tax code and company code assignment in sap

3016325 - How to assign GL account for Tax codes

How to assign GL Account for Tax codes？

Environment

SAP S/4HANA Cloud Public Edition

Note：Using Tax on Purchases(VST/Z8) as an example. This SSCUI 100297 specific configuration information depends on your actual business requirements.

• Open Fiori App Manage Your Solution.
• Open SSCUI 100297(Automatic Account Determination).
• Start Configuration：

      Step1:Area

        Area:Financial Accounting         Subarea:General Ledger Accounting         Process:Define Tax Accounts

     Step2:Parameters

        Transaction Group:%TX (Tax on Sales/Purchases)         Transaction Key:VST         Chart of Accounts:YCOA         Tax Code:Z8         Country:CN

     Step3:Account Assignments

        Click "Add" button.         Tax Code:Z8         Country:CN         Tax Account Number:12600000(GL Account)         Click "Review" to check it.         Click "Save" when the check result is correct.

        Image/data in this KBA is from SAP internal systems, sample data, or demo systems. Any resemblance to real data is purely coincidental.

100297, %TX, Automatic Account Determination, Tax on Sales/Purchases, Tax codes, VST, MIRO, FTXP, Create Supplier Invoices-Advance, Input Tax, FF709, FF 709, T030K , KBA , FI-FIO-GL-CA , Cross Application Configuration in General Ledger , MM-SRV-GF-TAX , Taxes , FI-FIO-GL-CA-2CL , Cross Application Configuration in General Ledger (Publ Cld) , How To

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Setting Up Tax Codes

After completing this lesson, you will be able to configure new tax codes in the system

Tax Codes Introduction

Max is now looking at the impact on the tax accounting of the new travel expense procedure.

Prerequisites for Tax Accounts

Let's talk about taxes, a basic legal requirement in tax reporting. We need to tell the difference between 'input tax' and 'output tax'. Simply put, input tax usually means the taxes we pay to our suppliers. On the other hand, output tax refers to the taxes we collect from our customers.

In the master data of the general ledger account, you can define tax accounts or accounts to which tax items are posted. You can do this in the Tax Category field by using the 'less than' and 'more than' symbols.

During the accounting journal entry process, the properties of the tax code used will define the tax posted as an input tax or an output tax.

All other G/L accounts may have one of the following entries in the Tax Category field:

Creating a Tax code

The tax procedure of SAP S/4HANA supports the accounting of taxes in several ways:

The tax amount can be determined upon request.

The tax amount is verified by the system at the document level.

The tax accounting postings are generated automatically to the tax accounts.

Taxes can be adjusted automatically for cash discounts and other deductions if required.

The tax reporting is supported.

To enter the tax in a journal entry and calculate it automatically, you need a tax code.

When an accounting document is posted, depending on the G/L accounts used, the system checks if it's necessary to enter tax codes. The tax code connects the document to the tax calculation. In addition to other information, the tax code also contains tax rates. Tax rates are assigned to the tax types used in the calculation procedure.

Usually, each tax code requires just one tax rate. However, for more complex cases, it’s possible to set up a tax code with several tax rates for different tax types.

For example, let's say there's a tax code calculation of 10% input tax on an item, where 40% of the tax amount is non-deductible. In this situation, the tax code will have 6% standard input tax rate and 4% non-deductible input tax rate.

SAP S/4HANA provides several pre-delivered tax codes. You can check the relevant Accelerators in the Best Practice Explorer at:

  SAP Best Practices for SAP S/4HANA Cloud

Time-Dependent Taxes

In certain countries or regions, time-dependent tax calculation (TDT) is available. When you turn on this feature, certain tax rates are applied during defined periods. This method helps to easily accommodate any current or upcoming tax rate changes.

Usually, adjusting tax rates involves creating new tax codes and managing multiple tables. However, in countries where time-dependent tax calculation is available, the process is made simpler and only involves maintaining existing tax rates.

When you get notifications about rate changes, you can add a new validity period to your current tax codes. As soon as the revised tax rate becomes effective, all line-item-related tax calculations will automatically use the correct rate. TDT not only reduces your tax rate maintenance efforts but also lowers the risk of discrepancies between your sales and finance documents.

You can find the current list of countries and regions where time-dependent-taxes are enabled in the SAP Help portal: Countries/Regions Where Time-Dependent Taxes Is Enabled | SAP Help Portal

Once time-dependent taxes (TDT) are active for a target country or region, you should consider using the Maintain Tax Box Mapping for Advanced Tax Return configuration activity. This will help you manage the box mappings, tax groups, and tax box structures. This step may not be necessary or available, depending on the local tax requirements. Ensure you determine whether this step is indeed necessary for your unique situation.

