Deferred Taxes (SAP Library - Consolidation (FI-LC))

Deferred Taxes

Provisions for deferred taxes can be created on different levels:

in individual financial statements

from standardizing entries to corporate valuation

from consolidation activities.

Possible provisions for deferred taxes resulting from valuations in individual financial statements will not be dealt with further at this point as they are not part of a Consolidation system.

Due to different valuations, standardizing entries at corporate valuation could, in some circumstances, be subject to the rules governing the formation of provisions for taxation. Since these entries within the Consolidation system are generally carried out manually, the system can, if necessary, automatically post accruals during such an entry.

This also applies to consolidation activities that are not limited to one company but which apply generally to several companies or a subgroup. In this case, it is also possible to control the posting of this provision for taxation in Document Type Maintenance. This procedure is similar to the one used for the automatic posting of adjustments to net income/retained earnings.

When the indicator Post deferred taxes to the credits is selected, a provision for taxation on the assets side is automatically posted in the respective transaction. When the indicator Post deferred taxes to the debits is selected, a provision for taxation on the liabilities side is automatically posted in the respective transaction. The system multiplies the adjustment to net income/retained earnings by the appropriate tax rate.

The entry is posted to the associated selected items. You can make this assignment in the Implementation Guide in the section Master Data ® Financial Statement Items ® Maintain Selected Items.

The balance sheet item is entered separately under the classification key LAB with a debit/credit indicator, and the respective income statement item is entered under the classification key LAG.

If the FS item requires a transaction type then this can be entered in addition to the item number in selected item maintenance.

Define the respective tax rates in Company Maintenance. Enter the tax rate for each company and key date.

The tax rate for the company is automatically used during standardizing entries at corporate valuation.
Subgroup-related consolidating entries are use the tax rate of the parent company.
When posting in pairs, say, during IC elimination, you can choose between two procedures for determining the tax rate in Document Type Maintenance. Either the arithmetic average of the tax rates of the two related companies is determined (composite rate), or the tax rate is taken from the company where the adjustment to net income is posted. This is primarily the first of both companies displayed in the elimination entry. During elimination of IC profit/loss in inventory you can choose the company where the adjustment to net income, and thus the deferred tax, is posted to.

Adjustment to Net Income/Retained Earnings, and Deferred Taxes