Oracle R12 E-Business Tax:Impacts and Alternatives

NCOAUG Training DayFebruary 25, 2011

Presenter Information

Dave Homiak, Vertex Inc. Sr. Channel Manager, Oracle Solutions11 years experience in the tax automation industryManaging the partnership with OracleCommunicating our solutions for Oracle clients

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Agenda

Session Objectives Vertex-Oracle PartnershipOracle Introduces E-Business Tax with R12Capabilities and Limitations of EBTax3rd Party Tax Integration (Vertex’s Role)Overview of Vertex O Series Integration for EBTaxSuccess StoriesEBTax Setups to Enable Vertex

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Objectives

Upon completion of this session, you will be able to:

Understand the concepts of E-Business Tax and Vertex O Series

Understand the current Oracle R12 integration status

Gain an understanding of how Vertex O Series is configured with E-Business Tax Learn through demonstration of O2C and P2P transactions where Vertex O Series calculates taxUnderstand Vertex O Series International tax capabilities for Oracle E-Business Suite R12

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Oracle Partnership

Oracle Platinum Partner Only tax solution provider to achieve this levelExecutive sponsorship from Oracle required

Oracle Development PartnerJointly developing tax solutions since 1992 (SalesTax/PayrollTax)Direct access to Oracle Tax Development groupOnly vendor selected by Oracle to test R12 tax integrations

Over 800 mutual clients

Mutual customers – Vertex uses Oracle; Oracle uses Vertex

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Introducing E-Business Tax for Oracle R12

E-Business Tax – Global Tax Management

Now

Oracle R12Oracle 11i

Oracle eBusiness Tax

Centralized Global Tax Management Module for Oracle R12Order to Cash and Procure to Pay ModulesAbility to create simple and complex tax rulesExpanded VAT functionality (Tax Content Library)Enhanced tax reporting functionalityBest native tax engine among major ERP players

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Determine Tax Status for each applicable Tax

Determine Tax RateEvaluate Exemptions and Exceptions

Determine Taxable Basis (normally line amount)

Calculate Tax (normally = line amount x rate)

Determine where the transaction is deemed to take placeDetermine Applicable Tax Regimes

Determine Candidate TaxesDetermine Place of Supply And Tax RegistrationDetermine Applicable Taxes & Jurisdictions

Tax Determination Steps

Identify Locations

Identify Attributes

Call O Series

Record O Series Calculated Tax

Regime Applicability

Vertex Registered?

Identify Locations

Vertex Registered?

Identify Attributes

Identify Locations

Vertex Registered?

Call O Series

Identify Attributes

Identify Locations

Vertex Registered?

Tax Calculation

Taxable Basis

Tax Rate

Tax Status

Tax Applicability

eBTax – Framework for Building Tax Rules

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eBTax – Compliance Limitations

R12 customer and consultant feedback – eBTax does not provide:

Tax ratesSitus/Place of Supply rules (e.g. modified origin)Tier tax & max tax rulesProduct/services taxability rulesDistinction between sales tax and use taxReturns or remittance capability

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eBTax – Functional Limitations

• Building, maintaining and testing rules can be time consuming

• Does not work with disparate systems – Oracle R12 only• Does not provide master geography data for Address

Validation

Oracle eBusiness Tax – Considerations

• Is my company prepared to maintain these rule changes that affect the simple tax rates?

• How many people will we need to track and manage changes?

• Once we implement R12 with eBTax, what kind of support will we get from Oracle when we call them about changes?

• Will we be getting support from folks that know tax or will it be coming from the standard support group?

• Will Oracle be in a position to respond to up to the minute business needs for complying with ever changing tax laws?

Oracle Strategy for 3rd Party Tax Integrations

Oracle Sales Tax Integration Background

Oracle 11i included standard US Sales Tax IntegrationQ Series embedded into 11.5.8 and aboveChanges need IT involvementNo Standard Tax Integration on the Procure to Pay side

Oracle R12 introduced eBusiness Tax ModuleOracle invested a great deal in the E-Business Tax moduleCentralized Tax ProcessingProvides a tax framework or skeletonStandard Tax Integration for P2P transactionsControl shifts to Tax Dept rather than IT

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eBTax Background and Basics

Oracle selected Vertex as the only testing partnerVertex was heavily involved in the design and development phases of eBTax integrationConsider Vertex a trusted partner and advisor for tax system design and development for over 15 yearsRecognize Vertex’s continued investment in research and development of tax systemsValue Vertex’s shared commitment to mutual customers’ success

