Have you ever been told that Oracle's tax engine isn't right for your business, can't be easily implemented, or is simply unable to compete with alternative products on the market?
Many such fallacies exist around using Oracle for tax, whether it's eBTax or Cloud Tax. Indeed, due to the global appeal of Oracle and its widespread use, it's hard to find a tax professional who doesn't have an opinion on its capabilities.
In my experience, Oracle remains one of the most powerful tax technology systems out there, capable of automating tax in almost every country in the world and managing the most complex, intensive, and bespoke tax scenarios.
Of course, there are several state-of-the-art third-party tax engines that will also empower you to optimize and perfect the way you determine, calculate, and apply tax. In some scenarios, I would endorse an investment in one of these. But in many cases, the Oracle ERP you already own can be configured to meet your precise needs, so it's worth considering native functionality first.
Here, I'll share some of the most widespread misunderstandings about tax in Oracle - and reveal exactly why they are entirely mythical and should, therefore, not influence your decision-making when investing in tax technology.
Myth 1: “Implementing tax in Oracle takes too long.”
If you opt to implement a new country in eBTax or Cloud Tax using your in-house team, I admit this can be true. Indeed, even working with an inexperienced tax partner can yield similarly frustrating results.
This is because when you first implement Oracle ERP, the native tax engine is empty. As a result, tax solutions for Oracle are typically built from the ground up, and solution implementers tend to rely on their client's tax teams to provide the content and design the rules. This can be a slow process and often stalls the more comprehensive project.
However, the reason this is a myth is that you no longer need to work with such outdated methods.
Instead, choose a partner that has pre-built tax content for all the countries you are implementing (and many more that you might require in the future). Best-in-class partners will be able to implement this tax content in next to no time - sometimes just a few hours.
If you cannot find that partner, consider using Oracle's own tools that allow you to upload your data via spreadsheets before downloading and uploading them to the next instance.
Working this way will save you a huge amount of time and drive down the cost of a project. Rather than being responsible for all the labor-intensive, time-consuming configuration, your team's input will only be required in the early stages when you will share any requirements or scenarios that are unique to your business and may require bespoke functionality to be delivered in addition to out-of-the-box content.
Myth 2: “I'll only get a manual tax solution.”
Not true! Oracle has the capacity and capabilities required for a complex, rules-based automated tax solution to be configured within its ecosystem.
What's more, a solution built in Oracle can use multiple tax-determining factors to automate even the most complicated, unusual, or compounded indirect tax scenarios.
Surprised? You're not alone. Many people think tax in Oracle will be underpinned by manual processes and human inputs, but it's actually one of the most advanced tax systems on the planet when configured, optimized, and maintained by experts.
We work with all major ERP providers, and Oracle is by some distance the most 'tax ready' ERP on the market - without the limitations we see in SAP or Workday, for example.
With the enhanced functionality of 'tax extensibility' provided as a patch by Oracle, there is almost no tax scenario that Oracle cannot handle; I've seen all the most complex, comprehensive, and creative projects over the years, and I'm always impressed by the ability of Oracle to automate even the most complicated processes.
However, it's worth remembering that Oracle's tax engine comes with no pre-installed tax content, so you will need to build on the base technology to create a solution that meets your needs.
Indeed, there aren't many specialists in the industry today who understand how to complete such a build that ultimately delivers a global tax solution using Oracle; that's why so many businesses that go it alone are left with an inadequate setup featuring multiple manual steps, which is the basis for this myth.
But suppose you have the expertise in-house or find the right partner. In that case, you can achieve full, seamless automation of all tax determination, calculation, and application in Oracle while eliminating manual processes from your team's day-to-day workload.
Myth 3: “Oracle isn't capable of handling Sales & Use Tax in the US.”
This depends on the nature of your business. Still, the majority of US businesses will find all they require to successfully automate core tax processes and realize key objectives within Oracle's tax engine, including managing different Sales and Use Tax rates in the same jurisdiction!
One limitation of Oracle is that it is unable to drill down to the ZIP+4 location level to determine the tax, so there are certain types of organizations - such as those trading in B2C markets - that will find it restrictive.
With the most common geography structure of state, county, city, and ZIP, Oracle can determine the correct tax rates for states, counties, and cities. But when it comes to district taxes (think police, school, transport), it becomes impossible to be 100% accurate as the ZIP code identifies the route the postman walks - it is not designed for tax.
