Self-Assed Tax

Self Assessed tax differs from regular taxes in one way: as a purchaser, you are responsible for reporting and paying the tax and the supplier is not. This was also known as USE TAX in previous releases.

For example,
You receive an invoice for $1000 which is due to be paid to the supplier. Tax A for 10% was not charged on the invoice however, as the purchaser, you recognize that you are responsible to pay tax A. You would self-assess Tax A for the $100 and include it in your filings to the corresponding tax authority.

Features

The flexibility to have self assessed tax automatically assessed (based on tax setup) or to manually mark the calculated tax as self assessed during invoice entry.
An ability to have recoverable and non-recoverable portions of self assessed tax amounts based on your invoice details.
The ability to report and account detailed recoverable and non-recoverable self assessed tax AND the corresponding Self Assessed Tax Liabilities when the transaction is accounted.

Benefits

Improved Fiscal Discipline
Automatic reporting and accrual helps maintain an audit trail for the tax amounts and the invoices they tie to.
Separate liability accounts for self assessed taxes translate to more granular and accurate accounting.

Improved Operational Excellence
By automating previously manual processes and providing functionality available during invoice entry, the propensity for human error or delayed information is reduced.

Self Assessed Tax Predetermined Process

During Invoice Entry, Validation, and Import, Payables gathers information known as “tax drivers’ entered on the invoice header and lines and passes that information to the new E-Business Tax module.
Based on these tax drivers and additional information derived by E-Business Tax such as the supplier’s party tax profile and buyer’s and supplier’s tax registrations, the engine determines if any self assessed tax is applicable to the invoice.
The self assessed tax will be passed back to Payables along with the recoverable and non-recoverable tax amounts and the General Ledger Accounts for the recoverable tax and self assessed liability.
Payables displays the self assessed tax amount in a column on the Invoice header in the Invoice Workbench. Payables will also derive the accounts for the non-recoverable portion of the self assessed tax then store all accounts to be used later when the invoice is accounted.
When the Invoice is Accounted, the self assessed tax and corresponding self assessed tax liabilities will be accounted along with the rest of the invoice.

Self Assessed Tax Manual Determination Process

This slide illustrates the process for an invoice where the calculated tax returned by the E-Business Tax engine is expected to be paid to the supplier and the Payables’ user updates the it as Self Assessed instead.
Just like the first example, Payables gathers tax drivers entered on the invoice header and lines and passes that information to the E-Business Tax module.
Based on these tax drivers and additional information derived by E-Business Tax, the engine calculates the tax that is expected to be paid to the supplier (in other words: Non-self assessed taxes)

Self Assessed Tax: Predetermined Set Up – First Party, Party Tax Profile

To enable the application to automatically assess self assessed taxes for the First Party or for certain Third Party Suppliers, you need to first set up the Party Tax Profile. The Party Tax Profile is party specific, tax related information that can be associated to 1st and 3rd parties. It includes information such as defaults, tax registrations, classifications and tax reporting codes.
Using the Tax Managers responsibility, navigate to the Parties, Party Tax Profiles page. Search based on the Party Type of First Party Legal Establishment and the desired party name.

You have the flexibility to configure First Party Establishments for Self Assessed Taxes at the following levels based on your needs:
Registration, Regime
Registration, Regime, Tax
Registration, Regime, Tax, Tax Jurisdiction
From the Tax Summary Window, the Payables user marks the tax as self assessed. E-Business Tax updates their records and returns the tax details to Payables.
Payables stores the GL Accounts, displays the self assessed tax amount in a column on the Invoice header and the validated invoice is ready for accounting.

