Archive for January, 2015

Czech VAT Changes

Czech Republic: Amendments to the VAT Act effective from 1/1/2015

The following changes have been made to the VAT Act:

Tax Rates
A second reduced tax rate of 10% has been introduced. This cover essential goods such as books, pharmaceuticals and baby nutrition.

Local Reverse-Charge
The local reverse-charge mechanism has been extended to other types of goods and services (e.g. mobile phones, laptops, game consoles) if the tax base exceeds CZK 100 thousand per tax document and with no limit in case of certain cereals and industrial crops, raw or semi-processed metals, and allowances for greenhouse gas emissions etc. Local reverse charge mechanism should be applicable also in case of sale of immovable property when the VAT payer opts for taxation even if the sale could be VAT exempt.

Mini-one-stop-shop (MOSS)
This was introduced with the change of the place of supply with regards to electronically supplied services, which is now the customer’s state of consumption. As discussed in a previous blog, this MOSS eliminates the necessity to register in Continue Reading

Oracle R12 eBTax ‘Query has exceeded 200 rows. Potentially more rows exists, please restrict your query’

What should you do if you receive this error message whilst trying to update look  up codes?

‘Query has exceeded 200 rows. Potentially more rows exists, please restrict your query’

2015-01-13_14-13-02

To resolve this you need to update the profile value of

FND: View Object Max Fetch Size to equal 2000

New Vat and GST Rates for 2015

New Vat and GST Rates 2015

Below is a list of Changes to VAT rates and introductions of VAT and rates as of or after 1st January 2015.

Europe

Czech Republic
Introduced an additional reduced VAT rate of 10%, their other VAT rates are currently 21% (since 2013) and 15% (reduced).

Luxembourg
Raised their VAT rates by 2% – with the standard rate going from 15%-17%, the 1st reduced rate went from 12%-14%, and the 2nd reduced rate from 6%-8%. However the 3rd super reduced rate remains at 3%. This is due to the EU digital download change. The boundaries for the VAT rates have also changed so some items now fall under different VAT rates.

For further reading please see our earlier posts:
Luxembourg VAT increase coming soon (posted 21-10-2014)
Digital media downloads force Luxembourg to raise VAT (posted 08-04-2014)

Rest of world

Bahamas
Has introduced VAT at a standard rate of 7.5%, this is currently the only rate but some goods/services are exempt or Zero rated. Having previously been a Tax haven and indirect tax free the Bahamas has now introduced VAT in order to apply for the World Trade Organisation. Companies in the Bahamas will now need to register for VAT.

Iceland
Iceland has now cut its standard VAT rate from 25.5% to 24% after reducing its sovereign debt from 90% to just above 70%. They have also abolished the commodities tax. However the reduced rate has now risen from 7% to 12%.

Sri Lanka
The standard VAT rate has been reduced from 12% to 11%. They currently have no reduced or additional rates. The boundaries for VAT have also changed so some goods that were exempt are now liable to VAT.

Malaysia
As of the 1st of April 2015, Malaysia will be introducing 6% GST. This is to replace the current Sales and Services Tax. Unlike the current Tax, GST is applied at multiple stages, this is to help reduce fraud.

For further reading please see our earlier posts:
Why MY GST is nothing like Singapore or Australia and more like Europe  (posted 02/01/2015)
Oracle R12 Malaysian GST 21 day rule  (posted 02/01/2015)
Are you ready for the 2015 Malaysian GST?  (posted 07/11/2014)

Peru
The Peruvian standard VAT rate has been reduced from 16% to 15%. The Sales Tax, which is 2%, will remain unchanged. The VAT rate may be further lowered in 2016 to 14% but nothing has yet been confirmed

Egypt
The Egyptian Government is looking at introducing VAT at a rate of 10-12% to replace its current GST system. The original date suggested was 2015 but nothing has yet been confirmed.

Oracle R12 – US Tax Geography Validations

This post has been put together to demonstrate how you can correctly set-up your ‘Trading Community Architecture’ (TCA) for the United States in Oracle R12.
Step 1.

