Tax Classification 

Definition

Groups together the attributes that you require to assign the data required for tax determination to a business partner.

Use

·        Country

Establishes in which country a business partner does business. A tax group (and thus also a tax rate) is assigned to this country.

·        Region

If necessary, you must state a region (e.g. a federal state) in addition to the country.

·        Tax type

The tax type establishes which tax is used as the basis of the country-specific tax determination.

You can define several tax types per country. The system uses the tax type according to the following criteria during order processing:

¡        Geographical business location of the supplying plant and the customer (ship-to party)

¡        Tax classification for business partner and product

·        Tax group

In connection with the country, the region if applicable and the tax type, the tax group serves to determine the tax rate for sales and distribution.

You can define the following tax groups:

Tax group	Meaning
FULL	Full tax rate
HALF	Half tax rate
NONE	No taxation

For more information about the system settings for tax groups, see in the Implementation Guide (IMG) Customer Relationship Management ® Basic Functions ® Taxes ® Basic Settings ® Tax Types and Tax Groups ® Define Tax Types and Tax Groups.