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
Condition Type Example
- Condition record defines access sequence, and other characteristics about the condition
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
Configuration - Assign Tax Procedure to Country
- Tax Procedures are assigned to countries in transaction OBBG
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
Configuration - Maintain Jurisdiction Codes
- Jurisdiction codes are maintained manually in transaction OBCP for tax procedures that do not use an external system
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 - Properties
- The properties of the tax code identify its code, name, type (input vs output) and other information about it
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 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
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)
