This blog represents the last part, part 6, of the 6-part series ‘Create Tax Content for Non-Localized Countries/Regions in SAP Cloud Applications Studio’.

Steps of Configuration

We will understand the various steps of configuration in the following blogs :

Overview

Part 1 :

Configure Tax Types
Configure Tax Calculation Procedure (Optional)

Part 2 :

Configure Tax Event
Configure Accounting Attributes for Tax Events (Optional)

Part 3 :

Configure Tax Codes

Part 4 :

Configure Tax Rate Schedules
Configure Tax Decision Tree

Part 5 :

Configure Account Determination Product Tax Event Group
Configure Product Tax Event Type Account Determination Product Tax Event Type Group

Part 6 (the blog that you are reading now) :

SAP Delivered Standard Tax Calculation Procedures

To recap from the preceding blog, we learnt how to configure account determination product tax event group and product tax event type account determination product tax event type group.

In this blog, we will have a look at the SAP delivered standard tax calculation procedures for the various tax scenarios.

SAP Delivered Standard Tax Calculation Procedures

The five standard tax calculation procedures delivered by SAP are listed below. You can use these calculation procedures in business scenarios where you only need a calculation for a single tax type for a line item. The Output VAT, Input VAT and Reverse Charge VAT tax procedures support both net and gross calculations. The examples given below show the net calculation.

• Non-taxable: You can use this tax procedure in both sales and purchase scenarios for non-taxable transactions.

• Output VAT: You can select the tax procedure Output VAT for the scenarios where the net amount works as the base amount for tax calculation. The calculation works as follows:

Net Value of the Transaction: 100

Rate Type: Standard, the assigned percentage rate is for example 16%.

Then, Output VAT: net price * rate = 100 *16/100 = 16

Total Gross Price: 100 + 16 = 116

          Posting Scheme:

• Input VAT: You can select the tax procedure Input VAT for the scenarios where the net amount is used as the base amount for tax calculation. The calculation works as follows:

Net Value of the Transaction: 100

Rate Type: Standard, the assigned percentage rate is for example 16%.

Then, Input VAT: net price * rate = 100 *16/100 = 16

Total Gross Value of the Transaction: 100 + 16 = 116

          Posting Scheme:

• Reverse Charge VAT: You can select the tax procedure Reverse Charge VAT for scenarios such as self-assessed taxes where the company can take the credit of the tax and at the same time be liable to pay the tax, such as is the case in certain SRM scenarios. Therefore, in accounting, tax lines are created for both payables and receivables. This is applicable only in SRM scenarios. The tax calculation works as follows:

Net Value of the Transaction: 100

Rate Type: Standard, the assigned percentage rate is for example 16%.

Then,

VAT Payable: net Value * rate = 100 *16/100 = 16

VAT Receivable: net Value * rate = 100 *16/100 = 16

Total Gross Value: 100.

          Posting Scheme:

• Import VAT: The assumption in calculating Import VAT is that the input amount entered is the tax amount. The calculation works as below to identify the actual base amount and this base amount is stored in the processing document.

If TaxRate = 0 .
TaxBaseAmount = TaxAmount
Else.

TaxBaseAmount = TaxAmount * 100 / rate
Endif.

Therefore, if the tax amount entered in the document is 100 and if the rate is 0%, then the                  calculated tax base amount is equal to 100 or, if the tax rate is 10%, then the base amount will            be 100*100/10 = 1000.

         Posting Scheme:

When you deploy the add-on that you create, you will be able to use the specific tax codes that you have configured for the non-localized country/region.

With this, we have completed all the blogs of the 6-part series, where we have understood in detail how to add tax content for non-localised countries/regions through the SAP Cloud Applications Studio in SAP Business ByDesign. Hope you find the information useful.