Nonetheless, for most companies, Oracle's tax functionality is a great fit. Almost all US tax scenarios can be automated within eBTax or Cloud Tax as they are able to determine state, county, and city taxes precisely.
To assess the likely accuracy of Oracle's tax engine for your business, consider where your customers are based - for example, B2C customers are often in zoned areas in which the district taxes are easily absorbed into the appropriate city or county tax. Also, consider that it is usually your customers' responsibility to ensure the correct tax treatment.
The result is that you are probably required to send very few - if any - transactions to customers in a region with an abundance of complex district taxes that can't be absorbed into other taxes. That's certainly my experience and further establishes the case for using Oracle in the US.
Admittedly, the complexity of using Oracle is based upon its lack of pre-existing tax content found within the engine, so you will need to purchase Sales Tax content. This is typically available in the form of a content file (also known as a rates file), which is regularly updated to help you stay on top of all the tax updates across all 50 states and loaded into your system monthly to capture any rate changes.
Once you have a content file in place, you can build bespoke tax rules based on a taxability matrix -available from one of the many vendors on the market providing the content file. After this, you can set up a tax rule that, for example, exempts the tax based on a product fiscal classification of 'Prof Services' that is linked to a tax zone containing all the states where professional services are exempt.
Myth 4: “It doesn't offer the scalability required to future-proof my investment.”
On the contrary, eBTax and Cloud Tax can be used to manage tax in almost every indirect tax regime across the globe.
That means if your business is planning future expansion into new territories or markets, Oracle can be configured so that all your core tax processes are automated in accordance with each country or state's specific regulations and requirements.
It doesn't matter how, when, or why you grow. Oracle can be tailored to ensure long-term, fully future-proofed tax support.
The key is to ensure structure and standardization in the design and avoid cutting corners on the configuration. Follow the same structure for every country using the same naming convention even if one of the countries only has a small number of transactions. For the US, a rates file can manage all US content, and outside the US, VAT and GST rates typically stay the same; and when they do, a quick change is all that is needed.
What could give you greater peace of mind than that?
Even in the handful of countries where Oracle's tax engine alone cannot provide complete coverage - such as Brazil, which boasts an unprecedented degree of complexity in its VAT rules and requirements - an Oracle-provided localization can be deployed within your setup to ensure compliance.
A mistake we often see businesses make is designing a tax setup on a country-by-country basis or a 'local solution' as they grow. This inevitably results in the company taking a different approach to configuring its tax systems for each jurisdiction, usually as a result of local knowledge or resourcing restrictions. If you stick to a global solution - and by global, we mean a standard solution across all your countries - and have the same naming convention and structure. The training, user guides, testing, reporting, and interfaces all become the same, making things much easier to manage.
In my experience, developing bespoke solutions for certain countries always leads to a business creating an inconsistent global solution that causes operational and financial pain. When taking in a wider perspective, additional maintenance needs and training headaches are among the most frequent problems.
Myth 5: “Oracle is inferior to a third-party tax engine.”
There is a misconception among some tax professionals that dedicated third-party tax engines are always superior to a native Oracle solution.
This is fundamentally and demonstrably untrue.
As I've previously mentioned, Oracle's tax engine can automate even the most complex indirect tax scenarios just as effectively as a bolt-on tax engine, often at a fraction of the cost and with a more straightforward, smoother implementation.
If configured correctly, it will deliver seamless automation that drives upturns in accuracy, efficiency, and productivity, providing you with the ultimate assurance of compliance.
The only word of warning that you should bear in mind when considering eBTax or Cloud Tax for tax is that they are only as powerful as the strength of their implementation and the knowledge and expertise available to your business when it comes to maintaining the systems.
There's no denying the fact that tax legislation moves at a rapid pace; new rates, rules, and regulations are commonplace in every country across the world - sometimes on a daily basis.
This level of unpredictability and near-constant change understandably concerns tax professionals - some of whom believe a dedicated third-party product is the only way to stay on top of every one of thousands of global tax updates.
But with the perfect partner or dedicated resources, your Oracle setup can be accurately and comprehensively maintained to ensure every detail remains up-to-date and every tax transaction is processed correctly.
Indeed, such is the power, flexibility, and precision of eBTax and Cloud Tax; I believe that if maintained correctly, an Oracle solution can significantly outperform a third-party tool.
One reason for this is that most third-party tax engines rely heavily on product mapping. In contrast, with eBTax or Cloud Tax, you can set the rules to favor your style of business - for example, assuming all your customers are registered for VAT, you could have regulations that only work when a customer is set as 'not registered.'
