Debit Memos and Credit Memos Before Tax Transfer (SAP Library

Debit Memos and Credit Memos Before Tax Transfer

Purpose

This process shows you how to enter a debit memo (or credit memo) for input VAT (value-added tax). You can follow this process, for example, if a vendor sends you an invoice with the wrong tax rate and later sends you a credit memo to change the tax rate.

The process described here assumes that you have not paid the original invoice.

Process Flow

You enter the invoice.

This graphic is explained in the accompanying text

In this case, the vendor has charged you VAT at 23%, but it should have charged only 6% instead.

You enter a debit memo for the tax, and contact the vendor to tell them that they have charged the wrong tax rate.

This graphic is explained in the accompanying text

When you enter the debit memo, you must post it using the original tax codes. The debit memo document must:

Reverse and clear the original tax item in its entirety
Create a new tax item

This enables the tax transfer-posting program to make links between memos and the original invoice and track payments against both the documents. Payments must be posted to individual documents (invoice, credit or debit memo) and must not be cleared with one clearing document.