Withholding Tax Reporting for Israel

Transcription

1 ERP CLOUD Withholding Tax Reporting for Israel Oracle Financials for EMEA Table of Contents 1. Purpose of the document Assumptions and Prerequisites Feature Specific Setup... 3 Create a new Withholding Tax Regime... 3 Create new Withholding Taxes Create new Tax Rules... 8 Create a new User-Defined Fiscal classification code... 8 Create a tax applicability rules... 8 Create Configuration Owner Tax Options Update the Business Unit Tax Profile Legal Entity Contacts Setup Supplier Setup Withholding Tax Certificates Setup Transaction entry Invoice creation Payment creation Review the withholding tax lines Receipt creation Reporting Withholding Tax Report for Israel Withholding Tax Reconciliation Report for Israel Withholding Tax File to Tax Authority for Israel Withholding Tax Annual Certificate to Suppliers for Israel Receipt Report for Israel

2 1. Purpose of the document The withholding yearly declaration is a legal requirement in Israel and all legal entities must complete the fiscal template according to specifications of the Israeli fiscal authorities. This template requires specific information regarding withholding tax. The purpose of this document is to explain the implementation and usage guidelines for the following reports: Withholding Tax Report for Israel - lists the total payments before withholding tax, withholding tax deducted from payments to suppliers, and the number of suppliers that had withholding tax deducted. The report displays information in either supplier site detail or summary level. Withholding Tax Reconciliation Report for Israel - lists all payments with withholding tax for suppliers and supplier sites and the tax certificates issued to the suppliers and supplier sites valid for the selected reporting period. Withholding Tax File to Tax Authority for Israel - creates a text file in a predefined format, form 856, for submission to the tax authorities. The file lists the withheld tax amounts for each supplier, supplier personal details and the total amounts on the transactions including payments, withholding tax amounts, and liabilities. Withholding Tax Annual Certificate to Suppliers for Israel - lists the annual summary of all supplier transactions with the entity issuing the certificate. It lists the withholding tax amounts and payments made to each supplier. Receipt Report for Israel lists each receipt, the receipt details and the payer information. The original receipt is printed only once but copies can be printed if required. In case the receipt is in the form of check, the account, bank and check number information is listed. The document explains the pre-requisite setup, important transaction entry aspects, report output details and the business flow. 2. Assumptions and Prerequisites In this document, the following entities are assumed to have already been set up: Data Security Refer to the Fusion Security topical essay available on cloud.oracle.com Geographies Enterprise Structure Suppliers Bank accounts Procurement Business Function Common Options for Oracle Payables Withholding calendars defined as Accounting Calendars It is recommended that the Implementation Project is complete for your organization before entering transactions and using the transaction tax reports. If you require further details, refer to the Analyze and Report section of Oracle Financials Cloud (Get Started) web site. 2

3 3. Feature Specific Setup The section below illustrates only a possible setup of withholding tax and tax rules. You should complete the withholding tax setup according to current tax legislation. Create a new Withholding Tax Regime Navigation: Navigator > Setup and Maintenance Task name: Manage Tax Regimes Open the Manage Tax Regimes UI and switch the radio button to Withholding Tax in the top left hand corner. Click on the create icon to enter a new withholding tax regime. Enter the required details for the new tax regime. Enter the legal entity subscribed to it under Configuration Options. 3

4 Save and close. Create new Withholding Taxes The Withholding Tax reporting feature for Israel enables you to report on withholding amounts. Navigation: Navigator > Setup and Maintenance Task name: Manage Taxes Open the Manage Taxes UI and switch the radio button to Withholding Tax in the top left hand corner. Click on the create icon to enter a new tax. Enter the details for the withholding tax. Do not enable the tax yet. 4

5 Save and create the tax rule defaults. Unless you specify different rules to use a different jurisdiction, status or rate, the default values will apply whenever the tax is applicable. Activate the Tax Jurisdiction type record by highlighting Tax Jurisdiction row in the Indirect Defaults region of the UI and click on the Create Default button. The Create Withholding Tax Jurisdiction UI opens. Enter the details for the tax jurisdiction. Save and close. Activate the Tax Status type and click on the Create Default button. The Create Withholding Tax Status UI opens. Enter details for the tax status. 5

