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VAT being incorrectly calculated


I have noticed that when entering an AR Invoice the VAT being calculated is 19.5% and not 20%. This is despite the BP being marked as liable and the sales/purchase data tabs against the item are also 20%. I seem to have narrowed it down to being the payment term associated to the Business Partner. The payment terms is set up as follows:

Customer 2.5% Settle disc.

No. of installments = 0

Open incoming payment = 0

Cash discount Name: 2.5% 14Days

Within the above cash discount is an amount of 2.5% - this is causing the issue. Upon reading the help file it doesn't mention discounting the VAT amount unless it's a country specific field?

The localisation setting is UK.

Has anyone come across this before?



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