Top 10 Taxes in Purchasing FAQs
Q1. How is the tax code determined in purchase orders?
In the standard SAP system, the tax code is determined from the following sources, in this order of priority:
- Reference item (such as a purchase order or contract).
- Contract (if applicable).
- Request for quotation (RFQ).
- Info record.
If no tax code is found from the above sources, the tax code can be manually entered.
Additionally, the tax code can be automatically determined using the condition technique. This involves the condition type NAVS (for tax codes) with the assigned access sequence 003 in the standard system.
To configure this, you can use transaction codes MEK1/MEK2 to define tax codes in the condition tables, based on indicators like material, plant, account assignment, and origin.
While NAVS is the standard condition type for tax codes, you can assign the access sequence to other condition types if needed. However, the tax code will only be transferred to the purchase order if the condition type belongs to class 'D' (taxes). If there are multiple condition types in the condition schema, the first one containing the tax code will have priority.
Q2.How is the tax jurisdiction code (tax jurisdiction code) determined in purchase orders?
You activate the tax handling with tax jurisdiction codes in FI Customizing (transaction OBCO). In the standard system during the creation of a purchase order, the system considers the following sources for the tax jurisdiction code: Reference item, request for quotation, contract, plant, the account assignment object.
During this process, the system overwrites the respective preceding value in this list. If for example, you have maintained a tax jurisdiction code with the account assignment object for a purchase order item, this entry "wins" as opposed to the entry in the plant table. Besides this, the tax jurisdiction code can be entered manually.
Q3.How is the tax amount calculated?
Only the non-deductible part of the tax is calculated. This amount should be regarded as an additional cost item of the procurement because the tax authorities do not refund this amount, unlike the deductible part of the tax. Therefore, the non-deductible part of the tax is added to the stock value during the inventory posting.
In the purchase order item, the non-deductible tax amount is saved in field EKPO-NAVNW and, if existing, it is saved in the first condition type of category 'N' (non-deductible tax). In the standard system, these are condition types NAVS and NAVM. For this reason, calculation rule 'B' (fixed amount) must be set for the condition type .
Moreover, you have to take into account that the non-deductible tax amount is calculated with the function module 'CALCULATE_TAX_ITEM' program internally. The calculation does not occur within the price determination. As a result of this, the tax amount is only calculated after you have returned from the condition screen and is not calculated on the condition screen when you change the price.
Q4.What must be taken into account for Customizing a tax condition type for purchasing?
To ensure that the tax code is transferred to the purchase order and that the tax amount is calculated correctly, you should make the following settings:
- Condition class: 'D' (Taxes)
- Calculation rule: 'B' (Fixed amount)
- Condition category: 'D' (Tax) or 'N' (Non-deductible input tax)
- Scale type: ' ' (must remain empty, this means 'can be maintained in condition record')
In addition, take into account that you have to set the tax record which is assigned to a tax code in purchasing in FI Customizing (transaction FTXP).
Q5.The deductible tax amount is not to be considered as a cost item of the procurement. Is it nevertheless possible to display it when printing a purchase order, for example?
Yes, it is possible to display the deductible tax amount on the purchase order printout without treating it as a cost item. This can be achieved through the following steps:
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Customizing the Print Program: Modify the purchase order print program to retrieve the deductible tax amount from the pricing procedure or condition records, such as from the KOMV or EKPO tables.
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Adjusting the Purchase Order Form: Update the smart form, SAPscript, or Adobe Form used for the purchase order layout to include a field for the deductible tax amount.
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Displaying for Information Only: The tax amount can be displayed as informational data in a separate section or alongside item details, without impacting the procurement cost structure.
This ensures the required tax details are visible on the printout while maintaining compliance with business and accounting rules.
Q6: How is the tax determination in purchasing linked with the tax determination in the service (MM-SRV)?
Tax determination in purchasing and MM-SRV is integrated as both use the same tax procedure and condition technique. Key points:
- Common Tax Procedure: Both rely on the same tax procedure (e.g., TAXINN), which is configured in FI and shared across modules.
- Condition Records: Tax codes are determined using access sequences and condition records based on parameters like vendor, region, and material/service.
- Field Dependency: Fields influencing tax determination, such as tax codes and regions, are consistent in both purchasing and services.
This ensures a unified tax calculation across modules.
Q7: I defined an access sequence with custom condition tables in Customizing for the automatic specification of the tax code in purchase orders. Why doesn't the system redetermine the tax code when changes to a purchase order affect fields in these condition tables?
To re-determine the tax code, the price determination process must be triggered again. The standard system does not consider all changes in the header and item fields for performance reasons. However, starting with Release 4.6B, you can use Business Add-Ins (BAdIs) to define additional fields whose changes trigger a new price determination (see note 495264).
Q8: I use tax handling that works with tax jurisdiction codes. Is it possible to determine the tax jurisdiction code based on the actual delivery address and use it for tax calculation?
Yes, this is possible. Starting with Release 4.6B, you can use a Business Add-In (BAdI) to define how the tax jurisdiction code specified in the delivery address should be considered for tax calculation in purchasing (refer to SAP Note 493515). However, this functionality is only available in the 'new' SAP ordering transaction ME21N.
Q9: I use a tax handling that works with tax jurisdiction codes. At the same time, I defined plants with a foreign location for company code in the system. However, the tax handling for purchase orders for these plants does not work or does not work correctly.
The purchasing uses the FI function for the calculation of taxes. In order to ensure that the tax handling for foreign plants works, you must activate and set the option "Plants abroad" in the FI Customizing. However, this option is not compatible with tax handling with tax jurisdiction codes.
Q10: You create a purchase order for a plant abroad or change such a purchase order. The system generates an error message and/or the tax code is not determined correctly.
For this application area, the following exist:
492935: ME21N ME22N FICORE704 upon company code change
423019: ME21N Incorrect tax code after change of plant
494420: ME21N Incorrect price determination when the plant is abroad
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