Maintain Tax Codes

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• May 1, 2017
• by Sachin Patil

Tax configurations are done in SAP at the country level. This is because all businesses in the same country need to follow the same taxation policies and generally accepted accounting principles while preparing their financial statements. Therefore, tax configurations in SAP are done for each country. Any company code which is then created in that country can then automatically use the tax configuration that is done for that country. So tax configurations need not be done for each and every company code again and again. This saves the effort required to carry out the tax configurations for every company code separately.

SAP allows the tax rates to be defined internally or the tax rates may be fetched from an external taxation system like Vertex. The tax configurations are stored in SAP in the form of tax calculation procedures and tax codes. These procedures can then be assigned to different countries. These procedures then become available to any company code which is created in that country.

The tax rates are provided by the tax codes are the different tax types while the method of calculation is defined in the tax calculation procedure. SAP allows the following taxes to be processed while posting documents:

• Tax on sales and purchases.
• Additional taxes like VAT which our country specific.
• Sales and Use tax as in USA.
• Withholding tax like income tax in India.

Concept Of Tax Jurisdictions

Tax jurisdictions represent the government authorities to which the taxes are paid. SAP allows up to 4 levels of tax jurisdictions representing state, county, city and others. The tax jurisdiction structure needs to be defined before the tax jurisdictions can be created in SAP. As mentioned before, the tax jurisdiction structure can have four levels. The tax jurisdiction structure defines the length of characters which will be used to represent each level in the tax jurisdiction code. The tax jurisdiction code structure needs to be defined for every tax calculation procedure.

Once the tax jurisdiction code structure has been defined, the next step is to create the actual tax jurisdiction codes. The tax jurisdiction codes need to be created for every government authority to which the tax needs to be paid.

Assign Tax Procedure To Country

Step 1: The tax configuration details are stored in the tax procedure. The first step is to assign the tax procedure to the country in which the company code exists. Navigate to the Implementation Guide menu path as shown below or execute the transaction code OBBG.

Step 2: Position to the country to which the tax calculation procedure is to be assigned and enter the tax calculation procedure details as shown in the screenshot below.

Step 3: Click on the save button to save the changes. A success message showing that the changes have been saved is displayed.

Define The Tax Jurisdiction Code Structure

Step 1: Navigate to the implementation guide menu path as shown in the screenshot below or execute the transaction code OBCO from the SAP easy access menu.

Step 2: Select the tax procedure for which the tax jurisdiction code structure needs to be defined and enter the length for the various jurisdiction levels as shown in the screenshot below. The length chosen should be sufficiently large to accommodate enough tax jurisdiction codes as per the requirement. For e.g. the first level represents the state. If the number of states is large then it is better to have a four letter key to represent it rather than having a two letter key. This is because the number of combinations possible with a four letter key will be much more than those possible with the two letter key.

Step 3: Click on the save button to save the changes. A success message indicating that the changes have been saved is displayed.

Define The Tax Jurisdiction Codes

Step 1: Navigate to the implementation guide menu path as shown below or execute the transaction code OBCP from the SAP easy access menu.

Step 2: Enter the work area details in the pop-up as shown in the screenshot below and click on the continue button.

Step 3: Enter the tax jurisdiction code and its description as shown in the screenshot below. On the basis of the configuration for the tax jurisdiction code structure, the first two letters of the tax jurisdiction code will represent the state, the next three letters will represent the county, and the next four letters will represent the city. Therefore, every tax jurisdiction code will be nine characters long. It will be possible to determine the correct taxing authority on the basis of the tax the jurisdiction code described above.

Step 4: Click on the save button to save the new tax jurisdiction code. A success message indicating that the new tax jurisdiction code has been saved is displayed.

Define Tax Codes

The tax codes are defined for each and every country. The tax codes contain the actual rates to be used while calculating the tax on the basis of the tax calculation procedure. Each country can have multiple tax codes for different types of taxes like input tax sales and purchases, output tax on sales and purchases, etc.

Step 1: Navigate to the Implementation Guide menu path as shown in the screenshot below or execute the transaction code FTXP from the SAP Easy Access menu.

Step 2: Enter the country in the pop -up as shown in the screenshot below and click on the continue button.

Step 3: Enter the tax jurisdiction code and the other details on the screen as shown in the screenshot below and press the Enter key. The tax code represents the type of the tax for which the rates are going to be maintained.

Step 4: Enter the tax rates as shown in the screenshot below. These tax rates can be used to calculate the tax while posting a document in SAP. The method of calculation will be determined on the basis of the tax calculation procedure.

Step 5: Click the save button to save the changes. A success message indicating that the changes have been saved is displayed.

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