Navigate to the Trading Community Manager responsibility.
TCA > Administration > Geography Hierarchy

Then, search for ‘United States’ and then click on ‘Manage Validations’.

Oracle R12 - Manage Validations for TCA - Geography Hierarchy

Step 2.

HZ_LOCATIONS
HZ Locations will already be available but won’t have been correctly assigned. Set the values as shown below. HZ_Locations are your suppliers and customers.

Oracle R12 - Correctly Assign HZ_Locations
Step 3.

HR_LOCATIONS_ALL
HR Locations will need to be added as it is not seeded. Set the values as shown below. HR_Locations are your own locations.

Add your own HR Locations
Step 4.

Continue Reading

VAT treatment in Monaco and the Isle of Man

Whilst Monaco and The Isle of Man are not part of the EU they are treated as so for the purposes of VAT.

For Monaco Value Added Tax is levied on the same basis and at the same rate as in France, since 1993 an agreement has been in place meaning that French customs regulations apply directly in the Principality of Monaco. French Customs therefore operate the levying of VAT on non EU transactions whereas the Monaco authorities operate the levying on all other transactions. This means that EU member states need to ensure that transactions originating in or intended for Monaco are treated as if they were for France. Companies in Monaco are registered with a French VAT registration number.

The Isle of Man is treated the same as the United Kingdom for VAT purposes, it has the same rate also. This means that goods sent from the UK to the Isle of Man are not treated as exports, and so VAT must be charged at the usual UK VAT rate the same is true for services. Other EU members must treat the Isle of Man the same as if it was to The United Kingdom. Companies in The Isle of Man are given a UK registration number.

They are both incorporated into European customs territory (although remain a third country with regard to the European Union).

Does patch 12726737 meet all the requirements?

patch 12726737

There is a patch ‘For automated tax date for AP and AR transactions – patch 12726737 – Used for ECE reports’ from Oracle that will apply a tax date to every transaction (subject to the country linked to the OU). What this means is that whilst an invoice, either in AP or in AR can have an invoice (or transaction) date, the tax date will default based on the GL date.

For AP this means that if an invoice was entered in March that has an invoice date of January, whilst the tax rate itself is determined based on the invoice date, the tax date will default to the GL date of March if no manual tax date is entered. This is how Oracle currently do things by using the GL date but this is in fact not correct and an SR will be raised. The issue is that if we close the period within 5 days after 31st Jan, we have not necessarily closed the tax period. With most countries, the tax return has to be done before the end of the next month. This means that most companies can still receive and enter invoices for January in the February GL period and include them on the January return. If we base this on the tax date and the tax date defaults from the GL date and the GL date is based on the system date then those January invoices entered in February only be reported in February. We will need to raise an SR on this.

Why MY GST is nothing like Singapore or Australia and more like Europe!

Recently, when setting up the new Malaysian GST, I took to the task assuming that it would be nice and simple and done in a few hours, following the same structure as I would for Singapore which has one of the more simplistic GST setups in Oracle R12 or Fusion. It did not take long however to realize that Malaysia was a complete different animal when it came to the GST solution.

At its bare minimum, there is a 6% GST and a 0% GST rate but unfortunately, as those that know about indirect taxation, its not just about the tax rate but why and as such, VAT or GST is also about information as to why you are charging a certain rate or to provide statistical information to the relevant tax authorities. As such, there are well over 20 different GST tax reporting codes that need to be considered that need to be included on the GST returns for Malaysia.

Indeed, the Malaysian GST was based on the tax regimes of the UK, Singapore and Australia and that is very evident as there is more of a European style with the requirements for reverse charging than anything like Singapore GST.

So before you foolishly go ahead and set the MY GST up in the footprints of SG GST, make sure you do your research and get the right advice or you will soon fall foul of the Malaysian Customs when you start submitting those GST returns.

For more information on Malaysian GST please see our previous posts.

Review of ‘E-Business Suite R12: Malaysia Goods and Services Tax (GST)
Are you ready for the 2015 Malaysian GST?

Oracle R12 Tax – Multiple Legal Entities one OU.

Do you need SLA to determine the tax?

