Oracle Fusion Tax – how can it be enhanced?

How can Oracle Fusion be improved to better enhance the visibility of Tax Rates calculated and whether it is a service, asset or inclusive without the need for additional rates?

Like any ERP solution, a good eTax consultant will design the way the eTax module is setup based on how the tax needs to be reported, often resulting in additional tax rates being required in order for these rates to be clearly visible. The design of the Tax engine with Oracle Fusion is looking at improving the way tax can be reported and thus reduce the number of rates needed. For example, in Europe, it is important to be able to report the sale of goods, services and also triangulation separately. Oracle offers ‘Tax Reporting Codes’ to do this with one ‘Intra EU Rate’ but when the tax is calculated, it is extremely difficult for a user to see what type of ‘Intra EU rate’ has been calculated until it has been reported – often too late.

It is too late to change R12 to accommodate changes to make the reporting easier but what can be done to Oracle Fusion to enrich the tax reporting so that at the point the tax is calculated, the user knows what tax rate is being used, whether it is a service or inclusive or an asset or even a ‘Self Assessed’ tax immediately.

  • One potential way is to have a Flexfield type structure that can be driven by the tax rules so that a single tax such as ‘Intra EU Rate’ can have the values of ‘Service’ or Triangulation’ attached to it. It needs to be clearly visible when the tax is calculated and it needs to be picked up on reports. Additional segments would indicate if it is inclusive, the recovery % or whether it is an asset. 
  •  In Belgium, a client recently requested that a rate be created to accommodate the fact that the tax was both an asset and a service. It would have been better to have been able to have had one rate with attached flags rather than several rates to capture all the possible combinations. 
  • AP Triangulation Tax. this is the scenario: Your organization in Finland is selling goods directly to an end customer in Estonia but the goods are being shipped directly from your organization in Ireland to Estonia. The organization in Finland will raise a zero rated invoice which the end customer in Estonia will reverse charge. Your organization in Ireland will raise a zero rated intercompany invoice to your organization in Finland. In AP the organization in Finland does not need to reverse charge the I/C invoice from Ireland as the goods were not supplied to Finland so there is not an equivalence requirement. The verification of the correct tax rate needs to be identified but this would mean a requirement to capture the ship to country as a country – not a stored location. We cannot use a ship to location because the Supplier may have drop shipped directly to our Customer so we would not even have that location setup nor available to us. Having a field where we can populate just a country value would be a massive benefit to the ebtax solution in both AP and AR particularly for EU VAT.