Self Assessed Tax: Predetermined Set Up – First Party, Party Tax Profile

Enable Self Assessment on the Party Tax Profiles tab
By checking the Set for Self Assessment/Reverse Charge option at a particular level, E-Business Tax returns applicable taxes for supplier invoices that fall within the level
–For example, if you enable this option at the Registration – Regime level, all invoices to be taxed within that regime will be considered Self Assessed tax

You can also set up a particular supplier’s Party Tax Profile by doing either of the following:
Use the Tax Managers responsibility to query a Third Party
Navigate to the Tax Details page from the Supplier (Entry) pages from the Payables Responsibility

Implementation Considerations

E-Business Tax is a common module available with Oracle Financial Applications.
The E-Business Tax engine is responsible for calculating tax amounts applicable to invoices.
It also assists in automatically identifying taxes as self assessed and allows setting options for manual determination.
Subledger Accounting is also a common module available with Oracle Financial Applications.
Subledger Accounting is not specific to this feature but a general tool to configure accounting entries and to provide accounting reports to meet your needs.

Balance Forward Billing

Balance Forward Billing replaces Consolidated Billing feature with enhancements to bill creation and presentation.

Billing Cycles
-Billing cycles are no longer just monthly. Easily create daily, weekly, monthly, bi-monthly, quarterly, and annual billings
-Bill on specific days of the month. User can not only specify the day of the month for the billing date, or even multiple days like “every 15th and last day of month”. User can also elect to bill on a specific day of the week, such as every Friday.
-Choose to exclude weekends. User can skip weekends when determining billing dates, so billing dates only fall on workdays
-For importing transactions with specific dates, there is an External Billing Cycle

Consolidate invoices at different customer levels

Activity can be consolidated across account sites, or by each billing site. This means one bill can be sent for each billing location, or a single bill can be sent incorporating all invoices for that customer account within an organization

Not all billing sites for a customer must consolidate their invoices. A site can be excluded from the account level bill. If a site prefers to receive individual invoices, that site can be excluded from the Balance Forward bill.

Specific invoices can be excluded from the Balance Forward Bill. By changing the payment term on an invoice, it can be printed separately

Enhanced viewing and printing

Balance Forward Billing integrates with Oracle Bill Management, which provides formats with a more appealing layout that can be easily modified. In 11i, there are five consolidated bill programs. The new feature consolidates these programs into three.

Benefits

1. Flexibility

In 11i, you had to choose between consolidating all invoices for a customer into one monthly bill, or printing all invoices separately. Plus, if you needed different billing formats that meant customizing print layouts.

Now you have expanded billing periods definition by using the new billing cycle concept; varied levels of consolidation; the ability to exclude specific invoices, and unlimited formats that are easily created and maintained and selected automatically by a rules engine

2. Clearer communication with the customer

User views the balance forward bill online exactly as the customer sees it

3. Accurate Aging

In 11i Consolidated Billing, the payment term assigned to the transaction was ignored if consolidated billing was enabled. This meant that the due date on an individual invoice may be different then on the consolidated bill if the payment term assigned to the invoice was different than the default payment term assigned to the customer. Aging is based on due date of the individual invoice, while payment due date was based on the payment term assigned to the customer. This caused aging to be out of sync with bills due date. Now all Invoices that are consolidated on the same bill have the same payment term and due date, guaranteeing the individual invoices will age simultaneously.

Setup and Process

The key setup steps are:

1.Define a Billing Cycle
2.Define or update the Payment term and assign it the Billing Cycle
3.Enable Balance Forward Billing for customers wishing consolidated bills at either the site or account level.

The process is then executed as follows:

1.Enter transactions or import them using AutoInvoice or Transaction API

2.Run the Generate Balance Forward Bill Program to create the bills as either draft or final, or set it up to run automatically
The generate program will kick off the print program in BPA to create either draft or final bills.
In Draft format, they can be reviewed before sending.
If the process is mature, you may elect to run Generate Balance Forward Bill Program in the create Final Bill format. In which case, the BPA program will create final bills.

3.If you create bills in draft mode, you can either reject or accept the bills using the Confirm Balance Forward Bills Program.

You can choose to reprint draft bills via the BPA Print Program by selecting the concurrent request ID.

Balance Forward Billing Setup - Define Billing Cycle

Responsibility: Receivables

Navigation: Setup:Print > Balance Forward Billing Cycles

For Daily, you can pick the number of days before the next bill. Also choose whether to include weekends in the number of days. For example, you can choose a daily cycle that is every 5 days, not including weekends in the daily count.

