ERP Cloud Tax Set Up United Arab Emirates

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2 ERP Cloud Tax Set Up United Arab Emirates December, 2017

3 Program Agenda Tax Rapid Implementation Sample Tax Set Up for United Arab Emirates (Basic and Tax Rules) Sample Tax Box Allocation Set Up For United Arab Emirates 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 United Arab Emirates can be taken for EBS 7

8 Oracle Tax Set Up United Arab Emirates 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 United Arab Emirates It cannot be relied upon as turnkey tax content solution for United Arab Emirates 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 United Arab Emirates VAT Return Standard rated supplies per Emirate (Boxes 1A to 1G) Tax Refunds provided to tourists under the Tax Refunds for Tourists Scheme (Box 2) Supplies subject to the reverse charge provisions (Box 3) Zero rated supplies (Box 4) Supplies of goods and services to registered customers in other GCC implementing states (Box 5) Exempt supplies (Box 6) Import VAT accounted through UAE customs (Box 7) Amendments or corrections to output figures (Box 8) Totals (Box 9) Standard rated expenses (Box 10) Supplies subject to reverse charge provision (Box 11) Totals (Box 12) Total value of due tax for the period (Box 13) Total value of recoverable tax for the period (Box 14) Net Vat due (or reclaimed) for the period (Box 15) If a VAT refund is due, do you wish to request that the refund is paid to you? (Box 16) 10

11 Tax Rules Scope United Arab Emirates Domestic: sales / purchases Goods & Services Includes Standard Rate; Zero Rate and Exempt goods and services Standard Rated sales (output VAT) reported by Emirate (Box 1A to box 1G) Intra GCC: sales to customers registered in other GCC Outside Scope of VAT for UAE, however needs to be reported in VAT return (box 3) Export: sales outside GCC (Export) Place of supply is UAE, however Zero Rated and reported in VAT return Import: Purchases subject to reverse charge Intra GCC purchases and imports from foreign suppliers Intra Tax Group: sales and purchases not within scope of tax Not included in VAT Return but can be separated out for reporting and reconciliation purposes in VAT Registers by using approach highlighted in the VAT registers and Document Sequencing solution (See Topical Essay) 11

12 Basic Tax Set Up United Arab Emirates Tax Regime = AE VAT TAX Tax Jurisdiction = AE VAT TAX Tax = AE VAT TAX Tax Status = AE VAT TAX Tax Rate Codes AEAZ VAT TAX STANDARD RATE (5%) (Standard Rate for supplies per Emirate: prefix AEAZ; AEDU; AESH; AEAJ; AEUQ; AERK; AEFY) AE VAT TAX STANDARD RATE (5%) (for Standard Rate Expenses (AP)) AE VAT TAX ZERO RATE (0%) AE VAT TAX EXPORT RATE (0%) AE VAT TAX EXEMPT RATE (0%) AE VAT TAX IMPORT RATE (5%) AE VAT TAX INTRA GCC RATE (0%) Tax Rate Recovery Code = UAE VAT STANDARD RECOVERY RATE (100% recovery) 12

13 Tax Rule Defaults United Arab Emirates 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 = AE VAT TAX Tax Status = AE VAT TAX Tax Rate = AE VAT STANDARD RATE Tax Recovery Rate = AE VAT STANDARD RECOVERY RATE 13

