Tax Account Determination

Contents Introduction .................................................................................................................................................. 2 Tax condition determination ........................................................................................................................ 2 Tax account determination ......................................................................................................................... 16 Link between SD tax condition and FI tax condition ............................................................................... 20

Introduction Tax account determination is a very commonly raised question in most of the SD interviews as this is a key Integration point between SD and FI. This action takes place during SD billing posting to FI. Therefore let's see how tax conditions determined in to the sales order and then posted in to FI.

Tax condition determination 

When you create the sales order in the system, based on below criteria's the SD pricing procedure flows to the sales order o

Sales area -> Entered in the sales document header

o

Document pricing procedure -> From the sales document type configuration

IMG Path:

o

Customer pricing procedure -> From the customer master

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Pricing procedure determination is configured in below IMG Path:

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Based on the above settings, the pricing procedure "J_3A01" should be determined to the sales document. You can see this in the sales document header / Sales tab

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With the pricing procedure determination, all conditions attached to it will also flows to the sales document.

IMG Path:

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Since we are considering only about taxes, I will highlight the tax condition

Here you need to consider about the Account key attached to condition - "MWST", which is "MWS" 

Condition MWST is attached to the access sequence

IMG Path:

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This access sequence "MWST" has below tables attached

IMG Path:

Let's see the level "Domestic taxes"

It considers the country of the departure plant (From sales document line item) and the tax classification of the customer and the tax classification of the material 

Now let's enter a material in to the sales order and see how tax gets determined. When you go to line item / conditions tab, you can see the tax amount that got determined.

If you go to pricing analysis button this tax amount

, you can see which criteria is being used to determine

o

Country "DE" is coming from the country of the delivery plant in the sales document line item

IMG Path:

o

Tax classification of the customer is coming from the customer master for the sales area of sales document header

o

Tax classification of the material is coming from the customer master for the sales area of sales document header

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Above tax cklassification records in the customer master and material master is comig from below IMG based on the country

IMG Path:

This is the reason why you see DE - MWST combination in both customer master and material master. 

With above 3 it search for a valid condition master record in VK11 and found below (This is based on the master records you have setup in VK 11 transaction for your access sequence)

That's how you have 16% tax determined in the sales order. Please take a note of the tax code here "A1". This is useful when we look at the tax account postings. Same can be seen if you go in to the condition value from the sales document using button

Here you can see the account key as well as the Tax code which will be used to tax postings later

Tax account determination 

Let's save the sales document and create the billing document to see how tax posting are done. When I create the billing document for this sales order, I can see the accounting document of it using button

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in transaction VF03

Double click on the below highlighted line

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Here you can see the G/L account that the tax has been posted

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During billing document posting to FI, below steps take place to determine tax G/L accounts First it determines the tax procedure in FI. This happens based on the country of the company code. In FI, there is a separate tax procedure which is attached to the country code of the company code. First let's see the country attached to our company code

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IMG Path:

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The tax procedure in FI is attached to the above country

IMG Path:

Country of our company code "A300" (DE) is attached to the tax procedure "TAXD"

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This tax procedure is defined under below IMG path:

IMG Path:

Like in SD pricing procedure, tax procedure in FI also using the condition technique

Link between SD tax condition and FI tax condition The most important point you need to remember here is, the link between tax condition in the SD pricing procedure and the tax condition in the FI tax procedure. This is how the TAX condition in SD pricing procedure is linked to tax condition in FI tax procedure 

In the SD pricing procedure the tax condition type "MWST" is attach with the account key "MWS"

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In the FI tax procedure we have same account key with the condition type "MWAS"

Important: Using same account keys, the tax condition in the SD pricing procedure is linked to the tax condition in the FI tax procedure. Therefore it is not necessary to have same condition in the tax procedure. When you post the billing document to FI, now we have the tax procedure determined based on the company code -> TAXD 

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Based on the "Account key" (MWS) attached to the tax condition (MWST) in the SD pricing procedure (J_3A01), system finds the corresponding tax condition (MWAS) in the FI tax procedure (TAXD) With the "MWAS" tax condition, system finds the access sequence attached to it

IMG Path:

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Now it goes to the access sequence to find correct access level

IMG Path:

I have below in my access level.

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Based on above data we know the country is "DE" and the tax code was "A1". Now system tries to find a matching G/L account for the above combination G/L accounts are configured in the below IMG Path:

IMG Path:

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Double click on "MWS" which is our account key in both SD pricing procedure and FI tax procedure

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Enter chart of accounts

Chart of accounts is attached to the company code under below IMG node. IMG Path:

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Now you can see for the account key "MWS" and for the tax code "A1", we determine the G/L account "216130".

This is how the G/L account "216130" was determined for tax postings in our billing document.

Author: Anupa Wijesinghe E-Mail: [email protected] / [email protected] Website: www.learnsaptips.com View my profile in LinkedIn Follow me on Twitter

Disclaimer This article is done based on my research and readings, unless otherwise stated. The views expressed are my own and not of anyone else. Author accepts no liability for the content of the articles in this website or for the consequences of any actions taken on the basis of the information provided. Using this information is at the users own discretion and responsibility.