For Weekly, you can pick the number of weeks before the next bill. Also, choose the day of the week the bill will be created. For example, you can choose bi-weekly billing that occurs every other Friday.

Balance Forward Billing Setup - Define Billing Cycle

For the monthly cycle, choose the number of months before the next bill. For example, choose 3 months if you need quarterly billing, or 6 months if you need bi-annual billing.

Also choose the day of the month to create the bill. This option allows you to choose more than one date so billing can occur bi-monthly on the same days each month. For example, you can set it so billing occurs on the 15th and last of day of each month.

By choosing Type of Day, you can elect to create the bills only on the workdays Monday through Friday. When you chose “Exclude Saturdays and Sundays”, if the billing date falls on a Saturday or Sunday, the billing date automatically changes to the date of the following Monday.

Balance Forward Billing Setup - Define Payment Term

Responsibility: Receivables

Navigation: Setup : Transactions > Payment Terms

Billing Cycle is a new attribute of the Payment term and must be assigned to the payment term to process balance forward billing. This field is not updateable if the payment term has been used.

Cutoff Date information is now setup on the billing cycle, therefore the Cutoff Date block has been removed from the payment term setup window.

The payment schedule dates:

-Due Date is calculated based on the cycle and billing date therefore, the Due Date is not enterable for Balance Forward Bills
-The Due Days field can indicate how many days after the billing date the bill is due for daily and weekly cycles
-Day of Month and Months ahead can be used with the Monthly billing cycle. It is recommended that these only be used when a single bill day is used otherwise the due date will be the same for all the bills created during the calendar month.

After a balance forward billing payment term has been attached to a customer profile, the cycle will not be updateable.

Existing payment terms cannot be updated to balance forward billing payment terms and vice versa.

Consolidated or Proxima billing terms created in 11i will automatically be updated to balance forward billing payment terms.

Balance Forward Billing Setup - Customer Profile Class

Responsibility: Receivables

Navigation: Customers > Profile Classes

The customer profile class can be updated with the Balance Forward Billing information, which can then default to the profile on the customer account record.

This region replaces the Consolidated Bill region in 11i.

The Enable Checkbox must be checked to select a payment term with a Balance Forward Billing cycle.

Balance Forward Bills can be created in summary or detail format: summary is at invoice total level; detail is at the invoice line level. Imported is used for the Imported Billing Number feature that was introduced in 11i.

-Note: The default print formats use this customer profile. If you do not want to use this option, you can create rules in BPA to ignore this value. When creating a rule, use the attribute “Display Format” to look at the value in this field.

The Payment Term field allows you to choose either a Balance Forward if the Enabled checkbox is selected, or a Non-balance forward term if the Enable checkbox is not selected.

The Override Terms checkbox means that the default Balance Forward bill payment term on an invoice can be changed. You can only select a non-balance forward payment term if you are overriding the default. Changing the payment term on the invoice means that you do not want this invoice to be included on the bill.

Note: This is different functionality then 11i Consolidated billing which included all in voices on the bill regardless of the payment term assigned if consolidated billing was enabled.

Oracle BPA Rules Setup

Rules in BPA determine which template is used for printing and viewing Balance Forward Bills. Rules are created and then the templates get assigned to them.

If you wish to have similar functionality as was provided by Consolidated Billing, use the default rules delivered with the feature. If you wish to create new BPA rules, and you want to use the Summary/Detail Type assigned to the customer profile option, use the BPA attribute called “Display Format”.

BPA uses the following information to create the default rules:

-The Primary Data Source must be Oracle Receivables Balance Forward. Use this source when creating your own BPA rules.
-There are two Default rules: 1) one rule uses the attribute “Display Format” = Detail, 2) another rule uses the attribute “Display Format” = Summary
-These rules are then included in the rule hierarchy.
-Templates are assigned to each of rules. You can use the delivered summary and detail templates provided by BPA, or create and use your own templates

When you run Generate Balance Forward Bills, BPA looks at the customer profile for the value assigned to the Summary/Detail Type to determine which template to choose.