Tax Determination in Leasing 

Use

To determine taxes in Leasing, you use the functions in SAP Customer Relationship Management (SAP CRM) and SAP ERP.

For more information, see Taxes.

Specific adjustments for Leasing have been made in the following areas:

●      Tax determination

●      Tax calculation

●      Billing

Integration

The system forwards the tax-relevant information in a new contract or a change process through billing to Accounting. The system assigns the contract item to the fixed assets of either the lessor or the lessee depending on whether you have classified it as a capital lease or as an operating lease.

Prerequisites

Before you can use tax determination, you must make the necessary settings in SAP CRM and SAP ERP.

The tax determination described here applies only to contracts in Leasing.

You have made the following settings for the data transfer of conditions for business partner data and product master data between SAP ERP and SAP CRM:

●      Tax assignment for the business partner (BP) and product

●      Tax type and tax group for the business partner (BP) and product

●      Product tax data

●      Assignment of business partner-relevant tax data in the ERP conditions to CRM

●      Creation of tax-relevant conditions in SAP ERP and transfer to SAP CRM

●      Assignment of revenue account determination to conditions

●      Assignment of the parameters required for tax determination to master data for customer and product in SAP ERP and in SAP CRM

You have made the following settings in SAP CRM. These settings define the tax calculation methods in Leasing:

●      Activation of ERP conditions that exist as text entries in the CRM pricing procedure

●      Definition of the flow categories for up-front tax

●      Adjustment of the condition function in the tax conditions

●      Definition of the tax calculation rule for each lease class

●      Definition of the tax exclusion

●      Adjustment of the tax codes in Customizing for the change processes

●      Installation of an external tax program to determine taxes for the United States and Canada

Features

Tax Determination

Leasing supports tax determination for the following countries:

●      Germany/Austria

For Germany and Austria, you use SAP CRM to determine value-added tax (VAT). The system uses the following as the tax base:

○       Net value of the item

○       Sum of periodic net values and billing request items (up-front tax)

 

The financing of taxes is not possible in Germany and Austria.

●      United States/Canada

You determine taxes for the United States using a special pricing procedure. This procedure supports periodic and up-front tax payments. The system uses the following as the tax base:

○       Net value of the respective billing request items

○       Up-front tax, determined from a condition

If an up-front tax payment is involved, the taxes can be financed.

The system uses external tax programs (Vertex and Taxware) to determine the relevant American/Canadian tax rates and the jurisdiction code. The basis for tax determination is the jurisdiction code, which the program determines for both the point of departure and the place of destination and saves in the respective plant and ship-to party.

Tax Calculation Methods

The tax calculation method is determined by the following data:

●      Type of leasing transaction, which is either derived from the type of financing and the classification, or is specified manually

●      Country in which the transaction is processed

Tax calculation in the lease differentiates between the following procedures:

...

●      Periodic tax payment

A periodic tax payment is normally used for operating leases. Depending on the tax classification, the system uses the table of tax rules to determine the calculation method.

The system uses the net value from the billing request items as the tax base. Tax base condition MWSB assumes this value in each billing request item – for example, in an annuity or interim period. Tax condition MWST uses the value of condition MWSB as the calculation base in SAP CRM and in SAP ERP.

The customer cannot finance the tax within Leasing. The system does not generate a separate billing request item for the tax payment.

●      Up-front tax

In a capital lease, a one-time, up-front tax payment at the start of the lease is the rule. Based on the tax classification, the system uses the table of tax rules to determine the calculation method.

In the case of an up-front tax payment, the system generates a separate billing request item (for example, flow category OTAX) in which the system calculates the tax.

Depending on the underlying tax calculation method, the system differentiates between the following methods for calculating one-time amounts:

○       Tax on the sales price

The value of a condition determines the tax base. The system determines the condition in the object item and copies it to tax base condition MWSB. In the IMG activity Assign ABAP Functions to Condition Types within pricing, you specify the condition provided by the value.

The customer can finance the up-front tax through a loan. This loan is administered, calculated, and displayed within the lease.

○       Tax on the sum of periodic payments

Within this calculation method, the system determines the net item values of the periodic payments from all billing request items and totals these values in the tax base.

 

For more information, see Calculation of One-Time Taxes and Fees.

Determination of the Tax Delta

The tax payment always takes the entire agreed term of the lease into account. If the term changes, this directly affects the tax to be paid.

If a lease is terminated early, the system credits the customer with the tax payable from the cancelled period, or bills the tax authorities for the same amount. The system uses conditions to clear the billing document.

Example of the determination of the tax delta

■       Up-front tax in the original contract

Total installments: USD 500,000

19% VAT: USD 95,000

■       Early termination after 2/5 of the lease term

Taxes paid: USD 38,000

■       Tax credit for remaining term: USD 57,000

 

If the term of a lease is extended beyond the term originally agreed, the new installments are liable for taxes. Depending on the classification, the tax is due either as a lump sum or as a periodic tax payment.

 

Tax Financing

Tax financing enables the lessee to finance the sales tax, which is due immediately, through a loan.

Tax financing is allowed for taxes that are due immediately.

For more information, see Financing of One-Time Tax Payments.

 

Tax Indicators

The tax indicators that are defined for the business partner and the product determine the tax rates in the sales document. Condition records are defined in the system, and the access sequences of these condition records use the indicators as keys.

An exception to this is the simultaneous tax analysis of the financed product and the financing product in a lease: The tax indicator in the financed product overrides the tax indicator in the financing product. The system uses the tax indicator of the financing product to access existing condition records. If the financed product does not have a tax indicator, the system uses the tax indicator of the financing product.