ERP Cloud Tax Set Up Saudi Arabia

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2 ERP Cloud Tax Set Up Saudi Arabia December, 2017

3 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 3

4 Rapid Implementation Tax Configuration Oracle Financials >Tax 4

5 Simple Tax Content Experience Tax Rapid Implementation Upload 1 2 Define Tax Configuration Workbook Content Download from Manage Tax Regimes* *Alternatively, use tax partner, or implementer tax content. 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

6 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

7 Rapid Implementation Approach E-Business Suite 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

8 Sample Tax Set up Saudi Arabia 8

9 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

10 SA VAT Return 10

11 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

12 Tax Rules Scope Saudi Arabia 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

13 Tax Rules Use Case Assumptions Saudi Arabia 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

14 Basic Tax Set Up Saudi Arabia 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

15 Tax Rule Defaults Saudi Arabia 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

16 Tax Rules Inventory Linked Saudi Arabia 16

17 SA Tax Rules: Domestic Sale/Purchase (Goods and Services) Standard Rate: SA VAT TAX STANDARD RATE (5%) Default tax rate is SA VAT TAX Standard Rate No rules required for domestic standard rated sales and purchases Other rates SA VAT TAX ZERO RATE (0%) SA VAT TAX EXEMPT RATE (0%) Purchases from non-registered suppliers 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 17

18 SA Tax Rules: Intra GCC Sales (Applicable after all GCC implemented) 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 18

19 SA Tax Rules: Export Sales (*before all GCC implemented) 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 Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Sales Transaction Geography - Country = ship from = SA and ship to not = SA Result = SA VAT TAX EXPORT RATE 19

20 SA Tax Rules: Export Sales (*after all GCC implemented) 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 Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Sales Transaction 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 20

21 SA Tax Rules: Import from Outside SA (*before GCC implemented) 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%) Rate rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Purchase Transaction Geography - Country = ship from not = SA and ship to = SA Result = SA VAT TAX IMPORT RATE * For imports from GCC countries this rule is applicable before all GCC countries have implemented 21

22 SA Tax Rules: Imports from Outside GCC (*after GCC implemented) 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%) Rate rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Purchase Transaction Geography - Country = ship to = SA and ship from not = SA User defined Geography - Ship to - Economic Region not = GCC * Applicable after all GCC countries implemented Result = SA VAT TAX IMPORT RATE 22

23 SA Tax Rules: Imports from GCC Countries (*after GCC implemented) 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 Determining factors/conditions: 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 23

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

25 Tax Rules for Non-Inventory Linked Sales Saudi Arabia 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

26 Tax Rules Scope - Non-Inventory Linked Saudi Arabia 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

27 SA Tax Rules: Non Inventory Linked Domestic Sales Non Inventory Linked Sales: Domestic sales Tax Rate SA VAT TAX STANDARD RATE (5%) SA VAT TAX ZERO RATE (0%) SA VAT TAX EXEMPT RATE (0%) (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 Determining factors/conditions: Transaction Generic Class - Transaction Business 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 Determining factors/conditions: 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

28 SA Tax Rules: Non Inventory Linked Intra GCC Sales Non Inventory Linked Sales: Intra GCC Sales Tax Rate SA VAT TAX INTRA GCC (0%) Place of Supply Rule Determining factors/conditions: Transaction Generic Class - Transaction Business Category = SALES_TRANSACTION Transaction Input Factor Tax Classification Code = SA INTRA GCC SALES Result = Bill From Rate rule Determining factors/conditions: 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

29 SA Tax Rule: Non Inventory Linked Exports (*before GCC implemented) Non Inventory Linked Sales: Export of to countries outside GCC Tax Rates SA VAT TAX EXPORT ZERO RATE (0%) * Applicable before all GCC countries implemented Place of Supply Rule Determining factors/conditions: Transaction Generic Class - Transaction Business Category = SALES_TRANSACTION Transaction Input Factor Tax Classification Code = SA EXPORT Result = Bill From Rate rule Determining factors/conditions: 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

30 SA Tax Rule: Non Inventory Linked Exports (*after GCC implemented) Non Inventory Linked Sales: Export of to countries outside GCC Tax Rates SA VAT TAX EXPORT ZERO RATE (0%) * Applicable after all GCC countries implemented Place of Supply Rule Determining factors/conditions: Transaction Generic Class - Transaction Business Category = SALES_TRANSACTION Transaction Input Factor Tax Classification Code = SA EXPORTS Result = Bill From Rate rule Determining factors/conditions: 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

31 Sample Tax Box Allocation Rules Saudi Arabia 31

32 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

33 SA VAT Return 33

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

35 Fusion Tax Box Allocation Tax Reporting Type Codes 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 35

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

37 Fusion Tax Box Allocation Determining Factors Sets 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 37

38 Tax Determining Factors Tax Box Allocation Rules Saudi Arabia 38

39 Fusion Tax Box Allocation Condition Sets 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 39

40 Tax Condition Sets Tax Box Allocation Rules Saudi Arabia 40

41 Fusion Tax Box Allocation Tax Box Allocation Rules 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 Note: GB is used here on the UI as an example 41

42 Fusion Tax Box Allocation Solution 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 Note: GB is used here on the UI as an example 42

43 Tax Box Allocation Rules Tax Box Allocation Rules Saudi Arabia 43

44 Appendix: Prerequisite Set up Saudi Arabia 44

45 Tax Set Up Steps Saudi Arabia 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

46 Tax Set Up Steps Saudi Arabia 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

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

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

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

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

51 Third Party Site Tax Profile > Registration Status 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 51

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

53 Assign Tax Classification Code to Standard Memo Line 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 53

54 Assign Product Category to Item 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) 54

55 Imports - 3 Key Considerations 55

56 Import VAT at Launch 56

57 Imports from GCC after Integrated System in Place 57

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