Implementing Fusion Taxes-The Rapid

Implementation Way
Shilpa Koganti

MARCH 7, 2016
DELOITTE
[Company address]
IMPLEMENTING FUSION TAXES – USING RAPID IMPLEMENTATION SPREADSHEET S

Oracle Fusion Tax provides a single point solution for global transaction tax needs by uniformly
delivering transaction tax services to all Oracle Fusion application business flows through one
application interface. Oracle Fusion Tax acts as a single source of truth for tax configuration,
reporting and a single integration point for third-party transaction tax products and services.

This document helps a reader in gaining an overview in configuring taxes using rapid
implementation spreadsheets made available as part of Oracle Cloud configurations. This document
aims to demonstrate a case study where all domestic transactions are taxable.

INTRODUCTION TO FUSION TAXES:

Using Fusion taxes organizations can model taxes according to the local and international tax
requirements:

• Both simple and complex country-specific tax legislation.

• Cross-border transactions, including exports and Intra-European Community transactions.
• Intercompany transactions.
• Local compliance requirements for recording and reporting.
• Continual changes to tax legislation, such as new taxes, local law changes, special tax rates,
and special exceptions for products and customers.

You can manage the entire configuration and maintenance of tax content from the one Oracle
Fusion Tax application. Using one application ensures a uniform tax setup across applications, with
a centrally managed system of automated tax services and control over manual intervention and
update.

ASSUMPTIONS:

1) This white paper addresses purely those configurations performed in Fusion Tax application
and those setups in sub-ledgers directly related to integration with tax application.

2) It should be noted that this white paper does not address the setup steps involved in
configuring Implementation project, Organization structure and other setups like Chart of
Accounts, Calendar, and Ledgers. It is assumed that the basic configurations in General
Ledger and other sub-ledger applications in which transaction taxes are to be calculated are
already setup.

GLOSSARY

Global configuration owner: An abstract owner which is used to define the owner of content that
can be shared by any business units and first party legal entities.
Tax configuration owner: A business unit, legal entity, or the global configuration owner that owns
the data.

Configuration owner tax options let a configuration owner update default tax options on
transactions that belong to a specific application event class. The values provided at this level has
overriding effect over the values entered elsewhere relating to regime determination method, tax
applicability/calculation, tax tolerances and controls, etc.,

Tax Regime is a set of laws and regulations that determines the treatment of one or more taxes
e.g., the US Sales and Use tax regime in the US includes regulations for the sales tax.

Tax Determining Factors the factors that participate in determining the tax on an individual
transaction. Ex: geography, fiscal classification, etc.

Tax Condition Sets consists a group of conditions that are used in building a tax rule.

Tax Status: A tax status is the taxable nature of a product in the context of a transaction and
specific tax on the transaction.

Tax Jurisdiction: A tax jurisdiction specifies the association between a tax and a geographic
location.

FUSION TAX ARCHITECTURE OVERVIEW

Oracle Fusion Tax Architecture has a centralized data model providing a single source of truth of
transaction tax information and is comprised of the following five tiers:
  Foundation Tax Configurations
 Tax Determining Factors
 Advanced Tax Configuration
 Services
 Tax Management

A brief overview of the five tiers of the Fusion Tax Architecture is provided below-

FOUNDATION TAX CONFIGURATION TIER

Foundation tax configuration tier represents the tax setup data that are configured for each tax
regime and tax that an organization implementing Oracle ERP is subject to in its normal course of
business. The detailed list of setups forming part of this tier are tax regime, tax, tax statuses, tax
rates, tax jurisdictions and tax recovery rates.

TAX DETERMINING FACTORS TIER

Tax Determining factors tier identifies the factors that participate in determining the tax on an
individual transaction. Tax determining factors can be classified into 4 P's which are the Parties
involved in a transaction, the Products transacted, the Places involved in a transaction, and the
Process or kind of transaction that takes place. Note that these tax determining factors are the
building blocks for tax rules.

ADVANCED TAX CONFIGURATION TIER

Advanced tax configuration tier consists of the defaults and tax rules used to determine and
calculate tax on a transactions. Create tax rules by translating the tax regulations of a tax authority
into determining factors and tax conditions.

