Posting Taxes
Which taxes are to be paid and how they are to be posted in the system depends on the tax regulations defined by law in the country of the company concerned. The postings made are controlled by the tax code. A distinction is made between the following:
Deductible taxes
Input tax is paid to the vendor, who passes this on to the tax authorities. The offsetting entry for the tax payment is posted to a separate input tax account. On the basis of this account and the sales tax account, Financial Accounting can calculate the difference between the tax received and tax paid and pay the amount to the appropriate tax authority.
The system creates a line for every tax code you enter. If various line items have the same tax code, the tax postings are summed up.
Non-deductible taxes
There are three different ways of processing non-deductible taxes:
With this processing method, you post the invoice and tax amounts to the vendor account. The taxes are distributed among the G/L account line items and totaled in each case as a net value.
With this processing method, you post the invoice amount and the tax amount to the vendor account. The offsetting entry is split: the offsetting entry for the invoice amount is posted to the stock account, and the offsetting entry for the tax amount is posted to separate tax accounts.
In this case, the invoice does not contain any taxes. The tax is determined by the tax code entered. You do not enter a tax amount. The tax expense is either distributed among the invoice items or posted separately. The offsetting entry is posted to separate tax accounts.
In all three cases, the tax can be defined on multiple levels. The postings to the individual levels can be distributed to different accounts.
The procedure, tax records, and the accounts to be posted are controlled via the tax code; you can maintain the settings in the Customizing system of Financial Accounting.