6 Save and close. Activate the Tax Rate type and click on the Create Default button. The Create Withholding Tax Rate UI opens. Enter details for the tax rate. Assign the ledger and account information for the rate. 6

7 Save and close. Now you have your tax defaults defined as below. Click on the Tax Authorities tab and assign the tax authority and site to the withholding tax. Save the tax and enable it for transaction entry by checking the Enable tax for transactions checkbox. Save and close. 7

8 4. Create new Tax Rules The example below is only for demonstration purposes to show you one possible way how you can set up the tax rules for withholding tax and social security. For customers the tax rules and tax determinants have to be based on the current legislation. Create a new User-Defined Fiscal classification code Navigation: Navigator > Setup and Maintenance Task name: Manage Transaction-Based Fiscal Classifications Open the Manage Transaction-Based Fiscal Classifications UI and change the value to User-Defined Fiscal Classification Codes in the top left corner. Click on the create icon. On the Create User-Defined Fiscal Classification Code UI enter a new code that you can use as a tax determinant for the withholding tax rules. Save and close the window. Create a tax applicability rules Navigation: Navigator > Setup and Maintenance Task name: Manage Tax Rules In this setup section shows you step by step how to create a new tax applicability rule. On the Manage Tax Rules UI choose the Withholding Tax radio button and Tax Rule Type Tax Applicability Rules in the top left corner. Click on the create icon. 8

9 Enter details for the new tax rule. Click on Create on the list of values for Tax Determining Factor Set. This opens the Create Tax Determining Factor Set UI. Define a new tax determining factor set based on user-defined fiscal classification code. 9

10 Click on OK. This saves the new record and automatically selects it as the tax determining factor set for the tax rule. Click on the next button. Select Create from the list of values for the Tax Condition Set field. This opens the Create Condition Set UI. Enter a new condition set that uses the new user-defined fiscal classification value created in the previous setup step. Click on OK and the new condition set is automatically saved and selected as the tax condition set for the tax rule. 10

11 Click on the Save and Next button. Enable the new tax rule by checking the Enabled checkbox and click on the Submit button. This completes the creation of the tax applicability rule for the withholding tax. This is the summary of the tax rule entered: 11

12 Create Configuration Owner Tax Options Navigation: Navigator > Setup and Maintenance Task name: Manage Configuration Owner Tax Options On the Manage Configuration Owner Tax Options UI select the Withholding Tax radio button in the top left hand corner. Click on the create icon to enter a new record. Select the first party legal entity as the configuration owner. Enter processing controls for standard invoice and prepayment invoice event class. In Italy the withholding tax has to be created at the time the payment is sent to the supplier so set the tax calculation point as Payment for both event classes. 12

13 Save and close. Update the Business Unit Tax Profile Navigation: Navigator > Setup and Maintenance Task name: Manage Party Tax Profiles Open the Manage Party Tax Profiles UI change the search option to Business Unit Tax Profile. Search for the Business Unit by name. Click on the edit icon to open the Edit Business Unit Tax Profile UI. Enable the Use legal entity withholding tax subscription on the Controls and Defaults tab. Save and close. Once the subscription is enabled you can see the corresponding start date. 13

14 This completes the example of a possible minimum setup for withholding tax for Israel. As mentioned previously, this is only a demonstration 5. Legal Entity Contacts Setup Navigation: Navigator > Setup and Maintenance Task name: Manage Legal Entity The following identification numbers are entered for Israeli legal entities as part of their contact information. This feature setup preserves the steps as entered in R12 EBS release for Israel. Search by Legal Entity. Select the legal entity and the contacts icon will be enabled. Enter a contact with a contact role of Legal contact and set it as the primary contact. The primary Legal contact details will be listed in the withholding tax reports. Enter a contact for the Deduction File Number (TN), listed in the Withholding Tax File to Tax Authority and in the Withholding Tax Annual Certificate to Suppliers Report. Choose role Person who is a contact for an organization, enter TN as the last name and enter the identification number as the first name. 14