For each transaction line, the tax determination process uses the default tax rules and special tax
rules(if any created) to determine the applicable tax regimes and taxes, place of supply, tax
registration, tax rate and taxable basis to use in tax calculation, and any tax recovery to the extent
applicable.

SERVICES TIER
Services tier consists of calculating tax amounts, determining appropriate tax recovery amounts,
exporting and importing designated tax setups, and integrating with third-party vendor products for
transaction tax data upload, calculation, and reporting considerations where elected.

TAX MANAGEMENT TIER

Tax Management Tier maintains all of the tax information pertaining to each transaction for use in
tax reporting.
SETTING UP FOUNDATION TAX CONFIGURATION

Foundation tax configuration refers to a set of tax setup components that are required at minimum
to facilitate the calculation of taxes on transactions. At transaction time, Oracle Fusion Tax uses the
foundation tax configuration to determine the taxes that apply to each transaction and to calculate
the tax amounts.

Foundation tax configuration comprises of the following components as shown in the below
picture:

 Tax configuration owners and options

 Tax Regime
 Tax
 Tax Jurisdiction
 Tax Status
 Tax Rates

The below picture shows the task list to manually setup foundation tax configurations
CONFIGURATION OWNER TAX OPTIONS

Configuration owner tax options let a configuration owner update default tax options on
transactions that belong to a specific application event class. At transaction time, Oracle Fusion Tax
uses the tax option settings of the configuration owner and application event class instead of the
default settings.

The values provided for the combination of a configuration owner and an event class has overriding
effect over the values entered for these fields elsewhere:

 Regime determination method,

 Switching on or off of the flag ‘Tax Applicable’
 Providing tax tolerances in terms of percentages and/or amount ranges
 Allowing entry and/or recalculation of manual tax lines
 Allowing override of calculated tax lines
SETUP TAX REGIME
Tax Regime is a set of laws and regulations that determines the treatment of one or more taxes e.g.,
the US Sales and Use tax regime in the US includes regulations for the sales tax. The tax engine uses
the tax regime to determine which countries taxes could be applicable and therefore identify all
taxes that could possibly apply to a transactions.

Set up tax regimes in each country and geographical region where you do business and where a
separate tax applies.

A tax regime associates a common set of:

 Default information
 Regulations
 Fiscal classification
 Registrations, to one or more taxes (optionally)

For example, in the US create a US Sales and Use Tax regime to group taxes levied at the state,
county, and district levels.

Using the UI shown in the below picture tax regimes can be manually configured. The Manage Tax
Regimes UI can be used to query existing regimes and/or to create new regimes either manually or
by using rapid implementation spreadsheet template. Associate the regime to an LE and/or OU
using ‘configuration owner and service subscriptions’ section.

TAX REGIME HEADER

TAX REGIME CREATION USING THE RAPID IMPLEMENTATION SPREADSHEET TEMPLATE:

Tax setup such as tax regimes and regime subscriptions may be driven by offline spreadsheet
preparation and subsequent spreadsheet upload. This can be achieved by using the Tax Regimes
and Regime Subscription Rapid Implementation Templates to populate the tax regime abs regime
subscription configurations and upload the same into Oracle Fusion Tax.

The required transaction tax configurations can be identified and entered offline in the applicable
spreadsheet templates without the need for any Oracle Fusion Applications access during the time
of spreadsheet preparation.

Note that the following are the limitations while using a rapid implementation template to
configure tax regimes:

1. Only one tax regime per country per tax type is allowed with the tax requirements administered
by a government tax authority for the entire country

2. Regime level is country

3. Tax regime cannot be defined to group other regimes

4. Define controls and defaults at lower levels within the Rapid Implementation configuration

PROCESS STEPS TO CREATE TAX REGIME VIA RAPID IMPLEMENTATION SPREADSHEET TEMPLATE:

1) Access the ‘Manage Tax Regimes’ rapid implementation spreadsheet template by clicking on
the ‘go to task’ icon against the option ‘Manage Tax Regimes’

2) From the available options, click on the ‘Download Tax Configuration Workbook’ option
 3) On performing the action mentioned in step 2 the below window opens allowing the user to
either open or save the ‘TaxRegimesTemplate.xlsm’. Use the default value of ‘Save File’ and
click on ‘OK’ to save the file to your local directory.

