Deferred Tax in Accounts Payable (SAP Library

Deferred Tax in Accounts Payable

Purpose

This process illustrates how the SAP System handles value-added tax (VAT) on vendor invoices for services.

Process Flow

A vendor sends you an invoice, including VAT, for services rendered.

You enter the invoice in the SAP System.

Where services are concerned, you cannot debit the VAT to the regular input tax account until you have paid the invoice and the vendor has sent you a tax invoice in acknowledgement. So for the time being you have to post it to a separate account for deferred input tax.

To achieve this, you assign the tax item a tax code for deferred tax (in Country Version Thailand, the tax code for 10% deferred tax is D1).

The tax code instructs the system to post the VAT to the deferred input tax account. Since the tax is not on the regular input tax account, the system knows that it is not yet available for reporting purposes.

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When the invoice becomes due, you pay it.

You do so as normal, using either the manual transaction or the payment program. The system creates an accounting document as follows:

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Once the vendor has received your payment, it sends you a tax invoice.

You enter the tax invoice in the SAP System using the Transfer Deferred Tax program.

The program creates an accounting document to transfer the tax from the deferred tax account to the regular tax account, assigning it a new regular tax code in the process (in Country Version Thailand, V1). The accounting document also contains all the information about the tax invoice.

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Result

When you come to prepare an input tax report, the system includes the tax from the accounting document from step 5, showing the tax invoice numbers, the tax date, and so on.