Dealing with Tax on Sales/Purchases (SAP Library

Dealing with Tax on Sales/Purchases

Use

Tax on sales/purchases can be dealt with in different ways according to the tax-based requirements of your organization. The update can be gross, separate or net:

Gross tax on sales/ purchases

In this procedure, the system posts taxes to the expenditure or revenue account assignment. The lines for sales/purchase tax are distributed proportionally to the FM account assignment elements (for example, commitment item, funds center and fund) of other relevant lines.

Separate tax on sales/purchases

In this procedure, the system posts the taxes in Funds Management to a separate commitment item. The lines for sales/purchases tax are distributed proportionally to the FM account assignment elements (for example, funds center and fund) of the relevant lines. The tax commitment item is derived, for example, from the tax account.

Net tax on sales/purchases

The tax is updated to a separate commitment item as it is in the separate tax update, provided that the tax account is assigned to a statistical commitment item with financial transaction 30. Otherwise, no update is carried out.

Define whichever procedure you want to use in Customizing of Funds Management in the IMG activity Make Other Settings.

Prerequisites

General

The tax line cannot have an account assignment on a funds center. Otherwise, the system cannot interpret the posting as tax.

Separate Update

A separate commitment item must be created for the input tax and output tax (with financial transaction 30 and item category 2 for the revenue item and item category 3 for the expenditure item).

For further information on maintaining commitment items, see Maintaining Commitment Items

These commitment items must be assigned to the tax accounts.

For more information, see Deriving the Commitment Item from the G/L Account and Account Assignment Derivation .

If your organization works on a payment basis and transfers payments to Funds Management using the program Payment Selection Enhanced Function , a commitment item with financial transaction 30 must be defined in the tax accounts for all three update types. If you use net update, this commitment item must also be flagged as statistical.

If you use payment selection original function, a commitment item with financial transaction 30 must be assigned to the tax account for the separate update. If required, you can also outsort the commitment item with another financial transaction for the other types.

Features

The form of tax on sales/purchases update you select is related to budgeting questions and the tax situation of your organization.

If your budget estimates contain the taxes for expenditures in addition to the expenditures and you are not obliged to provide information on the tax portion of the expenditure separately, you should select the gross update. The tax amount is then added to the expenditure commitment item. Availability control is also carried out against the gross budget amount entered for the expenditure item.

If you issue the tax on sales/purchases separately, you should choose the separate update. In this case, the tax amount in Funds Management is posted to the commitment item assigned to the G/L account. In this case, availability control is carried out on the tax amount.
If you do not want availability control to be carried out for tax postings, you have to define appropriate exception tolerances for availability control in Customizing.
If you receive deliveries and services free from tax on sales/purchases, you should you use the net update. Availability control is then carried out on the net amount of the expenditure too.

If you work on a payment basis in your organization and therefore transfer payments to Funds Management using Payment Selection , the appropriate tax lines are converted to payment during payment selection for the gross and separate tax updates.

For a partial payment of an invoice, the amount paid is distributed to the appropriate expense or revenue lines and to the tax line of the invoice document, depending on the conversion procedure selected (Supplementation or Splitting Procedure).

If you use the Enhanced Function for Payment Selection, a statistical commitment item must be assigned to the tax accounts with the net update. The additional – statistical - tax lines are converted to payment with the payment selection as with the separate update.