The rapid implementation spreadsheet template for tax regimes ‘TaxRegimesTemplate.xlsm’

consists of two sheets, one providing the instructions on using this spreadsheet template and the
second sheet named ‘Manage Tax Regimes’ would be used to populate the ‘Tax Regime’
information that would be uploaded using this rapid implementation spreadsheet template.

Below picture shows the ‘Manage Tax Regimes’ worksheet using which multiple ‘tax regimes’ can
be loaded into Fusion Tax application.
Once the user is done with populating the regime information he is now ready to generate the .CSV
file which would in turn be used to upload into the system.

Once the .CSV file is generated the user is provided with an option to save the file. Give an
appropriate name to the file and save it locally for future upload to create a tax regime.
User would receive a message confirming the creation of the CSV file.

Once the CSV file has been generated, log back in to the fusion environment and go to the ‘Manage
Tax Regimes’ page under the ‘Define Taxes for Rapid Implementation’ task list.

Once on ‘Manage Tax Regimes’ page, choose the options ‘Upload Tax Regimes from a Spreadsheet’
and ‘Upload Regime Subscriptions from a Spreadsheet’ from the ‘Rapid Setup Spreadsheets’ list to
load regime and regime subscriptions respectively. This would open the window ‘Upload Tax
Regimes from a Spreadsheet’. Browse and upload the .csv file created in earlier steps and click on
option ‘Upload’
Information of the process number would be displayed on the screen as seen below:

To view the status of the action performed click on the tab ‘Manage Upload and Download
Processes’. We can see the status of the process ‘Upload Tax Configuration from a Spreadsheet’ for
the process ID 14809 as ‘Succeeded’
Verification of the uploaded data:

User can verify and update the uploaded data after querying the same on the ‘Manage Tax -
Regimes’ page. We can see that the US_SALES_TAX regime has been created with a start date of
1/1/2015.

Once the tax regime information uploaded is verified, update the regime setup information to reflect the business
requirements in the defaults and controls section.
SETUP TAXES
Taxes are charges levied by the tax authorities on the transactions undertaken within the tax jurisdiction and
attracting the provisions of the tax law unless specifically exempted from tax payment. For example for a sales
transaction undertaken in the US, sales tax defined at state, city and country levels would be applicable based on
the exact jurisdiction in which transaction has taken place.

Configuration of taxes, similar to the configuration of the tax regimes, may be driven by offline spreadsheet
preparation and subsequent spreadsheet upload. Note the following key items when trying to upload taxes data
using rapid implementation spreadsheet:

1. Applicable is the default for the applicability of the tax. You can only modify this value in the user
interface.
2. Tax is not enabled for simulation or transactions when it is created from a spreadsheet upload. You can
only enable the tax from the Edit Tax user interface.
3. A pre-requisites for Loading Tax Data is that all the required master geography references in the Oracle
Fusion Trading Community Model geographies already exist.
a. All countries should already exist in the Trading Community Model geographies upfront.
b. For those countries in which transaction taxes may be applied at a level lower than the country
level, for example the United States and Canada, geography-level references must exist for all
relevant geographies below the country level such as the state, county, and city levels for the
United States and such as the province level for Canada.

Below screenshot depicts the create tax page accessible via manage taxes UI and facilitates manual creation of tax
configuration under an already defined tax regime.
PROCESS STEPS TO CREATE TAX CONFIGURATION VIA RAPID IMPLEMENTATION SPREADSHEET
TEMPLATE:
1) On the Manage Taxes page, click Download Taxes Spreadsheet Template in the Rapid Setup Spreadsheets
list in the ‘Search Results: Transaction Taxes’ table.