Compare this to some systems where you can only calculate the correct tax if the VAT number is entered, meaning if you do not have the VAT number, you cannot ship that order!
In most cases, there is no need to look beyond Oracle. However, there are times when I recommend a third-party tax engine be implemented, such as when the additional reporting and compliance features they offer are important.
Ultimately, 90% of the work is done in Oracle regardless of the actual tax engine used, so don't just think you can plug and play a third-party tax engine. If you do, it is likely to fall apart very quickly. You still need structure and standardization.
Myth 6: “I can't use Oracle for multi-state countries like Canada and India.”
Wrong! Oracle eBTax and Cloud Tax can handle multi-jurisdictional countries such as India, Canada, the USA, the UAE, and more.
Using standard functionality, you can create a rule structure and geographic hierarchy that will enable each of the different taxes to be charged in the exact circumstances they are applicable, alongside any relevant offset taxes. The trick is to make sure you have the geography hierarchy set up with all the addresses using a value from a drop-down list to ensure 100% accuracy. The tax engine is smart but not smart enough to recognize 'Taxes' should be 'Texas'!
It doesn't matter how many jurisdictions or taxes are relevant to your business activities or how complex the precise scenario you face is; I can assure you it will be possible to configure a solution to meet your needs within your ERP.
For example, the determination and application of CGST and SGST for India - which are to be calculated at the same time on an intra-state transaction - can be fully automated within Oracle.
In almost all cases, leveraging Oracle for multi-jurisdictional scenarios drives more efficient, effective, and accurate results than relying on a third-party application.
Myth 7: “It isn't capable of calculating reverse charges in the EU.”
The process of calculating and applying offset taxes and reverse charges can be fully automated within Oracle using only its standard functionality.
Those people who believe automating reverse charges in Oracle is impossible typically seek to resolve the issue by either making manual corrections at the end of the month when reporting or by zero-rating their EU purchases altogether.
Either option is extremely bad practice and, more importantly, will leave a business non-compliant.
My advice would be to develop an automated solution for calculating reverse charges and other EU taxes - whether that's in-house or with the support of a specialist provider.
Don't make the mistake of thinking such functionality is a special requirement or a nice-to-have. It's not; it is, in fact, a non-negotiable, an essential feature of any organization's tax setup.
Myth 8: “Oracle can't calculate different types of taxes and rules, such as origin-based taxes.”
Providing the configuration of your Oracle ERP is optimized and expertly devised, it boasts all the functionality required to calculate different taxes and regimes properly.
Take origin and destination-based taxes in the US, for example; Oracle can calculate taxes for different regimes based on an operating unit having multiple registrations.
Unfortunately, it remains a widely-held belief that Oracle does not boast these capabilities. Still, it actually offers a remarkable level of functionality, helping it to outperform the majority of third-party tax engines on the market in this area.
We have even automated the Tennessee Single Article Tax in Oracle!
You can also calculate tax based on an assessable value, which is incredibly useful when you need to charge tax on the free samples provided. Quantity-based taxes for goods like sugar or packaging work perfectly, and you can even compound taxes, charging one after the other or one on top of another. It's all there. You just need to know where to look.
And its powers are not restricted to the multitude of origin-based levies in place across the US. On the contrary, I believe Oracle is superior to third-party tax engines to an even greater extent when it comes to automating the derivation of different taxes throughout the rest of the world.
With such a vast depth and breadth of features and functionality, tax professionals are not always aware of the immense potential locked within their Oracle ERP for managing tax.
And with global use of Oracle's technology enshrined over so many decades by millions of people, understandably, there will be miscommunications and misunderstandings that ultimately give rise to the myths detailed in this article (and many more).
However, having developed and worked with tax technology for more than two decades, I am more confident than ever that Oracle's tax engine offers the features, functionality, and flexibility required to support a truly best-in-class tax setup in 2023 and beyond for almost any business, in any industry, in any country around the world.
So, as a general rule, if you're managing US taxes and your requirements are relatively basic, use Oracle.
If you're working in the US and have more complex requirements, use a third-party tax engine.
And for the rest of the world, use Oracle every time.
I urge you to realize the myths for what they are and work with experts you can trust before making any decision over the procurement of new tax technology or configuration of existing solutions.
You just might realize that the Oracle ERP already in your midst can deliver all you need for tax - and much more.