Customizing for Tax Codes 

Use

To work with deferred taxes, you require two tax codes for each form of tax. You use the first tax code for the deferred tax item, and the second for the normal tax item, once it has been recognized (see Deferred Taxes in Business Transactions). These tax codes are known as “deferred tax codes” and “target tax codes” respectively.

Procedure

...

       1.      In Customizing for Financial Accounting (FI), choose Financial Accounting Global Settings ® Tax on Sales/Purchases ® Calculation ® Define Tax Codes for Sales and Purchases.

       2.      Define the target tax code.

       3.      Define the deferred tax code, and, on the Maintain Tax Code: Rates screen, choose Properties.

       4.      Enter the target tax code in the Target Tax Code field.

Result

When you run the Deferred Tax Transfer program, it transfers the deferred taxes from the deferred tax codes to the target tax codes, and thus from the deferred tax accounts to the target tax accounts.