2) Prepare your tax configuration using the Manage Taxes spreadsheet. Complete the fields as shown in this
table:

Field Name Value

Tax Regime Code US_SALES_TAX
Country United States
Start Date 2015/01/01
End Date Blank
3) Save the spreadsheet data file as a comma separated values (CSV) file using the ‘Generate CSV’ macro in
the Instructions tab
4) On the Manage Taxes page click ‘Upload Taxes from a Spreadsheet’ option in the Rapid Setup
Spreadsheets list in the ‘Search Results: Transaction Taxes’ table
5) This would open the window ‘Upload Taxes from a Spreadsheet’. Browse and upload the Comma
Separated Values spreadsheet (CSV) file created in earlier steps and click on option ‘Upload’
6) Verify if the ‘Upload Tax Configuration from a Spreadsheet’ process is shown as completed with the status
‘Succeeded’ in the Monitor Upload and Download Processes tab. Else, verify the process log to make the
needed edits before uploading the taxes spreadsheet again into the system.

Below are some of the values on the taxes page that can be uploaded via a rapid implementation template:

It should be noted that the recoverable nature of taxes setup in fusion taxes is set at the Tax level at the
highest level.
CONFIGURING TAX STATUS, TAX JURISDICTION AND TAX RATES:
A tax status is the taxable nature of a product in the context of a transaction and specific tax on the transaction.
You define a tax status to group one or more tax rates that are the same or similar in nature.

For example, for US Sales and Use Tax create a tax status for standard and exempt. For the UK set up separate tax
statuses for standard, zero, exempt, and reduced rates.

A tax jurisdiction specifies the association between a tax and a geographic location. At transaction time, Oracle
Fusion Tax derives the jurisdiction or jurisdictions that apply to a transaction line based on the place of supply. You
must set up at least one tax jurisdiction for a tax before you can make the tax available on transactions.

For example, for US Sales and Use Tax create a county jurisdiction for every county in the parent geography type of
State and in the parent geography name of California. For the UK, create a tax jurisdiction for the country of United
Kingdom.

Set up tax rates for your tax statuses and tax jurisdictions. For tax statuses, set up a tax rate record for each
applicable tax rate that a tax status identifies. For tax jurisdictions, set up tax rate records to identify the tax rate
variations for a specific tax within different tax jurisdictions. For example, a city sales tax for a state or province
may contain separate city tax jurisdictions, each with a specific rate for the same tax.

Tax setup such as tax statuses, tax jurisdictions, and tax rates may be driven by offline spreadsheet
preparation i.e., using the Tax Rates Template and subsequent spreadsheet upload.

Note the following key items while loading the tax status, jurisdictions and tax rates using a rapid
implementation spreadsheet:

1. Upload and download actions on the Manage Tax Rates and Tax Recovery Rates task include tax rates, tax
recovery rates, tax rate tax accounts, and tax recovery rate tax accounts.

2. Tax statuses, tax jurisdictions, and tax rates can be created within the same upload.

3. Tax rates for tax statuses must be set up, but tax jurisdictions are optional for tax rates. For tax statuses,
you set up tax rate records for each applicable tax rate that a tax status identifies.

4. Effective start dates and effective end dates are applicable to tax statuses, tax jurisdictions, tax rates, and
default rate period effectivity.

5. Tax classification codes are created for input, output, and expense classifications by default and cannot be
selected in the spreadsheet.

6. The Zone Geography Type, Zone Geography Name, Inner City Jurisdiction, and Jurisdiction Precedence
Level Columns in the Manage Rates Worksheet are hidden by default as they may not necessarily be
applicable in many implementations, but if needed, they can be displayed.
PROCESS STEPS TO CREATE TAX RATES AND TAX RATE ACCOUNTS VIA RAPID IMPLEMENTATION
SPREADSHEET TEMPLATE:
1) On the Manage Tax Rates and Tax Recovery Rates page, click Download Tax Rates Spreadsheet
Template in the Rapid Setup Spreadsheets list in the ‘Search Results: Transaction Tax Rates’ table.
2) Prepare your tax configuration using the Manage Tax Rates spreadsheet. In this document we used
the below values against the respective fields to configure the tax rates information. Complete the
fields as shown in this table:

