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Purpose


I would like to provide a document that outlines the basics of SAP tax configuration and provides a couple of examples of how tax code could be determined in SD and MM.


Overview


  • SAP provides the majority of the tax configuration out of the box by country
  • There are three SAP areas that work together to determine taxes FI,MM, and SD

  FI – Base configuration for tax procedures, rates and accounts

  SD – Configuration/master data to determine output tax code

  MM – Configuration/master data to determine input tax code

  • Master data such as customer, vendor, and material, as well as transactional data like POs and Sales Orders are key to determining the correct tax
  • Rates can be maintained in SAP or SAP can call an external system for them (this document with focus on rates maintained in SAP)


FI Tax Basics


  • Tax configuration is done by country
  • All company codes in the country share those settings
  • Two Main Components:
    • Tax Calculation Procedure – Provide the method of calculation – normally use SAP standard
    • Tax Codes – Provide the rates

Tax Procedure


  • These are provided by SAP for each country – General recommendation is to use delivered logic
  • Tax Procedure, related conditions, and access sequences can be viewed in transaction SPRO at the path Financial Accounting Global Settings>Tax on sales/Purchases>Basic Settings>Check Calculation Procedure


Tax Procedure Example

  • Steps define calculation, conditions, and account assignments

Tax Procedure.jpg

Condition Type Example

  • Condition record defines access sequence, and other characteristics about the condition


Condition.jpg

Access Sequence Example    

  • Access Sequence defines field required to access a condition
  • For example to find a condition for the entry below the system will use Country, Tax Code, and Tax Jurisdiction

Access Sequence.jpg


Configuration – Assign Tax Procedure to Country

  • Tax Procedures are assigned to countries in transaction OBBG

Assign Tax.jpg

Tax Jurisdictions

  • Represent government authorities to which taxes need to be paid
  • SAP allows up to 4 levels tax jurisdictions representing state, country, city, and others


Configuration – Jurisdiction Code Structure


  • Tax Jurisdiction structure must be defined in transaction OBCO

Tax Jurisditions.jpg

Configuration – Maintain Jurisdiction Codes


  • Jurisdiction codes are maintained manually in transaction OBCP for tax procedures that do not use an external system


Jurisdiction Codes.jpg


Tax Codes


  • Tax Codes are maintained by country and jurisdiction code
  • They define the rate that is used in calculation
  • They are maintained in transaction FTXP
  • Don’t be confused on the name, this transaction can create,maintain, and display tax codes


Tax Code.jpg

Tax Code – Properties


  • The properties of the tax code identify its code, name,  type (input vs output) and other information about it


Tax Code Properties.jpg

Tax Code – Tax Rates


  • In the tax rate screen you enter the appropriate tax rates
  • You can also see the account assignment key and the conditions that are used to calculate a value in the follow on transactions such as SD invoice


Tax Rates.png

Tax Account Determination


  • Accounts are assigned in transaction OB40
  • You can also see the account assignment key and the conditions that are used to calculate a value in the follow on transactions such as SD invoice

Account Determination 1.jpg

Account Determination 2.jpg

Tax Code Determination


  • At the end of the day the tax is determined based on the tax code and the tax procedure on the AP or SD invoice
  • SAP multiple ways to determine the tax code, condition tables, master data, programs, manual entry, etc.
  • Method can be different by situation
  • This document shows an example of how a tax code could be determined for an SD invoice (output tax) and SRM Pos/invoices (input tax)

SD Calclation.jpg

MM determination.jpg

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