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eBTax Background and Basics

Tax Options for R12EBTax engine and Sales Tax Rate File

ORAMAST file format – US content onlyRequires manual construction and maintenance of rules

Vertex Q SeriesLeverages old 11i interface structureLimited functionality for Consumer Use Tax and VAT

Vertex O SeriesValidated Integration using supported Oracle interfaceAll sales, use and international tax rules included

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Oracle eBTax – Partner Integration Overview

eBusiness Suite/eB TaxTransaction Data Transaction Data

Tax Services Request Manager

ContentRepository

Record Repository

Vertex O Series

ServicesTax

ContentServices

TaxAdministration

Services

PartnerTax Content

Interface

Partner Tax Services

Interface

Tax Determination

Services

eBTax 3rd Party Integration

Impact on Vertex Completely different integration structure compared to 11i3rd party tax integration to Procure to Pay Modules

Integration TimelineIntegration design and development began in 2006O2C integration completed in 2008P2P integration completed in 2009VAT extension completed in 2010Validations achieved in 2010

eBTax and Vertex O Series – Client Benefits

Following the Oracle development standards leveraging the eBTax framework means:

The integration is supported by Oracle’s Support Center

Synchronization of versions when applying new RUPs

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Modules and Financial Events Transactions -Impact on Tax

Order to Cash (O2C)• Order Management• Receivables• Service Contracts• Quote

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Procure to Pay (P2P)• Accounts Payable• Purchasing• Expense Report • Projects

Sales Transaction QuoteReceivables InvoiceSales Credit/Debit MemoSales Adjustment

Oracle Payables InvoicePayables Credit/Debit MemoPurchase OrderPurchase Transaction QuotePurchase RequisitionPurchase Prepayment

Integration Availability

• US Order to Cash Available since 2008 – 20 clients

• US Procure to PayAvailable since 2009 – 14 clients

• International VAT Input and OutputAvailable since 2010 – 5 clientsBrazil, India and China – available 2011

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Oracle Validation

• Oracle has validated O Series 5.0 and 6.0 for R12Order to Cash ModulesProcure to Pay Modules

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Oracle R12 O Series Clients

EBTax Setup for Vertex O Series

EBTax Required Setups

Creating Tax RegimeRegistering Vertex as the Service ProviderLinking Vertex to EBTax Setups

Tax Tax StatusTax JurisdictionTax RatesTax Rules

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Tax Determination Steps

Determine Tax Status for each applicable Tax

Determine Tax RateEvaluate Exemptions and Exceptions

Determine Taxable Basis (normally line amount)

Calculate Tax (normally = line amount x rate)

Determine where the transaction is deemed to take placeDetermine Applicable Tax Regimes

Determine Candidate TaxesDetermine Place of Supply And Tax RegistrationDetermine Applicable Taxes & Jurisdictions

Identify Locations

Identify Attributes

Call O Series

Record O Series Calculated Tax

Regime Applicability

Vertex Registered?

Identify Locations

Vertex Registered?

Identify Attributes

Identify Locations

Vertex Registered?

Call O Series

Identify Attributes

Identify Locations

Vertex Registered?

Tax Calculation

Taxable Basis

Tax Rate

Tax Status

Tax Applicability

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Identify Locations • Determines relevant locations (Bill_to, Ship_to, etc)

Identify Attributes• Identifies Tax Exemptions sourced in Oracle• Identifies other Tax Attributes (product category, etc)

• Call is made to O Series to Calculate TaxCall O Series

Record O Series Calculated Tax

• Tax and attributes set by O Series are recorded on the transaction

Regime Applicability

• Determine where the transaction is deemed to take place• Determine Applicable Tax Regimes

Vertex Registered? • Determines if the Applicable Tax Regime is Subscribed to Vertex

Tax Determination Steps – Using Vertex O Series

Identify Locations

Vertex Registered?

Identify Attributes

Identify Locations

Vertex Registered?

Call O Series

Identify Attributes

Identify Locations

Vertex Registered?

Record O Series Calculated Tax

Call O Series

Identify Attributes

Identify Locations

Vertex Registered?

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Service Subscription Designation

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Service Provider Confirmation

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Tax Regime Creation

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Tax Regime – Tax Levels Covered

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Tax Regime Code – Possible Taxes

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Tax Status Creation

Vertex and Oracle R12 EBTax: Summary

Questions/Answers

Presenter Contact Information

Dave Homiak, Vertex Inc. Sr. Channel Manager, Oracle Solutions610-651-5361dave.homiak@vertexinc.com

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