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All About SAP Tax Calculation Procedures And Configurations

SAP FICO provides various ways to calculate taxes. SAP provides country specific tax calculation procedure with conditions and formula base configuration. These are customized in SAP FICO.

SAP provides you various methods in Taxation to:

  • Calculate tax,
  • Calculate deferred tax,
  • Calculate tax on special GL transaction,
  • Change the tax customization and entries.

At Apprisia, we have been customizing SAP for CIN (country India localization) and supporting the tax structure for the US/Canada geographies.

In SAP, you can calculate tax as per country specific taxation rules and format for financial report. SAP provides taxation methods, tax related reports. In SAP, adjustments of tax calculation with specific customization and many other things are possible.
There are many types of taxes in each country such as

  • Tax on purchase (VAT),
  • Withholding taxes,
  • Sales tax,
  • Service tax,
  • Excise duty on import or export of goods
  • many other taxes as per the country norms and regulations.

Taxes are levied at national level as well as state level. SAP provides provision for customizing and integrating these types of taxes in transactions.

SAP provides tax codes to calculate input or output tax. Tax code uses tax type to check the posting which has been done to mentioned account.

SAP provides automatic posting to tax account. You need the following:posting key, transaction detailaccount number of the respective tax account.

Tax amount is calculated automatically as per the customization as well as manually if not customized.

In SAP, taxes are also calculated on special GL transactions on sales/purchase such as down payment which is posted to special reconciliation account. In SAP, you can also calculate deferred taxes at the time of payment. You can maintain conditions to calculate taxes, for example, calculate in percentage, calculation of debit or credit side of the account to which the amount posted. You can make changes in tax amount and percentage through manual entries.

Need Help:
In case you need assistance on SAP FI and tax related configurations, please contact us. Please send us your questions, comments or assistance request, and our team would be glad to assist you.

By Pradipta Baral (on behalf of SAP Consulting Team)

SAP :: Streamlined

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