Tax on freight based on region

[Former Member]

We use standard SAP for tax determination. Taxing the material has been working fine, but we are now having to charge tax on freight when it appears as a separate line item. This is true depending on the region.

The tax should be included in the standard tax lines (state/county/city) and not as a separate line. Also, the tax rate should pull from the existing tax jurisdiction rates.

The freight is determined via customer freight document and transferred to billing document at creation.

How can this work so that the tax is determined but with exceptions. For example, Wyoming charges tax on freight, but Wisconsin does not. They both show a freight line.

The pricing procedure was modified to add the freight into the net value that is used to determine tax. This worked well. But how can it be modified to sometimes not include the freight?

The pricing is not changed but tax is redetermined at billing doc creation.

Thanks to all,

[Lakshmipathi · Accepted solution]

If you want to address this requirement via standard, then you have to add the region also into your existing table being used for determining tax on freight.

Based on this, maintain the tax percent in condition record and try.

Alternatively, if you dont want to modify the existing set up, as already suggested by Shiva, you have to go for zee table and have the required combination there based on which, system should trigger the tax on freight.

thanks

G. Lakshmipathi

[Shiva_Ram]

How the tax value is calculated? Does the process use external tax system like taxware? If so, then you consult with external tax service provider to create exceptions in the interfaces. Probably they can give you right direction.

Regards,

[Former Member]

Tax is determined using standard SAP. No tax package is configured.

Thanks,

[Shiva_Ram]

I never worked on this scenario, hence this is my suggestion.Can you add a requirement routine (t.code VOFM) against the freight condition type in the pricing procedure? This routine can check a Z-table values, where in the tax excluded region or jurisdiction codes can be stored, against customer region code or jurisdiction code. If it found, then only it can include the freight rate in the net value. Otherwise it will exclude from net value.

You can also think about adding another condition type for capturing freight, if the above solution does not work, which can capture the freight value from the previous freight condition type and exclude it in net value.

Regards,

[Former Member]

Thank you for your response. I had an idea for configuration which is similar to that you are describing and have most of it working, but there are still some areas that I need to finalize.

My idea works as such: Create a condition type that will be used to reverse the freight for tax purpose, but the net should be the sum of the freight + material.

Here is an example:

Net 225.00 USD

Tax 15.75

ZPRC Standard Price 4.50 USD 1 LBS 225.00

Net Value 4.50 USD 1 LBS 225.00

ZFSC Fuel Surcharge CF 255.00

Net Value including 9.60 USD 1 LBS 480.00

ZFTX FreightTaxReverse 100.000- % 255.00-

Net Value 2 9.60 USD 1 LBS 480.00

JR1 State Sales Tax 7.000 % 15.75

Total Tax 0.32 USD 1 LBS 15.75

Total 4.82 USD 1 LBS 240.75

Grand Total 4.82 USD 1 LBS 240.75

The tax is correct because it takes only the material into consideration, but the net amount s/b $480. Instead it is $225.00.

Here is configuration. Maybe that can explain why the net is not coming in correctly (which I am trying to understand through debugging but maybe there is a simple explanation.

620 0 ZFSR FuelSurchargeReverse 615 616

699 0 Total Freight 501 698 S 4

700 0 SKTV Cash Discount 14

710 0 Net Value including freight 400 698

730 0 ZFTX FreightTaxReverse 699 699

800 0 Net Value 3 710 730

805 0 Add freight back 699

810 0 Net Value 2 800 805 3

939 0 UTXJ Tax Jurisdict.Code 800

961 0 Total Tax 940 960 S 5

962 0 Total S A 4

965 0 Grand Total S 6 4

Again, thank you for your assistance.

[Former Member]

The ZFTX was flagged as statistical and that resolved the matter. The Net was the material + freight and the tax was calculated depending if the freight was backed out or included.

Thank you,