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Keeping Up with EBTax

After a successful implementation of Oracle EBTax, a company still faces the challenge of maintaining the solution. Changes in tax rates and tax rules will require additional configuration and testing and could even require additional design depending on the tax rule changes. And many tax jurisdictions around the globe are raising tax rates and/or taxing additional commodities to increase revenues. So the maintenance effort may be considerable.

During the implementation, the company must research and define all of the tax rates and rules for each jurisdiction in which the company owes indirect tax. The level of effort can be mitigated somewhat with experienced implementation personnel and implementation tools that either provide tax rate and rule data or help to automate the implementation activities.

But once the system is live, the maintenance activities are often manual. All of the same activities required during the implementation still apply: research to identify upcoming rate and rule changes, evaluation of rule changes to determine if they fit into the current solution design, re-engineering if the rule changes need additional solution elements, configuration and testing, and migration to production. These activities become the responsibility of company personnel once the implementation personnel have gone.

Leveraging the built-in integration from EBTax to a third party tax partner, such as Vertex, can significantly reduce both the implementation effort and the ongoing maintenance effort. Regime-to-Rate flow structures can be defined with default level Tax Rates that allow ad hoc rates to be associated. This will eliminate the need for new Tax Rates to be defined each time a rate changes. The tax partner software is responsible for maintaining all of the detail rates as well as the rules that evaluate detailed transaction data elements to determine the appropriate tax result. The tax partner will also provide notifications of pending tax rate and rule updates so that the appropriate, targeted testing can be performed when updates are required to the third party tax software.

Using a third party tax partner can definitely minimize the effort required to implement and maintain an automated indirect tax solution using EBTax within Oracle R12 applications.

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April Stooksberry

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