4/28/2021 Basic SAP Tax Overview | SAP Blogs

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Former Member
June 9, 2015 3 minute read

Basic SAP Tax Overview

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Purpose

I would like to provide a document that outlines the basics of SAP tax
con guration and provides a couple of examples of how tax code could
be determined in SD and MM.

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Overview

SAP provides the majority of the tax configura on out of the box by country
There are three SAP areas that work together to determine taxes FI,MM, and SD

FI – Base configura on for tax procedures, rates and accounts

SD – Configura on/master data to determine output tax code

MM – Configura on/master data to determine input tax code

Master data such as customer, vendor, and material, as well as transac onal 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 configura on is done by country

All company codes in the country share those se ngs
Two Main Components:
Tax Calcula on Procedure – Provide the method of calcula on – normally use
SAP standard
Tax Codes – Provide the rates

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Tax Procedure

These are provided by SAP for each country – General recommenda on is to use
delivered logic
Tax Procedure, related condi ons, and access sequences can be viewed in
transac on SPRO at the path Financial Accoun ng Global Se ngs>Tax on
sales/Purchases>Basic Se ngs>Check Calcula on Procedure

Tax Procedure Example

Steps define calcula on, condi ons, and account assignments

Condition Type Example

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Condi on record defines access sequence, and other characteris cs about the
condi on

Access Sequence Example    

Access Sequence defines field required to access a condi on

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For example to find a condi on for the entry below the system will use Country, Tax
Code, and Tax Jurisdic on

Con guration – Assign Tax Procedure to Country

Tax Procedures are assigned to countries in transac on OBBG

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Tax Jurisdictions

Represent government authori es to which taxes need to be paid

SAP allows up to 4 levels tax jurisdic ons represen ng state, country, city, and
others

Configura on – Jurisdic on Code Structure

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Tax Jurisdic on structure must be defined in transac on OBCO

Configura on – Maintain Jurisdic on Codes

Jurisdic on codes are maintained manually in transac on OBCP for tax procedures
that do not use an external system

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Tax Codes

Tax Codes are maintained by country and jurisdic on code

They define the rate that is used in calcula on
They are maintained in transac on FTXP

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Don’t be confused on the name, this transac on can create,maintain, and display
tax codes

Tax Code – Proper es

The proper es of the tax code iden fy its code, name, type (input vs output) and
other informa on about it

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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 condi ons that are used to
calculate a value in the follow on transac ons such as SD invoice

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Tax Account Determina on

Accounts are assigned in transac on OB40

You can also see the account assignment key and the condi ons that are used to
calculate a value in the follow on transac ons such as SD invoice

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Tax Code Determina on

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 mul ple ways to determine the tax code, condi on tables, master data,
programs, manual entry, etc.
Method can be different by situa on
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)

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Assigned tags

FIN (Finance) | sap erp nancials | tax |

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4 Comments

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Erwin Leitner

June 9, 2015 at 7:56 pm

Hello,

Really great stu .

all the best erwin

Like(0)

Former Member

June 10, 2015 at 1:23 pm

Nice Document , Thanks John.

Like(0)

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Revathy Somaskandan

December 14, 2017 at 11:10 pm

Beautiful explanation. It gives process information and needed

con guration.

Thank you

Like(0)

Narasimha reddy Tavanam

August 4, 2020 at 7:27 pm

Informative, thank you.

Like(0)

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