Taxes

Sales & Distribution

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 Taxes

 Types of taxes

Tax on sales,called sales tax will be levied on every sales
transaction.
 Additional taxes

 Tax payment

Taxes are sometimes applicable at National level or they are
levied at local level when goods are sold.

National level tax is generally levied in most of the European
countries

Tax at local level – Sales tax in US is an example of this. The
local tax authorities can exist at state level, county level, or town
level. To calculate tax at each level, it is processed using a tax
jurisdiction code in addition to the tax code.
 Taxes

 Taxes calculation

With Tax Jurisdiction

Without Tax Jurisdiction
For a country, one of these options is possible.

 Tax calculation with tax jurisdiction

 Tax Jurisdiction is a key which together with tax code
determines tax amount and the way payment of tax is divided
among tax authorities as per local tax structure.

Example – US Sales tax

Pricing procedure in SD is RVCXUS

Tax calculation procedure in FI is TAXUSX
 Taxes

 SAP provides interface with software products like

Vertex, which calculate tax % at different region levels

 In RVCXUS, condition types UTXJ and XR1 to XR6 are

created to map US location level taxes.

 UTXJ in a sales document gives tax code. Jurisdiction

codes for delivering location are taken from plant
definition and for delivered location from ship-to party
master. When this data is passed on to external tax
system then it returns SAP with tax rates at different
levels(XR1 to XR6)
 Taxes

 Tax calculation without tax jurisdiction

 This would be based on tax condition records with tax rates
picked from the FI tax code. example – MWST

 Important steps in SD

Create Tax condition types for applicable taxes

List tax condition types for each country

Create Country-State-County-City structure as per tax structure
in the country
 Maintain tax classification for material and customer
Tax classification can represent tax rate structure like regular tax
or half rate tax or exempt from tax as applicable for the material /
customer. This tax classification is entered in material and
customer master so that it can be used as criteria in tax
condition records