15 Enter a contact for the company Tax Registration Number (TM), listed in the Withholding Tax File to Tax Authority and in the Withholding Tax Annual Certificate to Suppliers Report. Choose role Person who is a contact for an organization, enter TM as the last name and enter the identification number as the first name. 6. Supplier Setup Navigation: Navigator > Procurement -> Suppliers Withholding tax reports can list the supplier name, alternate supplier name, supplier site name or alternate supplier name. This is standard information highlighted here for ease of use. Withholding tax application depends on some specific information from the supplier entered in the regional information section of the Supplier UI and in the Supplier Site UI. Withholding tax suppliers can add their organization type, business occupation description, the withholding tax officer number and the withholding tax group in the regional information section of the Supplier UI and Supplier Site UI. Choose Withholding Tax for Israel from the list of value in the Regional Information field for these additional attributes to appear. The information entered is also listed on the withholding tax reports for Israel. Supplier regional information: 15

16 Supplier site regional information: 16

17 7. Withholding Tax Certificates Setup Navigation: Navigator > Setup and Maintenance Task name: Manage Tax Exemptions Open the Manage Tax Exemption UI and choose Third-Party Tax Profile or Third-Party Site Tax Profile from the list in the top left hand corner. Search by the supplier name. Click on the Withholding Exemptions tab to see the existing certificates. Choose Actions and click on create icon to enter a new tax certificate. 17

18 Multiple tax certificates can be associated to a supplier, for a specific tax or a combination of tax attributes. A tax certificate can also be applied to a specific supplier site, for a combination of tax attributes. A valid date range is specified to the tax certificate. 18

19 In this example the tax certificate of 20% is applied to the combination of the listed tax attributes (tax regime, tax, tax rate code) for the given date range for this supplier site. 8. Transaction entry Invoice creation Navigation: Navigator > Payables -> Invoices -> Create Invoice Enter the invoice header and line information. For the User-Defined Fiscal Classification field enter the value created in the setup. In our setup this attribute is used as the tax determinant for withholding tax. Validate and account the invoice. Payment creation Navigation: Navigator > Payables -> Payments -> Create Payment Pay the invoice. In the Regional Information indicate the withholding tax amount the company paid on behalf of the supplier. Choose Payments for Israel from the list of value in the Regional Information field for the withholding amount paid by bank field to appear. The information entered is also listed on the withholding tax reports for Israel. 19

20 Note that the payment amount created is less than the full invoice amount. The difference is the withholding amount. Account the payment. Review the withholding tax lines Re-query the invoice and review the withholding tax lines created. There is one line created for withholding tax at 20% rate, corresponding to the percentage entered in the tax certificate for this supplier site. Receipt creation Navigation: Navigator > Receivables > Accounts Receivable -> Create Receipt 20

21 Create a receipt then manually apply to an invoice. If the receipt is paid by check, enter the bank, branch and account number in the customer region and in the Regional Information, choose Receipt Information for Israel to enter the check number. This information is listed in the Receipt Report for Israel. 9. Reporting Navigation: Navigator > Tools -> Scheduled Processes Withholding Tax Report for Israel Run the Withholding Tax Report for Israel to list all withholding tax transactions during a given period. The report has the following parameters: 21

22 Select the Ledger and the tax year for which you want to run the report. Select the period range within the tax year to be considered. Choose the Legal Entity. You can choose the supplier type to list only foreign suppliers, other suppliers than foreign or all suppliers. Choose supplier or site as the level of information to be applied to this report. Select the name source to be listed in the report: supplier, supplier site, supplier alternate name or supplier site alternate. The report can be run in a detail or a summary level. In the detail level, all transactions with withholding tax are listed. In the summary level, only the total by supplier is listed and the supplier balance is also displayed. The report information can be ordered by the supplier number or supplier taxpayer ID. This is a sample output for the report showing the payment entered earlier. 22

