This blog is intended for project members responsible for implementing Central Finance. this blog explains the various Taxes and the special Considerations for Taxes along with pre-requisites.
Introduction:
When FI and CO documents are replicated from source systems to a Central Finance system, tax-relevant data is also replicated. When Central Payment is activated, which is done on a company code basis, it becomes necessary for some tax-relevant postings to be made in the Central Finance system. As a result, tax reporting must also be carried out in the Central Finance system, based on the documents in the Central Finance system, whether they have been replicated to the system from a source system or posted there directly. This document describes both the checks that are available to ensure that the tax-relevant data posted in the Central Finance system is accurate for the purposes of reporting tax and the tax-relevant reports that can be run in a Central Finance system and the restrictions that apply to these reports.
Prerequisites:
If you already have an active Central Finance system, your tax-relevant data may not be correct. Therefore, before implementing Central Payment, it will either be necessary to reload all your data with the tax checks activated or to carry out certain clean-up activities. In order to do this, we recommend that you engage a consultant. General Prerequisites You must enable the enhanced tax checks (tax configuration consistency check and tax recalculation check) far enough in advance so that payment-relevant open items that are transferred as part of ongoing replication are posted with accurate tax data.
Tax Reporting in Source System:
Before you start tax reporting out of a Central Finance system, you must have completed tax reporting from your source system for periods for which only open items and balances are included in the initial load.
Rounding of Tax Values:
When tax is posted, the posted values must not be rounded. Therefore, the currencies involved in the transaction must not have fewer decimal places in the Central Finance system than they do in the source system.
In the IMG activity Define Decimal Places for Currencies in Source Systems you can identify currencies that have different numbers of decimals in the source system and the target system. You must then ensure that each currency in your Central Finance system has at least as many decimals as in the connected source systems. If you are already working with an active Central Finance system and then decide to activate Central Payment and your decimal settings for currencies do not fulfill this requirement, it will be necessary to start your Central Finance implementation again from the beginning.
Configuration Consistency Checks:
To ensure that postings that are replicated to Central Finance are consistent for the purposes of reporting tax, it is necessary to make sure that the tax-related configuration settings of the source systems match the configuration settings in the Central Finance system. For example, a tax code in the source system has the tax category “input tax”. In the Central Finance system, the corresponding tax code (which may have been mapped) has the tax category “output tax”. If this inconsistency were not detected, it would lead to errors in tax reporting from the Central Finance system. In the IMG activity Activate Tax Consistency Check for Company Codes, you can activate or deactivate the tax configuration consistency checks and tax recalculation checks for combinations of individual source company codes and source systems.
Tax Configuration Consistency Checks:
If customizing entities for which configuration does not match in the source and target system are involved in a replicated FI/CO posting, the Central Finance system stops the posting. The system issues an error message describing the error and telling you where you can correct it. To make the correction, it may be necessary to introduce new customizing entities or add mappings. Once the incorrect configuration has been corrected the AIF messages can be restarted so that the documents are posted.
VAT Recalculation Check:
When postings are replicated to Central Finance, the system recalculates tax values based on the configuration
of the Central Finance system and compares the expected outcome with the replicated values to be posted and issues an error if a significant difference is detected. Prerequisites for this check:
The tax code must be configured with the indicator Error Message for Invalid Tax Amount (field label CheckID) set (T007A-PRUEF = ‘X’).
In addition, an appropriate tolerance must be configured for the Tolerance Percentage Rate for Tax Calculation.
This tolerance percentage rate defines, for the tax code, the percentage rate which is accepted as tolerance between a calculated value and a value which was replicated. This setting also applies to the values which are entered for documents posted directly in the Central Finance system. The Tolerance Percentage Rate for Tax Calculation must be set to check the value strictly, that is, as close to zero as possible.
Note: The tolerance amount arises from the application of percentage rates to the amount determined by the system. If the difference between the tax value replicated and the value calculated by the system is lower than the tolerance amount, the document is posted by the system and no warning or error message is issued.
