Order Management enables you to quote an estimated tax for orders at the time of order entry. This is step eight of the Order Management Setup Steps. The tax estimate can be based on the tax status; address information, and VAT (Value Added Tax) codes assigned to items, ship to sites, and customers. The actual tax value that appears on the customer's invoice in Oracle Receivables may vary.
See: Oracle Receivables Implementation Guide.
Credit Check
Tax amount for each line will be stored on the order line. You can control whether the tax amount is included in credit checking while specifying the credit checking rules.
Multiple Tax Amounts on an Order Line
You can specify a tax group for an order line. You can view multiple taxes applied to an order line at the time of entry and query, or on the acknowledgement and notification of shipment. Oracle Receivables allows each invoice line to be taxed automatically with one or more taxes.
Tax Related Processing Constraints
Through the use of seeded processing constraints, Order Management does not allow a user to:
- Enter/Change Tax Classification Code on Order Line if the profile option EBTax: Allow Override of Tax Code is set to NO.
- Enter/Change Tax Handling, Tax Exemption Number and Tax Exemption Reason when the profile option EBTax: Allow Override of Customer Exemptions is set to NO.
- Update Tax Exempt Number, Reason, or any other tax related fields once an invoice has been generated.
If your business process allows tax information to be updated after an invoice has been created, you must modify the seeded processing constraints that affect updating tax information.
Tax Calculation
You can calculate tax by selecting a Tax Date to base your tax rates on, choosing the tax, the tax schedule, requested, promise, and system dates. You cannot set a value for the Tax Date field within the Sales Order window, but you can decide to change or update the existing seeded Defaulting Rule for Tax Date.
Tax calculation in Order Management can occur at one of the following events:
- Entry
- Booking
- Invoicing
Tax calculation for the above events can only be controlled at the order level (not at the order line level). You specify when to calculate the tax for an entire order when you create Order Types within the Order Management Transaction Types window.
The default value for Tax Calculation Event Code is null. Null Tax Calculation Event is same as Entry. For payment verification purposes (to include tax in the total authorized amount), specify Entry or Booking as your Tax Event.
Note: The Copy Order functionality does not copy tax amounts; tax is recalculated for the new order.
For return orders (referenced or non-referenced returns), tax calculation occurs at the tax event defined for the associated Order Management transaction type. To calculate tax at any time, select Calculate Tax from the Actions button menu within the Sales Order or Order Organizer windows.
Tax amounts are displayed:
- Within the Sales Orders window, Main Tab. This is value is the current total order tax
- Within the Sales Orders Lines window, Pricing tab. This tax value is for each taxable order line
Additionally, tax is always recalculated when tax-dependent attributes change on the order line.
Tax Calculation at Entry
With tax calculation at Entry, tax is calculated as each order line is entered. This tax calculation is used, for example, in businesses that requires the user performing order entry to view the total of the order, including tax, so it can be quoted to a customer.
To include tax in Commitment Applied Amount, set the tax event to Entry.
Tax Calculation at Booking
When tax calculation occurs at Booking, tax is calculated on each of the booked order lines. This tax calculation option is used, for example, in business that require tax visibility for booked orders, but who want to increase order entry input times by not calculating tax at entry.
Tax Calculation at Invoicing
When tax calculation occurs at Invoicing, no tax calculations will occur within Order Management. Tax calculation will occur in Oracle Receivables when the order or order line is invoiced.
For maximum performance, set the Tax Event as Invoicing.
Inclusive Taxes
When you create your tax codes, you can specify that the taxes are inclusive taxes (the tax amounts are already included in the price of the item).
When the Tax Engine is called to calculate taxes, it will return inclusive taxes as well as exclusive taxes. Any inclusive taxes returned are not added to the extended amount of the order line or displayed within the Tax column of an order line. Order Management displays the estimated tax amount based on the tax date on the order line. However, inclusive taxes are displayed when you View Tax Details from the Action button menu within the Sales Orders Lines window.
You can perform a credit check including or excluding the estimated tax amount.
Tax Method Options
Order Management enables you to specify the tax method for your company or installation as a Oracle Receivables system option. The tax method determines how taxes are calculated. Tax methods include the following:
- Sales Tax
For sales tax, taxes are based on different components of the customer's shipping address. Order Management provides you with a default sales tax location flexfield structure composed of the State, County, and City. - Value Added Tax (VAT)
For value added tax, taxes are based on tax rates assigned to user- defined codes. These codes are assigned to specific items, customers, and customers business locations.
Note: Tax codes are used for value added taxes or location-based taxes such as a sales tax).
Tax Security
Order Management enables you to update the tax security information on an order or return by setting the eBTax: Allow Override of Customer Exemption profile option. This profile option controls the modification of the Tax Handling Status, Reason & Certificate fields at the order header and order line levels. Standard tax calculations can be overridden by setting the profile option to Yes. The eBTax: Allow Override of Tax Classification Code profile option determines whether the defaulted tax classification code on an order line can be updated.
Non-Taxable Transaction Types
Order Management enables you to define whether Oracle Receivables will automatically calculate taxes for a given OM order line type. You will need to associate a Receivables Transaction Type with the OM Transaction Type for this to occur.
This will determine if tax is required on an order. This option (tax calculation flag) is set in Oracle Receivables. You can specify whether a transaction type is taxable in the Receivables Transaction Types window. See: Transaction Types, Oracle Receivables User's Guide.
Related Topics
Oracle Receivables User Guide
Oracle Receivables Implementation Guide
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