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Dear Fellows

I am sharing this document here because I faced this issue a couple of days ago and I was not able to find out the reason and solution to this strange behaviour of system. I am not sure whether this is new information for you or not but as it was for me so I thought I should share here so that it may be helpful for some knowledge seekers like me in future.

Business Requirement

We had one tax category here in Pakistan till last week and we were using MWST condition for that. Government declared two new tax categories and I was asked to configure these new taxes in a way that finance department could see three taxes in standard reports separately and for that reason I had to create two new tax codes and tax conditions as well.

The steps I followed to achieve this requirement were

  • Created two conditions by copying MWST with the names of ZTX1 and ZTX2. I didn’t create any new access sequence or condition table because I was going to use Tax classifications standard fields.
  • Added those new tax conditions in pricing procedure.
  • As these conditions were copies of MWST so I didn’t make any changes in FI side but I verified all the settings there in Tax pricing procedure.
  • Made the necessasry settings in OVK1, OVK3 and OVK4 for tax classifications.
  • Maintained tax classifications in material master and customer master data.
  • Maintained condition record for 1 1, 0 1, 1,0 combinations where 0 is for Tax Exempt and 1 is Liable for Tax.
  • Created Sales order where 1 1 situation was applicable and everything was working fine from order to accounting document of FI invoice.
  • Created order for 0 1 or 1 0 combination but system was determining 1 1 combination and in analysis screen was showing the same.

Go through the following screen shot.

untitled.JPG

At this time tax classification for this material in material master was 0 but in order system was determining 1. I was not aware of use of fields TAXM2, TAXK2 and so on. This was the time when company’s sale was discontinued due to these sales tax changes. I had pressure to complete the configuration ASAP so that sales persons may delivery the materials. I searched in SCN, Google and tried my every possible way but was not able to find out the reason.

Solution

For using multiple tax conditions SAP has delivered TAXK1,TAXM1 to TAXK9,TAXM9 fields. For every tax condition we have to create new condition table and access sequence with these fields. You can view these fields in fields catalog as in below screen.

untitled.JPG

I also tried by creating a new condition table with following fields and an access sequence for ZTX1. Then I maintained new condition record and it determined condition record for 1 0 and 0 1 combination as per my requirement.

untitled.JPG

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Same was the case with ZTX2. For this I used TAXK3 and TAXM3 fields and it worked fine.

Conclusion

Although I solved the issue but still I am confused why SAP has delivered these fields for tax classifications. I have searched in SCN, Google and service market place for SAP notes and found nothing about the reason. There are few threads discussing this solution (which I couldn’t find at the time of need due to different search texts) and also SAP Note 191932 but the reason why we can’t use TAXKD for customer tax classification and TAXKM for material tax classification is still a question mark for me. If someone knows the reason and logic behind this functionality of Tax classifications determination in condition records please share in comments. I have seen a thread in which Jyoti Prakash was sharing the solution with OP so I wonder if JP could share the logic and reason behind this behavior.

Regards

MoazzaM Ali

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27 Comments

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      1. Abhishek Laghate

        Dear Moazzam,

        Thanks for sharing the document. This is very helpful.

        Besides, I want to share one scenario, which is somehow related to above scenario, you mentioned.

        For one specific material, Client does not want to calculate CST as it is Tax exempted. Therefore, I maintained zero as a tax classification in customer master-Sales area data-billing document. Still it was calculating in sales order.

        Besides, I maintained condition record with a relevant tax code with a combination of Country/PlntRegion/Region/TaxCl1Cust/TaxCl.Mat. Where I maintained zero in TaxCl1Cust. Still it was calculating CST.

        Then I removed tax classification from material master also, but it calculated again.

        Then I checked and my findings were:

        1. 1) The condition table, where the fields were maintained, the field was TAXK1 for the tax classification of customer.
        2. 2) In customer master, where, the field was KNVI-TAXKD for CST.
        3. 3) The above field (KNVI-TAXKD) is not available in the field catalog to create condition table.
        4. 4) In addition, in sales order, Goto-Header-Billing-All tax classification (VBAK-TAXK1) I maintained as zero then CST was not calculating.
        5. 5) In condition record, VK11, when I checked the field for TaxCl1Cust the field was A368-TAXK1.