The following cases are excluded from tax recalculation
Description |
Logical Constraint |
Postings that originate from contract accounting |
BKPF-AWTYP = 'FKKSU'
|
Postings that originate from sales and distribution |
BKPF- AWTYP = 'VBRK'
|
Postings that originate from CRM-billing |
BKPF- AWTYP = 'BEBD'
|
Postings with special G/L transaction type down payment request and with tax code |
BSEG-UMSKS = 'A' and BSEG-MWSKZ NE space |
Cross-company posting |
BSEG-KTOSL = 'BUV'
|
Tax jurisdiction code |
Structure of jurisdiction code specified for the schema of the country and BSEG-TAXPS is initial |
Posting with origin HR that have been split due to technical reasons
|
BKPF-AWTYP = 'HRPAY' and BSEG-KTOSL= 'HRA' |
Postings that have been split with classical split logic |
BKPF-AWTYP not in ('MKPF', 'RMRP', 'VBRK', 'WBRK', 'BEBD') and BKPF-XSPLT = 'X |
Initial load |
Transaction type = 'O' |
Tax Reporting Based on Postings from the Initial Load:
Initial Load of Documents Reporting of deferred tax is not supported for documents that were transferred as part of the initial load of documents. Initial Load of Open Items Open items are transferred without any tax information and without the other line items (income and expense).
Therefore, you should note the following:
- Central Finance does not support tax reporting for those periods of the initial load for which only balances and open items are transferred. For these periods, tax reporting must be done out of the source system and must be completed before you start reporting taxes out of the Central Finance system. Central Payment must not be activated until this task has been completed.
- Reporting of deferred tax is not supported for open items that were transferred as part of the initial load of open items and balances.
- If tax reporting is carried out based on selection via posting date (BUDAT) or tax reporting date (BKPFVATDATE) then, once you have transitioned to central tax reporting, you should not make retrospective postings into the periods which were covered by the initial load of open items and balances only.
Tax Reports:
- Country-Specific Requirements: Official Document Numbering (ODN) Central Finance does not currently support the concept of official document numbering. Consequently, tax reporting for countries where official document numbering is a legal requirement is not supported.
- Core Tax Reports
Technical Name |
Description |
RFUMSV00 |
Advance Return for Tax on Sales/ Purchases |
RFUVDE00 |
Print Program: Advance Return for Tax on Sales/Purchases (Germany) |
RFUMSV10 |
Additional List for Advance Return for Tax on Sales/Purchases |
RFID_PTVPRADPRC00 |
Pro-Rata adjustments due to PR calculation |
RFID_PTVPRADPRV00 |
Pro-Rata adjustments due to PR variation |
RFUMSRVG00 |
VAT Refund |
RFUMSV35 |
Tax Adjustment |
RFASLM00 |
EC Sales List |
RFASLD20 |
EC Sales List in Data Medium Exchange Format |
Fiori App |
Tax Reconciliation Account Balance |
Fiori App |
Tax Declaration Reconciliation |
Deferred Tax:
Central Finance does not currently support deferred tax with the initial load. If you have activated Central Payment, deferred tax must not be active in your source systems. Instead deferred tax must be processed in the Central Finance system only. Potentially deferred tax could work in a greenfield scenario.
Withholding Tax:
Withholding taxes are supported in the Central Finance scenario with some restrictions. Supported use cases and current restrictions are explained below.
- If you have activated Central Payment for a certain source company code, you post documents centrally with tax impact in the Central Finance system that are not available in the source system. That is why you must also do the tax reporting in the Central Finance system. This applies to all taxes including withholding taxes.
- Central Finance supports Extended Withholding Tax only. In all source company codes, for which withholding taxes shall be replicated to the Central Finance system, Extended Withholding Tax must be activated in the respective source system.
- Withholding taxes are calculated in the source system and transferred to the Central Finance system exactly as they are posted in the source system. They are not recalculated in the Central Finance system.
Please make sure that the withholding tax configuration in your source system(s) and the Central Finance system is semantically the same, even if various Customizing codes are different and require mapping.
