ERP CLOUD Self-assessed Tax Oracle Financials for EMEA Table of Contents 1. Purpose of the document 2 2. Assumptions and Prerequisites 2 3. Tax Setup 3 4. Subledger Accounting Setup 4 5. Accounting of Transactions with the New Rules 10 1
1. Purpose of the document This document explains accounting aspects of self-assessed tax setup and functionality. Accounts are set up for each tax rate and tax recovery rate per ledger: Tax Recoverable Account Tax Liability Account Tax Expense Account Interim Tax Account By default, these accounts will be used for the accounting of taxable Payables invoice independent of whether the invoice has standard tax or self assessment. Some countries in Europe have a requirement stating that different tax recoverable account should be used when the invoice has self-assessed tax. 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 Enterprise Structure Tax Configuration (Tax Regime, Tax codes, statuses and rates) Oracle Payables System Options Supplier Sites Procurement Business Function Common Options for Payables 2
3. Tax Setup The system uses the accounts for tax rate and tax recovery rate by default for the accounting of Payables invoices with recoverable tax. Example setup screens are shown below: Task name: Manage Tax Rates and Tax Recovery Rates Navigation : Navigator > Setup and Maintenance -> Manage Tax Rates and Tax Recovery Rates 3
4. Subledger Accounting Setup With Standard Accrual method, when a Payables Invoice with recoverable tax is accounted, the default subledger accounting rules will use tax rates accounting setup. If tax recoverable account is defined on tax recovery rate, it will be used, otherwise tax recoverable account on tax rate will be used. This applies to invoices with both supplier-assessed and self-assessed tax. The following images show the accounting distributions of two invoices on the same enterprise having supplier-assessed and self-assessed respectively. You can see that same tax account is used. Supplier-assessed: Self-assessed: 4
In order to make the system use different tax recoverable and tax liability accounts for supplier-assessed and self-assessed tax, you can setup rules that will use a specific natural account value to create accounting for self-assessed tax. With this setup, different natural account values will be used to account for supplier-assessed tax, and self-assessed tax. For supplier-assessed tax the natural account value will come from tax rate or tax recovery rate, and for self-assessed tax, the natural account value will come from the value you provided in a new rule created. In this section you will find the setup details for modifying the Subledger Accounting rules in such a way that the accounting of self-assessed invoice will use a different account in reference to a standard supplier-assessed invoice. Setup steps are as follows: (1) Create new Account Rules (2) Create new SLA Journal Entry Rule Set (3) Create new SLA Accounting Method (4) Modify Ledger Options Following images show sample setup steps in detail: 1. Create new Account Rules We create new account rules that we will use for self assessment. Task name: Manage Account Rules Navigation : Navigator > Setup and Maintenance -> Manage Account Rules 5
2. Create new SLA Journal Entry Rule Set We only want to change journal entry rules that apply to the accounting of self assessed invoices. If you are using a seeded journal entry rule set or if you do want to keep the current one for future reference, duplicate the rule as shown below. You can also update user created journal entry rule sets. Task name: Manage Subledger Journal Entry Rule Sets Navigation : Navigator > Setup and Maintenance -> Manage Subledger Journal Entry Rule Sets 6
Change the Self-Assessed Tax Liability and Self-Assessed Recoverable Tax rules. 7
3. Create new SLA Accounting Method We only want to change the journal entry rule assignment that applies to the accounting of self assessed invoices. If you are using a seeded accounting method or if you do want to keep the current one for future reference, duplicate the accounting method as shown below. You will only need to change your related journal entry rule set assignments. You can also update user created accounting methods. Perform the changes as shown in the example below: Task name: Manage Accounting Methods Navigation : Navigator > Setup and Maintenance -> Manage Accounting Methods 8
4. Modify Ledger Options Change the accounting method to the one you have newly defined. Task name: Specify Ledger Options Navigation : Navigator > Setup and Maintenance -> Specify Ledger Options 9
5. Accounting of Transactions with the New Rules There will be separate accounts for self-assessed tax and supplier assessed tax which is important if these will be declared separately on tax returns. The following image shows the accounting lines created for an invoice with supplier assessed tax: The following image shows the accounting lines created for an invoice with self-assessed tax: 10
11
Oracle Corporation, World Headquarters Worldwide Inquiries 500 Oracle Parkway Phone: +1.650.506.7000 Redwood Shores, CA 94065, USA Fax: +1.650.506.7200 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. 1117 White Paper Title November 2017 12