Deferred Tax in Accounts Receivable (SAP Library

Deferred Tax in Accounts Receivable

Purpose

This process illustrates how the SAP System handles value-added tax (VAT) on customer invoices for services.

Process Flow

You provide some services for a customer and enter an invoice, including VAT, in the system.

Where services are concerned, you cannot credit the VAT to the regular output tax account until the customer has paid the invoice and you have sent it a tax invoice in acknowledgement. So for the time being you have to post it to a separate account for deferred output tax.

To achieve this, you assign the tax item a tax code for deferred tax (in Country Version Thailand, the tax code for 10% deferred tax is DT).

The tax code instructs the system to post the VAT to the deferred output tax account. Since the tax is not on the regular output tax account, the system knows that it is not yet available for reporting purposes.

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Once you have entered the invoice, you print it out (see Correspondence). Note that this document is only an invoice and does not serve as a tax invoice.

Your customer pays the invoice and advises you accordingly.

When you receive the notification, you enter the payment in the SAP System as normal.

The system creates an accounting document as follows:

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You can then print out a receipt for the customer, if required (again, see Correspondence).

You create a tax invoice for the customer using the Transfer Deferred Tax program.

The program creates an accounting document to transfer the tax from the deferred tax account to the regular tax account, assigning it a new regular tax code in the process (in Country Version Thailand, O1).

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The program also assigns the accounting document a tax invoice number.

You print out the tax invoice (see Correspondence).

Result

When you come to prepare an output tax report, the system includes the tax from the accounting document from step 4, showing the tax invoice number, the tax date, and so on.