23 This is the same report showing summary level information. In the example above Foreign Supplier for Israel was entered with Deduction Type 08 in the Supplier UI Regional Information. The withheld amount for these types of suppliers is paid by the bank and not by customer itself. The Tax authorities have decided that this amount should be reported by the Bank and by the customer itself. The customer needed to provide only the payment amount but the withholding amount should not be reported. The report totals summarize the listed amounts for gross amount and withholding bank amount. Note the report summary for Withholding Amount is the total withholding amount minus the total Withholding Amount Paid By Bank, following the country requirement. Withholding Tax Reconciliation Report for Israel The Withholding Tax Reconciliation Report for Israel is used to list all payments with withholding tax accounted for a tax period. The report has the following parameters: 23

24 Select the Ledger and the tax year for which you want to run the report. Select the period range within the tax year to be considered. Choose the Legal Entity. You can choose the supplier type to list only foreign suppliers, other suppliers than foreign or all suppliers. Choose supplier or site as the level of information to be applied to this report. Select the name source to be listed in the report: supplier, supplier site, supplier alternate name or supplier site alternate. The report information can be ordered by the supplier number or supplier taxpayer ID. Alternatively you can run the report for a particular supplier and supplier site. This is a sample output for the report showing the payment entered earlier and the available certificates for this period. The example for Internal Supplier for Israel illustrates no tax certificates existing for the supplier. The standard withholding tax rate is applied to the payment. 24

25 The example for Foreign Supplier for Israel illustrates the 20% rate from the certificate applied to the payment. The report output displays totals by Supplier Site, Supplier and Report. Withholding Tax File to Tax Authority for Israel The Withholding Tax File to Tax Authority for Israel is used to list withheld tax amounts for each supplier, supplier personal details and the total amounts on the transactions including payments, withholding tax amounts, and liabilities. It is a text file, form 856, and sent to the tax authorities. The report has the following parameters: 25

26 Select the Ledger and the tax year for which you want to run the report. Select the period range within the tax year to be considered. Choose the Legal Entity. You can choose the supplier type to list only foreign suppliers, other suppliers than foreign or all suppliers. Choose supplier or site as the level of information to be applied to this report. Select the name source to be listed in the report: supplier, supplier site, supplier alternate name or supplier site alternate. Select the value to be listed in the file corresponding to the existence of a manual report and a complementary report, also to what is the payer position in relation to the tax authority. The file follows the pre-defined form 856 to be submitted to the tax authorities. Withholding Tax Annual Certificate to Suppliers for Israel The Withholding Tax Annual Certificate to Suppliers Report for Israel lists the annual summary of all supplier transactions with the entity issuing the certificate. It lists the withholding tax amounts and payments made to the supplier. The report has the following parameters: Select the Ledger and the tax year for which you want to run the report. Select the period range within the tax year to be considered. Choose the Legal Entity. You can choose the supplier type to list only foreign suppliers, other suppliers than foreign or all suppliers. Choose supplier or site as the level of information to be applied to this report. Select the 26

27 name source to be listed in the report: supplier, supplier site, supplier alternate name or supplier site alternate. Alternatively you can run this report for a range of suppliers. This is a sample output for the report showing the summary of withholding transactions. Each supplier is issued a certificate in separate pages. Receipt Report for Israel The Receipt Report for Israel lists each receipt, the receipt details and the payer information. The original receipt is printed only once. After the first printing the receipt is printed as a copy. In case the receipt is in the form of a check, the account, bank, branch and check number information is listed. For the case of an account transfer the account, bank, branch information is listed otherwise the credit card information is listed. The report has the following parameters: 27

28 The check number is retrieved from the receipt Regional Information. The credit card information is printed in a separate region. 28

29 29

30 Oracle Corporation, World Headquarters Worldwide Inquiries 500 Oracle Parkway Phone: Redwood Shores, CA 94065, USA Fax: C O N N E C T W I T H U S blogs.oracle.com/oracle facebook.com/oracle twitter.com/oracle oracle.com Copyright 2017, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only, and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document, and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners. Intel and Intel Xeon are trademarks or registered trademarks of Intel Corporation. All SPARC trademarks are used under license and are trademarks or registered trademarks of SPARC International, Inc. AMD, Opteron, the AMD logo, and the AMD Opteron logo are trademarks or registered trademarks of Advanced Micro Devices. UNIX is a registered trademark of The Open Group White Paper Title October