14 UAE Tax Rules: Domestic Sale/Purchase Standard Rate: AE VAT TAX STANDARD RATE (5%) Need to report standard rated supplies by Emirate Other tax rates: for specific goods/services AE VAT TAX ZERO RATE (0%) AE VAT TAX EXEMPT RATE (0%) (not reported by Emirate) Purchases from non-registered suppliers Default tax rate is AE VAT TAX STANDARD RATE No rules needed for AP as domestic expenses not split by Emirate For AR transactions, Tax Rate rule type is required: Determining factor/conditions Transaction Generic Class - Transaction Business Category = Sales Transaction Geography Emirate Ship From = دبي (for example Dubai) (separate condition set for each emirate) Result = AEDU VAT TAX STANDARD RATE (separate tax rate code per Emirate) Tax Rate rule type: Other tax rates Determining factor/conditions Product Inventory Linked - Product Category = category codes Zero : goods = AEG0101; services = AES101 Exempt: goods = AEG0104; services = AES102 Result = specific rate codes: AE VAT TAX ZERO RATE or AE VAT TAX EXEMPT RATE Application rule type (P2P only) Determining factor/condition Registration - Registration Status - Ship from Not = Registered Geography - Country = ship from = UAE and ship to = UAE Result = Not Applicable 14

15 UAE Tax Rules: Domestic Intra Tax Group Sale/Purchase Standard Rate: No tax is applicable Intra Tax Group sales and purchases within UAE are not subject to VAT Application rule type (Receivables) Determining factor/condition Transaction Generic Class - Transaction Business Category = Sales Transaction Transaction Generic Class Level 1 - Transaction Type= Intra-Group Geography - Country = ship from = UAE and ship to = UAE Result = Not Applicable Application rule type (Payables) Determining factor/condition Transaction Generic Class - Transaction Business Category = Purchase Transaction Registration - Registration status - Bill From = Intra Group Geography - Country = ship from = UAE and ship to = UAE Result = Not Applicable 15

16 UAE Tax Rules: Intra GCC Sales Sales of goods to customers registered for VAT in other GCC country Needs to include legal message on invoice Tax Rates AE VAT TAX INTRA GCC RATE (0%) Tax Rate rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Sales Transaction Registration - Registration status - bill to party = Registered Geography - Country = for ship from = UAE and for ship to not = UAE User defined Geography- Economic Region> ship to = GCC Result = rate codes AE VAT TAX INTRA GCC RATE 16

17 UAE Tax Rules: Export Sales Export of goods and services to countries outside GCC Tax Rates AE VAT TAX EXPORT RATE (0%) Rate rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Sales Transaction Geography - Country = ship from = UAE and ship to Not = UAE User defined Geography - Ship to - Economic Region Not = GCC Result = AE VAT TAX EXPORT RATE 17

18 UAE Tax Rules: Imports from Outside UAE Import from countries outside GCC Import of goods: place of supply is the UAE The recipient accounts for VAT under the reverse charge mechanism Reported separately in VAT return Tax Rate AE VAT TAX IMPORT RATE (5%) Note: Self Assessed must be checked on LE Reporting Unit Tax Profile Rate rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Purchase Transaction Geography - Country = ship to = UAE and ship from not = UAE User defined Geography - Ship to - Economic Region Not = GCC Result = AE VAT TAX IMPORT RATE Registration rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Purchase Transaction Registration - Bill From Party - Registration status = Not Registered Geography - Country = for ship from not = UAE and for ship to = UAE User defined Geography - Ship from - Economic Region not = GCC Result = Bill to Party Place of Supply rule type Determining factors/conditions Transaction Generic Class - Transaction Business Category = Purchase Transaction Geography - Country = ship from not = UAE and ship to = UAE User defined Geography - Ship from - Economic Region not = GCC Result = Ship to, use bill to if ship to not found 18

19 UAE: Imports from GCC Countries Imports from implementing GCC countries Purchases subject to reverse charge (self assessment) Must be accounted and declared as both Input and Output VAT Tax Rate = applicable standard rate AE VAT STANDARD RATE (5%) Note: Self Assessed must be checked on LE Reporting Unit Tax Profile Registration rule type Determining factors/conditions: Transaction Generic Class - Transaction Business Category = Purchase Transaction Registration - Bill From Party - Registration status = Registered Geography - Country = for ship from not = UAE and for ship to = UAE 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 Party- Registration status = Registered Geography - Country = ship from not = UAE and ship to = UAE User defined Geography - Ship from - Economic Region = GCC Result = Ship to, use bill to if ship to not found 19

