How Oracle TCA Classification Helps in UAE VAT Compliance

Oracle TCA (Trading Community Architecture) classification allows user to classify parties the way business sees them instead how rest of the world sees. The flexibility of TCA classification model does not restrict users to a single way of classification. User can define & update party classifications as per business needs evolve.

The components includes:

• Class category
• Class Codes

We know that UAE VAT law has three basic rates 5%, Zero & exempt and on the other hand the transactions does not comes under these three basic rates called out-of-scope. Example entities under same tax group, employee payout by entity, un-registered parties.

Organizations using Oracle E-Business Tax can efficiently develop tax rules to automate out-of-scope transaction by using TCA classification. In our example the class category will be “Out-Of-Scope” and transactions type sharing same tax classification can be grouped under Class Code.

•  Class category
• Out-Of-Scope
• Class Code
• Same tax group
• Employees Transaction
• Un-registered party

Once TCA classification defined, user can define party classification and can attach Out-Of-Scope class category in E-BTAX. A tax rule can be defined in E-BTAX on the above mentioned class codes to apply appropriate tax rates on transactions. VAT report generated on the basis of above class code will give a clear understanding to internal and external teams in reconciliation of VAT amount. This is how class category makes transactions transparent for auditors and helps in VAT compliance.

Note: Once all setups are defined users have to attach party classification code at party tax profile or at party site level. Accordingly tax engine apply tax rates on the satisfaction of tax rules conditions.