Short Answer is yes!

For a further details please read our previous post:-

Oracle R12 – The problem with using legal entities for Tax

Oracle R12 and Fusion Tax – US Sales and Use Tax, automating Over/Under Taxation

Some Third Party products automate the over/under handling of sales tax, if you have been charged too much or too little then an adjustment is made automatically. But why?

How often does this actually happen and would you not want to be in control of how the tax is handled instead of leaving it to be done automatically?

What if one of the lines was exempt from tax but that was somehow not captured on the invoice line as it was entered. An over/under solution would in fact deal with this incorrectly, making an adjustment on a transaction that was actually incorrectly entered thus ultimately costing you more in tax!

I am trying to get a feel for how important this requirement is so please respond to this blog posting with your views and opinions.

Oracle R12 Malaysian GST 21 day rule

There is a requirement that if the invoice is not issued within 21 days of the service being supplied then a different tax date is required.

This could be handled with a patch (For automated tax date for AP and AR transactions – patch 12726737 – Used for ECE reports) from Oracle that will apply a tax date to every transaction but unfortunately this patch is country specific so won’t work for Malaysia.

We can however still use European setups to capture the tax date as a way of doing the tax reporting. What this means is that whilst an invoice, either in AP or in AR can have an invoice (or transaction) date, but a customization would be needed to update the tax date because Oracle does not do this for us.

 

Oracle eBTax – End Dated your tax regime and need to reactivate it?

How to remove the end date from a tax regime

Ever accidentally end dated a tax regime in Oracle R12 and then needed to activate the tax regime again? Oracle wont let you – unless of course you follow this trick.

First, query back the end dated Oracle tax regime.

Oracle tax regime 1

You can see that the ‘effective to’ date is set as ’01-01-2000′.

Continue Reading

Oracle R12 – Withholding Tax (WHT) in AR – how to account for it

Withholding tax (WHT) is not Tax! it’s the withholding of tax from a payment to a supplier. With standard functionality in AP to handle WHT, how do we handle the WHT on an AR invoice? We don’t need to actually withhold anything on the AR invoice but what we do need to do in the majority of cases is to inform the customer how much WHT should be applied and then ideally to automate the WHT application when receipting cash. Continue Reading

Oracle R12 Paches requried for eBiz Answers US Rates data file load

Patches for eBTax Upload Process Comments
Patch Number Description Category
Patch 9173819 VANITY CHANGES FOR TAX PARTNERS Upload Process
Patch 9724954 DATAFIX TO CORRECT THE DATA UPLOADED USING DATA UPLOAD Upload Process
Patch 9676886 ERROR IN ZXUPPROCESSDATA MODULE: E-BUSINESS TAX CONTENT UPLOAD PROCESS DATA PROG Upload Process
Patch 7623657 INCORRECT RECORDS ARE INSERTED INTO ZX_ACCOUNTS EBTax Tax Engine Tax Accounting Defaulting Logic
Patch 14544974 Patch to support CCH Tax Partner Data Upload Upload Process Latest version of the Upload Process
Patch 8747425 TAX NOT CALCULATING AFTER UPGRADING TO 12.1.1 FROM 11.5.9 DUE TO MISSING SETUPS eBTax Required for upgraded environments

Oracle R12 – US Geography data clean up

This is not an approved Oracle approach but if you need to clean up bad data from an 11i upgrade where you have all sorts of States, Counties or Cities then the flowing SQL could help you.

 

DELETE

hz_relationships

where subject_id IN (

select geography_id

from hz_geographies where created_by_module = ‘EBTAX_MIGRATION’

)

and subject_table_name = ‘HZ_GEOGRAPHIES’

;

 

DELETE

hz_relationships

where object_id IN (

select geography_id

from hz_geographies where created_by_module = ‘EBTAX_MIGRATION’

)

and object_table_name = ‘HZ_GEOGRAPHIES’

;

 

The last step must be the delete of the HZ_GEOGRAPHIES as it is used in the queries above

 

DELETE hz_geographies where created_by_module = ‘EBTAX_MIGRATION’

;