Hello everyone,

I have seen on SCN that I’m not the only one wondering how to deal with the requirement of posting a reverse charge tax entry during the payment posting:

Malaysia GST Reverse charge at Payment

Malaysia GST Tax regulation

Not finding information issued by SAP directly if / how this requirement is covered, I opened a Customer Incident to gain clarification. In the meantime, I also prepared a functional specification which I will hand over to a developer in case no solution will be provided (on time).

Requirements definition for the user exit

  1. The user exit shall be called during the posting of the financial documents of the payment run
  2. The payment document shall be extended to debit input tax code TX and credit output tax code SR, the amounts balancing each other out.
  3. The calculation is based on the invoices which are grouped in a single payment; only tax code IS has to trigger this special treatment; this also means that if a payment is comprised of invoices where some match the given tax code and other(s) not, only the matching tax codes shall be considered. This configuration configuration shall be stored in a custom table.
  4. Concerning foreign currency: Valuation of the reverse charge tax lines will take the original local currency amounts
  5. A tax segment has to be created as well.

Configuration table

I prefer to store the tax codes in a configuration table, rather than hard-coding them in the user exit.

Tax codes TX and SR are set to 6 percent.

Company Code Invoice Tax Code RC Input Tax Code RC Output Tax Code
0001 IS TX SR

Sample Invoices

Invoices to indicate that not necessarily all invoices being paid fall under the condition of the configuration table.

Sum of the invoices with tax code IS are 2850.00 USD / 6895.00 MYR.

Company Code Tax Code Amount in doc. currency Amount in local currency FX rate
0001 IS 1500.00 USD 5020.00 MYR 0.2988
0001 IB 600.00 USD 2000.00 MYR 0.3000
0001 IS 750.00 USD 1875.00 MYR 0.4000
2850.00 USD 8895.00 MYR

Expected posting and calculation

Company Code Account Amount in doc. currency Amount in local currency Tax code
0001 (Vendor) 2850.00 USD 8895.00 MYR
0001 (Cash) -2850.00 USD -8142.86 MYR
0001 (FX diff.) 0.00 USD -752.14 MYR
0001 (Input Tax) 135.00 USD 413.70 MYR TX
0001 (Output Tax) -135.00 USD -413.70 MYR SR

Tax segment

Account Tax amount Base amount Tax code
(Input tax) 413.70 MYR 6895.00 MYR TX
(Output tax) -413.70 MYR -6895.00 MYR SR

My questions to the readers

  • Have you already received an answer from SAP if / by when a general solution can be expected?
  • Do you agree with my understanding of the requirement?
  • What do you think of the approach for this functional specification for a user exit? Would you approach the requirement differently, e.g. with a separate posting?

I am looking forward to your comments.

Best Regards,

Christoph

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4 Comments

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  1. Mohd Shazaly A J

    Hi Christoph, it was suggested to me to use a standard SAP Tax Deferred program (RFUMSV50) which shall be executed after payment run (or during month end) which help to make sure all posting related fall in the same month/period.

    Basically the tax code you create is the source tax code (i.e. IS) and later when you execute the program you can specify the target tax code – TX and SR.

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    1. Christoph Gilberg Post author

      Hello Mohd,

      thanks a lot for your comment.

      I was invited to an SAP “Meet the Expert” online event on the GST-03 topic, reverse charge payment was mentioned on a side note. Their answer matched yours exactly, ‘Deferred Tax’ should be used.

      They mentioned the following notes:

      1979386

      2000583

      2011533

      2062785

      2073648

      I will compare our custom program with the Deferred Tax solution.

      Best Regards,

      Christoph

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    1. Christoph Gilberg Post author

      Hello Ferdinand,

      we went for the custom solution, it’s the stand-alone program as drafted above. Contrary to my earlier spec, the users have requested not to have “IS” as the triggering tax code for the reverse charge but a separate new tax code. This new one will be used in the underlying invoices, yet this tax code itself (= the invoices) will be excluded from the GST-03 report, only the separate reverse charge documents will be included in GST-03 reporting.

      Best Regards,

      Christoph

      (0) 

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