Verity Solutions

SAP FICO Advanced – Taxes

Overview

Step by Step Guide to Tax Configuration

 

Below example shows how the tax codes will be setup in SAP. These are the set of tax codes setup for the state of Arizona:

 

Step 1: Assign Tax procedure TAXUSJ to Country US

save

 

Step 2:  Define Tax Jurisdiction Structure

Below is the structure used for setting up the Tax Jurisdiction codes:

This means the first 2 characters in a Jurisdiction code refer to State followed by others

As explained below:

S.L.PartNumber of CharactersRemarks
1State2 
2County2 
3City2 
4District3Will always be 000since it is not used.

 

Step 3:  Create below tax codes

T-code: FTXP

Tax CodeDescription
OLLicense Tax
OMMaintenance Tax
OSService Tax
O00% Tax Exempt

 

The tax codes configured in Softrax will be mapped to a Jurisdiction code in SAP. The Jurisdiction code is linked to a Tax code (as shown above). One Tax Code can be linked to multiple Jurisdiction codes. That means the same tax code OL, for example, can be tied to different Jurisdiction codes & have a different tax rate as shown below:

 

Tax CodeJurisdiction codeRate
OLAZ01020006.25 %
OLAZ01030007.25%

 

 

ENTER

 

 

Step 4:  Link the tax codes to GL Accounts

Note: The above tax codes can be mapped to different GL accounts or to the same GL account.

 

On the below screen:

Keep cursor on the account key for which you wish to link the GL Account & click on Tax accounts

 

Enter your chart of accounts:

 

 

Step 5:  Maintain Jurisdiction code  on the customer master on the general data section as shown below:

Transaction XD03

 

While entering the invoice manually user needs to check the jurisdiction code from the customer master of the relevant customer & just enter one of the 4 tax codes (OL,OM,OS or O0), the system derives the tax rate in the back ground.

NOTE: Please note that no jurisdiction codes needs to be entered when the invoice is created in SD. This will default from the customer master to the contract & then from the Contract into the billing document & the accounting document.

 

Configurations in SD module:

 Sales and Distribution -> Basic Functions -> Taxes -> Define Tax Relevancy Of Master Records

1) Customer Taxes (T-Code: OVK3)

2) Material Taxes (T-Code: OVK4)

3) Condition Records (T-Code: VK15)

Following combinations need to be setup:

Customer MasterMaterial MasterTax Code
           0               0     O0
           0               L     O0
           0               M     O0
           0               S     O0
           1               0     O0
           1               L     OL
           1               M     OM
           1               S     OS

 

 

 

Verify Conditions JR1, JR2,JR3,JR4

IMG Path: Sales and Distribution -> Basic Functions ->  Pricing -> Pricing Control -> Define Condition Types

 

 

 

Each user has to make this configuration change in accounting options:

Follow the below steps:

Transaction: FB70

Check the flag next to . & save

How Jurisdiction codes are captured in contracts:

Step 1: customer master:

Tax code: Maintain Tax code for level 1:

 

Tax code: Maintain Tax code for level – 2

 

Tax code: Maintain Tax code for level –

The 7.7 % is the total of the tax at the below 3 levels

Level%
Arizona State5.6
Mariposa County0.7
Scottsdale City1.4
TOTAL7.7

Prerequites:

a) Following Tax jurisdiction codes have been setup:

           AZ0000000

           AZ0100000

           AZ0101000

b) Tax code OM has been configured for all the above 3 jurisdiction codes

Contract:

Create a contract (900000046) for material 7000000002

Double click on the line item for material 7000000002 & click on conditions tab:

Example for FI Invoice.

Transaction FB70

Enter the Tax Code & the Jurisdiction Code manually as shown above. Make sure that the Calculate tax check box is flagged. Hit enter to find the amount of the header in this case it is 1,077.00 .

Now enter the amount of 1,077.00 in the header

amount () & Save to post the document.

 

Below is the accounting entry:

T-code: VK12

 

 

 

 

Talk to Us

1-419-408-3178

1-419-408-3178

Fees

$500.00

Curriculum

Course Curriculum

Free Career Counselling



    Training Review

    Add testimonial description here. Edit and place your own text.

    John Doe

    Codetic

    Training FAQ