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How SAP SD determines Tax Code

April 19th, 2010 Leave a comment Go to comments

In sales order processing procedure, the output tax amount is calculated automatically according to the configuration. Below screenshot shows the tax rate is 4% and total tax amount is 28.00 USD based on sales price 700.00 USD.

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This article tries to analyze how the tax is calculated from a step-by-step example.

1. Several tax related condition types are configured in the pricing procedure. For example, UTXJ – Tax Jurisdict.Code, JR1 – State Tax and so on. The system determine the pricing procedure using document pricing procedure and customer pricing procedure.

Condition type UTXJ is specifically used in USA which will be an interface condition type where VERTEX is used. MWST is an output tax can be used where there is a sale in Europe, and can be applied where ever necessary.

2. Condition type UTXJ is used to determine the tax code. Go to transaction VK13 and enter UTXJ. A pop-up window with three key combination will appear. Choose the third option – Domestic Taxes. Enter country US and execute the program, the detail screen shows how the tax code is determined according to customer tax class and material tax class.

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The customer tax class and material tax class are stored in customer master and material master separately. In my test example, both value are 1, so the tax code should be O1 according to the condition record.

3. Go to IMG path: SAP Customizing Implementation Guide -> Financial Accounting (New) -> Financial Accounting Global Settings (New) -> Tax on Sales/Purchases -> Basic Settings -> Check Calculation Procedure. Choose condition type JR1, Choose ‘Records for access’ button.

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Enter Country ‘US’, Tax Code ‘O1’ and Tax Jurisdiction ‘GA0000000’ and execute the report. The tax rate is 4% which is the same percentage in the sales order. Technically, the condition table is A053 – Taxes via Jurisdiction Code.

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In next post, I will try to explain how the tax amount is posted to corresponding G/L account.

Reference

http://help.sap.com/erp2005_ehp_04/helpdata/EN/a8/b72038f11e9b64e10000009b38f8cf/frameset.htm

  1. SAP Training
    August 31st, 2011 at 14:37 | #1
    Reply | Quote

    Do you have an example of how the Canadian taxes are configured in SAP with GST, PST and HST as this is much more difficult.

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