Geography> Bill to > Country not = SA
• Result = SA VAT TAX EXPORT RATE
29
SA Tax Rule: Non Inventory Linked Exports (*before GCC implemented)

– Export of to countries outside GCC
• Tax Rates
* Applicable after all GCC countries implemented
SALES_TRANSACTION
• Transaction Input Factor – Tax Classification Code = SA EXPORTS
• Rate rule
– Transaction Generic Classification> Level 1> Transaction Business
Category = SALES_TRANSACTIONS
– Geography > Bill from> Country = SA
– Geography> Bill to > Country not = SA
– User defined Geography> Bill to>Economic Regions not = GCC
Transaction Input Factor = Tax Classification = SA EXPORTS
• Result = SA VAT TAX EXPORT RATE
30
SA Tax Rule: Non Inventory Linked Exports (*after GCC implemented)

Sample Tax Box Allocation Rules
Saudi Arabia
31

Tax Box Allocation Solution
• Oracle Tax includes a flexible, rules driven tax reporting solution that aids in
the preparation of VAT return
• This solution is not available in E-Business Suite
32

SA VAT Return
33

•Tax Box Allocation Rules
•Tax Box Allocation Processes
•Tax Box Allocation Reports
Fusion Tax Box Allocation Solution
Fusion Tax Box Allocation
Selection
Processes
Reporting
Tax Box
Allocation
Rules
Define Tax
Reporting
Type Codes
Define Tax
Determining
Factor Sets
Define Tax
Condition Sets
Define Tax
Allocation
Rules
Run Selection
Process
Run Tax Box
Allocation
Process
Run Tax Box
Allocation
Listing Report
Run Tax Box
Allocation
Exceptions
Report
Run Tax Box
Return
Preparation
Report
34

Tax Reporting Type Codes
•If Tax Reporting Type Purpose is ‘Tax
Box Allocation’ Tax Box Details region is
displayed
•Assign Tax Box Numbers
Note: GB is used here in the UI as an
example
Fusion Tax Box Allocation – Tax Reporting Type Codes
35

Tax Reporting Type Codes
36
Tax Box Allocation Rules – Saudi Arabia

Tax Determining Factor Sets
• Set Usage = ‘Tax Box Allocation Rule’
•Allows use of specific Determining Factors and
qualifiers
For example:
In SA tax boxes can be allocated based
on the type of transaction line and Tax
Rate Codes on the transaction
Determining Factors:
•Derived = Tax Rate Name
•Transaction Input Factor = Line Class
Note: GB is used here in the UI as an example
Fusion Tax Box Allocation – Determining Factors Sets
37

Tax Determining Factors
38

Tax Condition Sets
• Assign the Determining Factor set to
the Condition set
•Enter the operator and the condition
value
•For example: SA VAT TAX STANDARD
RATE
Note: GB is used here on the UI as an example
Fusion Tax Box Allocation – Condition Sets
39

Tax Condition Sets
40

Tax Box Allocation Rules Set Up UI
•Tax Determining Factors / Condition
Sets
Example: Domestic AR invoices with
standard rate VAT
•Determining Factor Set/conditions:
•Drived = tax rate = SA VAT STANDARD RATE
•Transaction Input Factor > Line Class = INVOICE
Fusion Tax Box Allocation – Tax Box Allocation Rules
41

Tax Box Allocation Rules Set Up UI
• Results = ‘Tax Reporting Type
Codes’ used to assign tax box
numbers
Example AR invoices with standard
rate VAT:
•Determining Factor Set/conditions:
•Drived = tax rate = SA VAT STANDARD RATE
•Transaction Input Factor > Line Class INVOICE
•Result
• Taxable allocated to Box = 0101 SALES STD RATED
DOMESTIC
Fusion Tax Box Allocation Solution
42

Tax Box Allocation Rules
43

Appendix: Prerequisite Set up
Saudi Arabia
44

Tax Set Up Steps
• Document sequencing – see Topical Essay
• Legal Entity Reporting Unit Tax Profile
– Registration Status = Registered
– ’Self Assessed’ must be checked on
– Enable ‘Allocation’ & assign ‘Tax Calendar’
• Tax Regime
– Assign the Legal Entity to the Tax Regime
– Enable 'Use tax reporting configuration'
• Tax - Enable Duplicate Tax Registrations (if VAT Tax Groups required)
45
Saudi Arabia

Tax Set Up Steps
• Tax Zone = GCC – see ’Economic Zones Set Up.ppt’
• Supplier and Customer Tax Registration
• Tax Classification codes > Manage Tax Lookup Codes> Lookup Type = ZX_Output
• Product Category – assign to item
46
Saudi Arabia

Manage Tax Regime>
• Configuration Options> add Legal Entity
• General Controls > enable ‘Use Tax
Reporting Configuration
Tax Regime> Assign LE & Use Tax Reporting Configuration
47

Manage Party Tax Profile> Legal Entity
Reporting Unit > General Tab
• Tax Registration Status = Registered
• Enable ‘Set as Self-assessed (reverse
charge)
Legal Entity Reporting Unit Tax Profile
48

Manage Party Tax Profile> Legal Entity
Reporting Unit > Reporting Configuration
• Tax Registration Status = Registered
• Enable ‘Set as Self-assessed (reverse
charge)
Legal Entity Reporting Unit Tax Profile
49

Manage Taxes> View Tax Registration
Details>Edit>Allow Duplicate Registration
Numbers
Enable Duplicate Tax Registrations
50

Registration Status = Registered
•Manage Tax Registration> Third Party Site
Tax Profile > Tax Registration tab > View
Registration> Edit
•Ensure Tax Regime = SA VAT TAX
Required to make Intra GCC Sales and
Purchase rules work
Third Party Site Tax Profile > Registration Status
51

Manage Tax Lookup Codes
• Lookup Type = ZX_OUTPUT
52
Tax Classification Codes

Assign Tax Classification Codes to Standard
Memo Line code
•Manage Standard memo Lines> search
Memo Line Set (eaxmaple:UK1 BU SET)
•Edit or create new memo line
•Add Tax Classification codes as required
(example Consultant (UK) is set up)
Required if you are using Standard Memo
Lines to default ‘Tax Classification Code’ on a
non-inventory linked AR invoice
Assign Tax Classification Code to Standard Memo Line
53

Assign Product Category to Relevant Items
•User name = Karen Curtis
•Manage Items > search for required item
• Add Catalog *‘SA PROD_CLASS_CLIC
•Add required category
(example set up in item FI90000 = Reduced
Rate item)
Required to make Zero Rate; Reduced Rate
and Exempt Rate rules work
(* - needs to be added)
Assign Product Category to Item
54

Imports - 3 Key Considerations
55

Import VAT at Launch
56

Imports from GCC after Integrated System in Place
57

ERP-Tax-Setup-Overview-Doc.pdf

ERP-Tax-Setup-Overview-Doc.pdf

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