        Ultimately, I created another key combination with adding Material group, and then it was working.

        Therefore, my question is what the difference between all these fields. Why the relevant table and field KNVI-TAXKD is not available in field catalog.

        Kindly guide.

        Regards

        Abhishek

        (0) 
        1. Jyoti Prakash

          Abhishek Laghate

          Check my response in Tax calculation in Sales Order

          And please use that discussion for any further Q/A on that topic.

          ‘ MoazzaM ‘ – Please refer above mention post to Abhishek. That mention something, where 2 different tax condition type is using similar condition table 368Country/PlntRegion/Region/TaxCl1Cust/TaxCl.Mat. for condition record determination in sales order. This can be further helpful to you on the query you raised on me through this post.

          Best Wishes, JP

          (0) 
  1. Jyoti Prakash

    See, this should be part of your tax pricing design in pricing:

    1. when you need to have more than one indirect taxes category is applicable on one sales for a country.

    2. each tax category is determined based on individual attribute of material & customer.


    Check my response in following discussion.

    http://scn.sap.com/thread/3284465

    Thanks, JP


    (0) 
    1. ' MoazzaM ' Post author

      Thank you JP for responding and sharing the link but I am not able to understand this that why can’t we use Tax classification field like others to determine condition record. We can use KNVV-KONDA or KNVV-KDGRP and so many other fields then why there is different behavior of KNVI-TAXKD and MLAN-TAXKM. I am sorry for bothering but I want to know the logic behind this functionality.

      Regards

      (0) 
      1. Jyoti Prakash

        MoazzaM

        Please go through my statement again.

        more than one indirect taxes category is applicable on one sales for a country.

        FYI, you assign tax condition to country in OVK1.

        use KNVV-KONDA or KNVV-KDGRP

        Take guidance of any indirect tax consultant. They will justify that TAX generally take place determination take place based on:

        – Departure country as maintain in your delivering plant (From Place)

        – Destination country of Ship-to party (To Place)

        – Tax classification for customer (Person)

        – Tax classification for material (Material)

        Tax is not only applicable

        For more clarity on this, please refer my post in following discussion.

        XD03 liable for taxes

        This will let you know that “Only customer my not help you in getting the tax rates for sales proceeds”.

        If you still have any concerns, do let me know that.

        Thanks, JP

        (0) 
        1. ' MoazzaM ' Post author

          Dear JP

          Thanks a lot for guiding me. Let me discuss this with finance guys and also explore the tax settings and your thread again. I hope I will get understanding now.

          Thank$

          (0) 
  2. Anwer Suleman

    Hi Moazzam,

                            I just tested this in the system very good learning,  you please share the name of the table which contains all these fields, for which you have shared the screen shot. i have searched but some how cant find it.

    Regards

    Anwer Suleman

    (0) 
  3. Mohammed Shoeb Gulam

    Dear Moazzam,

    It was reallly nice information you shared and the way you presented in detail by spending time in typing in such understandable way is also appreciable…

    (1) 
  4. Kıvanç Bilgin

    Moazzam,

    Not sure if you still have question marks about why you need to use different TAXM* fields for different tax categories, but here is my input to clarify the reason:

    Let’s say you have two different tax categories (TAX1 and TAX2), and two different materials (MAT1 and MAT2). Let’s think about a scenario where MAT1 is applicable to both TAX1 and TAX2, but MAT2 is applicable to TAX1 only, and not TAX2. If you don’t use a different condition table for calculating TAX2, this scenario will fail for MAT2 (more complicated versions of this are actually real life examples from Turkey’s tax system).

    (1) 
    1. ' MoazzaM ' Post author

      Hi

       

      Thank you for the clarification. I agree with your example and we also have similar complex tax scenarios in Pakistan tax system.

       

      Thank$

      (0) 

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