Tax codes in SAP

 Tax codes

Tax codes in sap


Tax codes are quite a key section to understand. The tax code really is meant to define the type of transaction clearly and accurately. But not only just define the type of transaction but also sufficiently to enable accurate reports. Should be able to report all VAT/tax-relevant transactions correctly. Should cover the full scope of transactions. And any possible overlaps should be eliminated.

There are several sections to defining tax codes in SAP. We've got these outlined below the key data fields and we'll look at these one by one.

  1. Reporting country: firstly, it's an additional field which is unlocked after adds basically, the plants aboard functionality. In the tax code settings, you'll be able to define the country to which our tax code is relevant. Otherwise - default reporting country matches with the one of the company codes. So, what we typically see is when you've got a company code with overseas VAT registrations, then that's where you'd want the reporting country to be defined.  It is recommended to have the reporting country maintained against all applicable tax codes. And the reason for this really is, it enables better reporting but also control.
  2. EU codes: Relevant for cross-border transactions. And the EU code is actually a standard within SAP, and it's used to classify certain tax codes Important for the EC sales list. But there can also be an impact on other reporting, for example related to deferred taxes where we've seen this. Obviously within the EU.
  3. Rates: Quite straightforward. It's going to indicate the tax rate that should be applied. Important here to look things such as rate changes and how they should be handled. Ideally create new tax codes for rate changes, old rates to be marked as expired and not used anymore (The deactivation tick box in FTXP). Those should be configured so that the user cannot select it for manual posting.

Will discuss about couple more points regarding tax codes in further posts

Comments

Post a Comment

Popular posts from this blog

Difference between Manual and Quick Payment

Functionally: Manual Payment:  These are manual check payments. Payments processed by writing a cheque manually, issued to the Supplier and later updated in the system. you can select invoices having Payment Method as Electronic Quick Payment:  Quick payment are computer generated payments. Cheques will be printed from the system. for quick payments even though a check is voided we can reissue the same check since it is a computer generated payment. interest invoices are generated only for quick payment Technically : With Manual Payment option, you can apply the payment on any invoice and on any Site of the Supplier.  Manual Payments can be recorded against invoice with supplier site having a 'Hold All Payments' checked whcih is not possible in case of Quick Payments Where as in Quick Payment, system picks up the Supplier Name and Address based on the invoice you selected to pay and you are not allowed to alter the site details.
Read more

Distribution Sets

Image
Distribution sets are used to have the invoice distributions entered automatically. It can have information like charge account, tax code.. etc which will flow to invoice distributions and later they can be adjusted if required.  Distribution sets can be selected while keying in an invoice. They can be defaulted from supplier site as well. Creating Distribution Sets     To create a Full Distribution Set: 1. In the Distribution Sets window, enter the Name and Description of the Distribution Set you are creating. 2. Enter the Account and Description for each distribution and enter the Percentage of the invoice amount that you want to distribute to the Account. You can enter positive and negative percentages. Create as many distributions as you need. The sum of the distribution percentages must equal 100 or 0. 3. Save your work. Payables automatically assigns type Full to your Distribution Set.     To create a Skeleton Distribution Set: 1. ...
Read more

Prepayment: Difference between Temporary and Permanent Prepayments

A prepayment is a type of invoice you enter to pay an advance payment for to a supplier or employee. For example, you may need to pay a deposit on a lease, or you may need to pay an employee an advance for travel expenses. You can later apply the prepayment to one or more invoices or expense reports you receive from the supplier or employee to offset the amount paid to them. You can enter either a Temporary or a Permanent type prepayment.   Temporary prepayments can be applied to invoices or expense reports you receive. For example, you use a Temporary prepayment to pay a hotel a catering deposit. When the hotel's invoice arrives, apply the prepayment to the invoice to reduce the amount you pay.  Permanent prepayments cannot be applied to invoices. For example, you use a Permanent prepayment to pay a lease deposit for which you do not expect to be invoiced. If you want to apply a prepayment to one or more invoices or expense reports, you must firs...
Read more

Glad you came here

It is part of my attempts to write about tax topics in general. Scribbling notes on topics I work on. Crossed 12K hits. Glad to know it's helping others as well. I seek your feedback. Raise your opinion. Share with people who can benefit from it. Contribute in the comments section, on social media, over a cup of coffee, or however you prefer. This will help me and the community tremendously.