20 Tax Rules Non Inventory Linked United Arab Emirates 20

21 Tax Rules Scope - Non-Inventory Linked United Arab Emirates Different tax rules for sales transactions are required where Inventory is not implemented Scope of rules affected 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 Intra Group Sales 21

22 Tax Rules for Non-Inventory Linked Sales United Arab Emirates Place of Supply in AR transactions derived from warehouse Place of Supply needs to be switched from the default of Ship From to Bill From Tax Rate default is AE VAT TAX STANDARD RATE Tax rate needs to be switched for each Emirate Standard Rate tax rate code and the Intra EU; Exempt sales and Export Sales tax rate codes Rules based on use of Tax Classification Codes in AR invoices Tax Classification Codes can be entered manually on AR invoice lines or defaulted from a Standard Memo Line 22

23 UAE Tax Rules: Non Inventory Linked Domestic Sales Non Inventory Linked Sales: Domestic sales Standard Rate Tax Rate (5%) AEAZ VAT TAX STANDARD RATE AEDU VAT TAX STANDARD RATE AESH VAT TAX STANDARD RATE AEAJ VAT TAX STANDARD RATE AEUQ VAT TAX STANDARD RATE AERK VAT TAX STANDARD RATE AEFY VAT TAX STANDARD 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 Determining factors/conditions: Transaction Generic Class - Transaction Business Category = SALES_TRANSACTION Geography Emirate Bill From = دبي (for example Dubai) Transaction Input Factor Tax Classification Code = AEDU VAT TAX STANDARD RATE etc. Result = Bill From Tax Rate rule Determining factors/conditions: Transaction Generic Classification> Level 1> Transaction Business Category = SALES_TRANSACTIONS Geography Emirate Bill From = دبي (for example Dubai) Transaction Input Factor = Tax Classification Code = AEAZ VAT TAX STANDARD RATE etc. Result = AEAZ VAT TAX STANDARD RATE and so on 23

24 UAE Tax Rules: Non Inventory Linked Domestic Sales Non Inventory Linked Sales: Domestic sales Zero & Exempt products/services Tax Rate AE VAT TAX ZERO RATE (0%) AE 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 = AE VAT TAX ZERO RATE or AE VAT TAX EXEMPT RATE Result = Bill From Tax Rate rule Determining factors/conditions: Transaction Generic Classification> Level 1> Transaction Business Category = SALES_TRANSACTIONS Transaction Input Factor = Tax Classification Code = AE VAT TAX ZERO RATE or AE VAT TAX EXEMPT RATE Result = AE VAT TAX ZERO RATE or AE VAT TAX EXEMPT RATE 24

25 UAE Tax Rules: Non Inventory Linked Intra GCC Sales Non Inventory Linked Sales: Intra GCC Sales Tax Rate AE VAT TAX INTRA GCC RATE (0%) Place of Supply Rule Determining factors/conditions: Transaction Generic Class - Transaction Business Category = SALES_TRANSACTION Transaction Input Factor Tax Classification Code = AE VAT TAX INTRA GCC RATE Result = Bill From Rate rule Determining factors/conditions: Transaction Generic Classification> Level 1> Transaction Business Category = SALES_TRANSACTIONS Registration> Bill to Party> Registration Status = REGISTERED Geography > Bill from> Country = UAE Geography> Bill to > Country not = UAE User defined Geography> Bill to>economic Regions = GCC Transaction Input Factor = Tax Classification Code = AE VAT TAX INTRA GCC RATE Result = AE VAT TAX INTRA GCC RATE 25

