This is the first part of a series discussing the impacts for tax configurations and processing when upgrading from 11i to R12. Part I will address how Procurement tax components are migrated. Part II will address how Receivables tax components are migrated. Part III will identify migration challenges and issues.
Tax data structures and technical architecture between 11i and R12 changed significantly. Migration of the 11i data structures and values is accomplished with automated programs that include built-in assumptions about how to migrate the information so reconciling 11i and R12 configurations can be challenging.
The 11i structure for Procurement consists of a Tax Code and a Tax Group. A Tax Code may have an Offset Tax Code (to record self-assessed or self-accrued tax liability). A Tax Group may be used to apply multiple taxes for a single transaction line (such as Canada GST and PST).
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The R12 structure is a Regime-to-Rate hierarchy: Regime > Tax > Status > Tax Rate.
A Regime will be created for each Operating Unit and Tax Type. A Tax, Status, and Tax Rate will be created for each 11i Tax Code that exists in the Operating Unit. In addition, a Tax Classification lookup code will be created for each 11i Tax Code. Tax Classification codes created for Payables Tax Codes will have a type of ‘Input’. A Tax Rule with type of ‘Direct Rate’ will be created to associate each Tax Classification Code to the corresponding Tax Rate.
The conditions defined in a Tax Group are migrated as additional formulas on Tax Rules to determine when each Tax Rate should apply.
An Offset Tax Code would be migrated in the same manner as a Tax Code but the R12 Tax would be set as an Offset Tax. Offset Tax Rates will also be flagged and will be linked to the appropriate ‘base’ Tax Rate.
Tax Codes with a recoverable rate that is not equal to 0 will also create R12 Recovery Rates linked to the associated Tax Rate.