- Certificate numbers are always generated in the Central Finance system. For this reason, you need to make all required settings for WHT certificate numbering in the Central Finance system.
- Accumulation data for withholding taxes and localization is not supported as part of the standard product. For more details, please read (Accumulated) Withholding Taxes and Central Payment
- Implement the relevant SAP notes for the source system.
Replication of Withholding Taxes to Central Finance:
In the following, the supported use cases for replicating withholding taxes to Central Finance are described. check ACCIT_WT structure exactly which fields are considered in the replication.
- Withholding taxes posted at the time of invoice (ongoing replication): Withholding taxes posted at the time of invoicing, are calculated in the source system and replicated to the Central Finance system in real time as part of the FI document.
- Withholding taxes posted at the time of payment (ongoing replication): Withholding taxes posted at the time of payment, are calculated in the source system and replicated to the Central Finance system in real time as part of the FI document. The relevant withholding tax data are replicated to the Central Finance system when an invoice is posted as well as when a payment is posted. Additionally, the payment transaction updates the withholding tax data referring to the invoice paid, and the updated data are also transferred to Central Finance. If you have activated Central Payment, withholding taxes at the time of payment are calculated and posted in the Central Finance system only. If you have activated Central Payment, withholding taxes at the time of payment are calculated and posted in the Central Finance system only.
- Withholding taxes in reversal documents When you reverse an invoice or a payment including withholding taxes in the source system, the respective withholding tax data are reset both in the source system and the Central Finance system.
- Withholding taxes in the initial load of documents and open items When you perform an initial load for documents or open items, withholding tax information is transferred to the Central Finance system.
- Withholding taxes within document changes When one of the withholding tax relevant fields in the FI document is changed in the source system, this change is transferred to the Central Finance system. This might occur, for example, for the Withholding Tax Base Amount field.
Configuration Consistency Checks for Withholding Taxes:
During the replication of FI documents with withholding taxes to the Central Finance system, the system checks the withholding tax configuration. For the list of Customizing tables that are compared in the source and the Central Finance system. If the configuration of Customizing entities, like for example withholding tax types and withholding tax codes does not match in the source and the Central Finance system, the posting is stopped. The system issues an error message in SAP AIF, which describes the error and how to correct it. Once, you have corrected the configuration, the SAP AIF message can be restarted and the document is posted in the Central Finance system.
(Accumulated) Withholding Taxes and Central Payment:
- If you use only withholding taxes (WHT) without accumulation, you can activate Central Payment and start preparing your WHT reporting in the Central Finance system.
- If you use withholding taxes with accumulation and want to activate Central Payment, you should first analyze your business processes and decide carefully, whether and when the Central Payment function shall be activated. Accumulation data are not replicated to the Central Finance system. It depends on the tax types used, on the point in time at which the accumulation is done, on whether Central Payment is active or not, whether the accumulated withholding taxes are available in the Central Finance system. Below the scenarios possible are listed.
External Tax Calculation:
If you use an external tax calculation system that is called in your source system, you must use the same external tax calculation system in your Central Finance system. External tax calculation out of SD invoicing is not currently supported.
Input Tax from Parked Documents:
Central Finance does not replicate parked documents. However, you can choose to run report RFPUMS00 in the source systems in which the parked documents were originally posted. The generated GL postings, including taxes, will then be replicated to Central Finance.
Relevant SAP Notes:
2509047 - Central Finance: Required SAP Notes to support Tax Reporting out of the Central Finance System
2623514 - Central Finance and Withholding Tax - SAP Notes
2494127 - SAP LT Replication Server for SAP Central Finance - VAT Configuration Check for Company Codes
2668261 - SAP LT Replication Server for SAP Central Finance - Withholding Tax Configuration Check for Company Codes
2154420-SAP LT Replication Server for SAP Central Finance
Conclusion:
This blog is very useful for all the customers and Consultants who are planning to implement Central Finance .it Covers the Consideration of Understand the supported various taxes and Configuration of Taxes.