26 UAE Tax Rule: Non Inventory Linked Exports Non Inventory Linked Sales: Export of to countries outside GCC Tax Rates AE VAT TAX EXPORT RATE (0%) Place of Supply Rule Determining factors/conditions: Transaction Generic Class - Transaction Business Category = SALES_TRANSACTION Transaction Input Factor Tax Classification Code = AE VAT TAX EXPORT RATE Result = Bill From Rate rule Determining factors/conditions: Transaction Generic Classification> Level 1> Transaction Business Category = SALES_TRANSACTIONS Geography > Bill from> Country = UAE Geography> Bill to > Country not = UAE User defined Geography> Bill to>economic Regions not = GCC Transaction Input Factor = Tax Classification = AE VAT TAX EXPORT RATE Result = AE VAT TAX EXPORT RATE 26

27 UAE Tax Rules: Domestic Intra Tax Group Sale/Purchase Standard Rate: No tax is applicable Intra Tax Group sales and purchases within UAE are not subject to VAT Application rule type (Receivables) Determining factor/condition Transaction Generic Class - Transaction Business Category = Sales Transaction Geography - Country = Bill from = UAE and Bill to = UAE Result = Not Applicable 27

28 Sample Tax Box Allocation Rules United Arab Emirates 28

29 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 29

30 United Arab Emirates VAT Return Standard rated supplies per Emirate (Boxes 1A to 1G) Tax Refunds provided to tourists under the Tax Refunds for Tourists Scheme (Box 2) Supplies subject to the reverse charge provisions (Box 3) Zero rated supplies (Box 4) Supplies of goods and services to registered customers in other GCC implementing states (Box 5) Exempt supplies (Box 6) Import VAT accounted through UAE customs (Box 7) Amendments or corrections to output figures (Box 8) Totals (Box 9) Standard rated expenses (Box 10) Supplies subject to reverse charge provision (Box 11) Totals (Box 12) Total value of due tax for the period (Box 13) Total value of recoverable tax for the period (Box 14) Net Vat due (or reclaimed) for the period (Box 15) If a VAT refund is due, do you wish to request that the refund is paid to you? (Box 16) 30

31 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 31

32 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 32

33 Tax Reporting Type Codes 33

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

34 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 34

35 Tax Determining Factors Tax Box Allocation Rules United Arab Emirates 35

36 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: AEAZ VAT TAX STANDARD RATE Note: GB is used here on the UI as an example 36

37 Tax Condition Sets Tax Box Allocation Rules United Arab Emirates 37

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 in

38 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 in Abu Dabi Determining Factor Set/conditions: Drived = tax rate = AEAZ VAT TAX STANDARD RATE Transaction Input Factor > Line Class = INVOICE Note: GB is used here on the UI as an example 38

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

39 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 = 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 39

40 Tax Box Allocation Rules Tax Box Allocation Rules UAE 40

41 Appendix: Prerequisite Set up United Arab Emirates 41

42 Tax Set Up Steps United Arab Emirates 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) 42

43 Tax Set Up Steps United Arab Emirates 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 assigned to item 43

44 Tax Regime> Assign LE & Use Tax Reporting Configuration Manage Tax Regime> Configuration Options> add Legal Entity General Controls > enable Use Tax Reporting Configuration 44

45 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) 45

46 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) 46

47 Enable Duplicate Tax Registrations Manage Taxes> View Tax Registration Details>Edit>Allow Duplicate Registration Numbers 47

48 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 48

49 Tax Classification Codes Manage Tax Lookup Codes Lookup Type = ZX_OUTPUT 49

50 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 50

Assign Product Category to Item Assign Product Category to Relevant Items User name = Karen Curtis Manage Items > search for required item Add Catalog SA

51 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 51

52 52

ERP Cloud Tax Set Up Saudi Arabia

ERP Cloud Tax Set Up Saudi Arabia December, 2017 Program Agenda 1 2 3 4 Tax Rapid Implementation Sample Tax Set Up for Saudi Arabia (Basic and Tax Rules) Sample Tax Box Allocation Set Up For Saudi Arabia