Field Name Value

*Tax Regime Code US_SALES_TAX
*Tax US_SALES_TAX
*Tax Status Code STANDARD
Tax Jurisdiction Code US SALES TAX JURIS
*Tax Rate Code US ST STD RATE
*Effective Start Date 2015/01/01
Ledger DELMFG US GAAP
Business Unit DELMFG US BU
Tax Expense Account Not mandatory
Interim Tax Account Not mandatory
Tax Recoverable Account 110.99999.252170.9999.999.99999.99999
*Tax Liability Account 110.99999.252170.9999.999.99999.99999
Receivables Finance Charge Tax Liability Not mandatory
Account
Non recoverable Tax Earned Discount Not mandatory
Account
Non recoverable Tax Adjustment Account Not mandatory
Non recoverable Tax Unearned Discount Not mandatory
Account
Expense and Revenue Earned Discount Not mandatory
Account
Expense and Revenue Finance Charges Not mandatory
Account
Expense and Revenue Adjustment Account Not mandatory
Expense and Revenue Unearned Discount Not mandatory
Account
 Note that all the fields marked with an asterisk at the beginning are mandatory fields, if the user tries
to generate the CSV file without populating any such field would result in an error shown in the
below screenshot:

3) Save the spreadsheet data file as a comma separated values (CSV) file using the ‘Generate CSV’ macro
in the Instructions tab.
4) On the Manage Tax Rates page click ‘Upload Tax Rates from a Spreadsheet’ option in the Rapid Setup
Spreadsheets list in the ‘Search Results: Transaction Taxes’ table.
5) This action would open the window ‘Upload Taxes from a Spreadsheet’. Browse and upload the
Comma Separated Values spreadsheet (CSV) file created in earlier steps and click on option ‘Upload’.

Verify if the ‘Upload Tax Configuration from a Spreadsheet’ process is shown as completed with the status
‘Succeeded’ in the Monitor Upload and Download Processes tab. Else, verify the process log to make the
needed edits before uploading the taxes spreadsheet again into the system.
PROCESS STEPS TO CREATE TAX RATES AND TAX RATE ACCOUNTS VIA RAPID IMPLEMENTATION
SPREADSHEET TEMPLATE:
1) On the Manage Tax Rates and Tax Recovery Rates page, click Download Tax Rate Accounts Spreadsheet
Template in the Rapid Setup Spreadsheets list in the ‘Search Results: Transaction Tax Rates’ table.
2) Prepare your tax configuration using the Manage Tax Rate Accounts spreadsheet. In this document we used
the below values against the respective fields to configure the tax rates information. Complete the fields as
shown in this table:

Field Name Value

*Tax Regime Code US_SALES_TAX
*Tax US_SALES_TAX
*Tax Status Code STANDARD
Tax Jurisdiction Code US SALES TAX JURIS
Tax Jurisdiction Name US SALES TAX JURISDICTION
Geography Name COUNTRY
*Tax Rate Code US ST STD RATE
Tax Rate Name STANDARD RATE
*Tax Rate 10.000
Set as Default Rate Yes
Allow override and entry of inclusive tax lines Yes
Allow tax rate override Yes
Allow ad hoc tax rate Yes
Adjustment for Ad Hoc Tax Amounts Tax rate
*Effective Start Date 2015/01/01
Effective End Date
3) Save the spreadsheet data file as a comma separated values (CSV) file using the ‘Generate CSV’ macro in the
Instructions tab
4) On the Manage Taxes page click ‘Upload Tax Rate Accounts Spreadsheet Template’ option in the Rapid Setup
Spreadsheets list in the ‘Search Results: Transaction Taxes’ table.
5) This would open the window ‘Upload Tax Rules Spreadsheet Template’. Browse and upload the Comma
Separated Values spreadsheet (CSV) file created in earlier steps and click on option ‘Upload’.
6) Verify if the ‘Upload Tax Configuration from a Spreadsheet’ process is shown as completed with the status
‘Succeeded’ in the Monitor Upload and Download Processes tab. Else, verify the process log to make the
needed edits before uploading the taxes spreadsheet again into the system.
TAX RATE HEADER:

