Tax Codes (SAP Library

Tax Codes

Definition

Use

In Taiwan, the value-added tax (VAT) rate ranges from 0% to 25% depending on the industry, the goods and services sold, whether the sales are local sales or exports, and whether the purchases are local purchases or imports. This means that you have to differentiate between the different tax types you use in order to create your VAT media files.

In general:

5% is the standard rate for goods, services and imports
15% and 25% apply to various entertainment industries
1% and 2% apply to financial services
0% applies to exports
Special industries, such as non-profit making organizations, are exempt from paying tax, and similarly some goods sold, such as medicines, are not subject to tax

You maintain your tax codes in Customizing for Financial Accounting:

Financial Accounting Global Settings ® Taxes on Sales/Purchases ® Calculation ® Define Tax Codes for Sales and Purchases

Note

There is no prescribed naming convention for tax codes in Taiwan. The codes listed below are intended to serve as examples.

Output tax	Input tax
You need tax codes to differentiate between: Taxable items Items subject to zero tax Items exempt from tax Special taxes	You need tax codes to differentiate between: Local purchases of goods and services that are tax deductible Local purchases of fixed assets that are tax deductible Local purchases that are not tax deductible Imports of goods that are taxable Imports of services that are taxable Imports of fixed assets that are taxable Imports that are exempt from tax
To illustrate:	To illustrate:
S0 represents the code applied to items subject to zero tax S1 represents the standard tax rate at 5% S2 represents the tax levied on financial industries for non-core operations at 5% SE represents the code applied to items that are exempt from tax SF represents the tax levied on financial industries for core operations at 2% SI represents the tax levied on the reinsurance industry at 1% SR represents the tax levied on the special entertainment industries at 25% ST represents the tax levied on the special entertainment industries at 15%	I3 represents tax levied at 5% on imported goods I4 represents tax levied at 5% on imported services (in Customizing, this rate is set to 0% given that the 5% is levied only at the time of reporting) I5 represents tax levied at 5% on imported fixed assets I6 represents imports that are exempt from tax V3 represents deductible tax levied at 5% on goods and services purchased in Taiwan V5 represents deductible tax levied at 5% on fixed assets purchased in Taiwan V6 represents non-deductible tax levied at 5% on goods and services purchased in Taiwan

Integration

You post your tax codes when you post your vendor documents and your customer documents. The information is then transferred to the Data Medium Exchange Engine (DMEE) that you use to create your VAT media files.

This graphic is explained in the accompanying text

When you have created your tax codes, you can use split valuation and info record functions to default the various tax codes to different combinations of materials and vendor codes. By doing this, you avoid having to enter tax codes manually when you post your documents.