Tax Determination Clarification

[Former Member]

Hello everybody

We have configured Tax Determination in SD in our system & I need some clarifications.

Condition Types configured:

1) ABCD - Sales Tax

2) LMNO - Shipping Tax

They appear in the same Order in the Tax Determination Rules for country US.

As mentioned above, ABCD calculates tax for the total (Base price - Discount) in the Order where as LMNO does it for the Shipping & Handling charge.

Now the access seq for them are:

1) ABCD - ALAND / REGIO / VKORG / VTWEG / SPART / TAXK1 / TAXM1

2) LMNO - ALAND / REGIO / VKORG / VTWEG / SPART / TAXK1

Now the Customers & materials are tied to both these condition types with the following value options:

ABCD : 0 = Sales tax exempt & 1 = liable

LMNO: 0 = Shipping tax exempt & 1 = liable

Now we have the following requirement::

1) In our Business, Sales Tax ABCD should be determined based on the parameter values coming from the Sold-to-Party & S&H tax LMNO should be determined using Ship-To-Party parameters.

What I mean here is for ABCD the fields REGIO = state/region of the SP & TAXK1 should be the value of the tax indicator for ABCD in the Sol to Party.

Similarly for LMNO, REGIO = state/region of SH & TAXK1 = value of tax indicator for LMNO in the SH

Obeservations:

1) First concern is the TAXK1 is pointing to tax classification value for ABCD in the Customer.

So my question would be that to consider the Tax Classification value for LMNO in the Customer, should TAXK2 be used as a field in the access of LMNO ?

2) Secondly the REGIO/TAXK1 fields are always the picked up from the Ship to party.

So when SP=SH, it works fine.

But when SP is different than the SH, ABCD is using SH's REGIO for determination.

Is there a field to point to SP's REGIO ?

Also I want to know if its a universal rule that if the SP is from New Jersey & SH is from California, the sale is considered to be done in CA and hence SAP is by default pointing to the SH ?

The reason I ask is in our business they consider that in the above case the Sales Tax shld goto NJ & the Shipping tax should go to CA. Just trying to understand if the Business process is fundamentally incorrect.

Can someone share their experience on this & kindly suggest some input for the mentioned queries.

Thanks

Vin

Edited by: vinit parkar on Oct 7, 2010 11:17 PM

[jpfriends079 · Accepted solution]

1) First concern is the TAXK1 is pointing to tax classification value for ABCD in the Customer.

So my question would be that to consider the Tax Classification value for LMNO in the Customer, should TAXK2 be used as a field in the access of LMNO ?

Yes, you are correct, TAXK2 ought be used for LMNO.

2) Secondly the REGIO/TAXK1 fields are always the picked up from the Ship to party.

So when SP=SH, it works fine. But when SP is different than the SH, ABCD is using SH's REGIO for determination. Is there a field to point to SP's REGIO? Also I want to know if its a universal rule that if the SP is from New Jersey & SH is from California, the sale is considered to be done in CA and hence SAP is by default pointing to the SH? The reason I ask is in our business they consider that in the above case the Sales Tax shld goto NJ & the Shipping tax should go to CA. Just trying to understand if the Business process is fundamentally incorrect.

As per best practices, tax is determined on the bases of -

a. Departure Country (Delivering Plant )

b. Destination of Ship-to Party.

c. Customer Master Data Tax Classification.

d. Material Master Data Tax Classification.

Hope this can assist you.

Thanks & Regards

JP

[Former Member · Accepted solution]

Well currently I have set the Tax liability to be determined from the Sold to Party.

In our business we collect 2 taxes:

1) Sales Tax

2) Shipping tax

Now both the above tax liabilities are determined from the Sold to party (due to the Tax SIN determination set to A )

I am wondering, is it even possible thru configuration to check only the Sales Tax Liability from the Sold to party & the Shipping Tax liability from the Ship to Party ?

in either case please let me know.

Thanks

Vin

Edited by: vinit parkar on Oct 28, 2010 5:43 PM