TAX RATE: RATE PERIOD DETAILS: MAIN TAB:

TAX RATE: RATE PERIOD DETAILS: TAX ACCOUNTS TAB:

TAX RULES
The default values for the following rule types are specified at the time of configuring taxes itself and not handled
separately on a different UI, like it was done in Release 12 E-Business Tax. The below snapshot highlights the
default values entered for the following rule types:

- Place of Supply

- Tax applicability

- Tax registration

- Tax calculation formula

- Taxable basis formula

- Tax status
MANAGE TAX RULES:
Manage Tax rules UI lets you create a tax determination model to reflect the tax regulations of different tax
regimes and the tax requirements of your business. You can create a simple tax model that makes use of default
values without extensive processing, or a complex tax model that considers each tax requirement related to a
transaction before making the final calculation.

Special Tax rules can be configured manually or by using the rapid implementation spreadsheets.

PROCESS STEPS TO CREATE TAX RATES AND TAX RATE ACCOUNTS VIA RAPID IMPLEMENTATION
SPREADSHEET TEMPLATE:
1) On the Manage Tax Rules page, click Download Tax Rules Spreadsheet Template in the Rapid Setup
Spreadsheets list in the ‘Search Results: Transaction Tax Applicability Rules’ table.

TaxRulesTemplate.xls
m

2) Prepare your tax configuration using the Manage Tax Rules Spreadsheet and generate the tax rules CSV file for
uploading these rules into the system.
3) Save the spreadsheet data file as a comma separated values (CSV) file using the ‘Generate CSV’ macro in the
Instructions tab
4) On the Manage Tax Rules page click ‘Upload Tax Rules Spreadsheet Template’ option in the Rapid Setup
Spreadsheets list in the ‘Search Results: Transaction Tax Applicability Rules’ table.
5) This would open the window ‘Upload Tax Rules Spreadsheet Template’. Browse and upload the Comma
Separated Values spreadsheet (CSV) file created in earlier steps and click on option ‘Upload’.
6) Verify if the ‘Upload Tax Configuration from a Spreadsheet’ process is shown as completed with the status
‘Succeeded’ in the Monitor Upload and Download Processes tab. Else, verify the process log to make the
needed edits before uploading the spreadsheet again into the system. Once the process completes
successfully, we would be able to query, validate and/or update the created tax rules.
Note the following key items relating to uploading tax rules via rapid implementation spreadsheet:

1. Tax rules are consolidated in one spreadsheet upload and download for all rule types and are identified by a Tax
Rule Type attribute within the spreadsheet.

2. Determining factor sets and condition sets are created in line with tax rule setup. The maximum number of
determining factors per condition set is 10. Use the respective user interface if a larger number of determining
factors is needed.

3. Operators are supported for conditions using spreadsheet integration. However, some operators are not
currently available in the spreadsheet integration, primarily the ‘In’ and ‘Not In’ operators.

4. Determining factor classes that a user can create through the spreadsheet upload are:

 Document
 Geography
 Legal party fiscal classification
 Party fiscal classification
 Product inventory linked
 Product non-inventory linked
 Registration
 Transaction fiscal classification
 Transaction generic classification
 Transaction input factor
 User-defined geography

5. The Accounting determining factor class is available through the respective user interface page in Oracle Fusion
Tax.

6. In order to properly create a tax rule using Party fiscal classification, it is a prerequisite that both the Oracle
Fusion Trading Community Model party classification and the corresponding Oracle Fusion Tax party fiscal
classification be created first prior to populating the tax rules spreadsheet.

7. Similarly, in order to properly create a tax rule using Product inventory linked, it is a prerequisite that the Oracle
Fusion Inventory ‘inventory category set’, categories, and category descriptions be created first prior to populating
the tax rules spreadsheet.

8. In order to properly create a determining factor set for a specific tax regime that is related to Party fiscal
classification, Product inventory linked, or Transaction fiscal classification using the tax rules spreadsheet, it is
necessary to first associate a tax regime to a specific party fiscal classification, product fiscal classification, or
transaction fiscal classification before a determining factor set can be created for that tax regime through
spreadsheet upload.