Delivery address clarification

[Former Member]

Hello Guys

Could any one of you please clarify on Delivery Address?

Delivery address is created in personalization and it is the address where the goods are delivered by the vendor.

In our project, delivery address created / maintained by the user in SRM, i.e. for the country, region (our project specific) in delivery address and the product category in SC the Tax code is determined.

I believe this should be vendor specific i.e. Tax code should be selected, based upon the vendor region, country (because we are procuring from that region and country, rather than, customer delivery address in personalization) and the product category in SC.

Could any one address my clarification?

Thanks in advance.

[Former Member · Accepted solution]

Hi Santosh,

The taxes are calculated based on the conuntry where the goods are delivered and not where they are shipped from as rightly mentioned by Ritesh.

For ex: If you are importing a machine from the US, then you won't be paying any of the taxes applicable in the US. and only import duty and local taxes would be aplicable.

I hope this clarifies your query.

Regards,

Ajay

[Former Member · Accepted solution]

Thanks Rithesh & Ajay for your excellent answer and this solved the answer to my question but raised the below question.

Just one more clarification on this, Suppose if we are procuring from outside nation, as said local taxes would be applicable. I believe along with the total price of the material we will be paying the taxes to vendor or taxes would be directly paid to in local government.

Thanks in advance.

[Former Member · Accepted solution]

Hi Santosh,

The order price will be paid to the vendor.

The import duty will be paid to the custom authorities.

And, as for the local taxes, there will only be octroi which will be applicable because the goods are imported and there is no local transaction invloved. And moreover, octroi will only be charged, if applicable (in that particular state).

I hope this clarifies further.

Regards,

Ajay

[Former Member · Accepted solution]

Hello Ajay

Thats fine.

My question is, we need to pay the concern amount to the concern authorities or full settlement to the vendor if vendor will pay to the concern tax authorities.

Thanks in advance.

[Former Member · Accepted solution]

Hi Santosh,

No. It will be paid by the customer not the vendor since vendor will only be paid the CIF amount.

Same is applicable for the octroi. Buyer has to pay it to the tax autorities directly.

Regards,

Ajay

[Former Member · Accepted solution]

Hello Ajay

First thanks for your response.

Sorry. Here i have again two questions.

First, as you mentioned buyer has to pay tax to the local tax authorities directly and CIF to the vendor.

Here in the PO it will have the total amount (CIF + Tax) as net amount. How the buyer manages to split the amount to be paid to the vendor and the tax authorities, could you please eloborate more on this in detail.

Second, if we have a Jurisdiction code (Which is determined based on plant or delivery address) is that sufficient to determine the tax code and tax calculation from the backend ECC (if have Vertex or Tax software's connected to it) without tax code configuration in SRM.

Is tax code really needed to determine tax if we use tax softwares like vertex as we have jurisdiction code, is that sufficient.

Please confirm on the above two.

Thanks you so much in advance.

Regards

Santhosh.

[Former Member · Accepted solution]

Hi Santosh,

I can help you with the first question of your's: This is related to CIN. (would have been more apt to post this query in MM area though )

In an import PO, usually we have few condition types which are nothing but the various tax rates which make up the total custom duty cumulatively. For ex: JCDB, JEDB etc. We have around 7 such condition types.

The total value of these conditions is paid to the custom vendor (tax authorities) which is defined in the PO in the item details under "conditions" tab. (you have to select each condition type individually and then click on the lens icon & give the customs vendor).

And the material cost is paid to the import vendor which is the main vandor at header level in the PO.

Making payment:

Custom vendor is paid first. So while performing MIRO, you need to select planned delivery cost and pay to the custom vendor i.e. the tax authorities. So this step will take care of the import duties payment.

And now you post MIGO, means, the actual goods receipt.

And finally you post the invoice for the import vendor which will only include the material cost and subsequently the final payment is made by the Finance deptt.

I hope this clarifies your first query.

Regards,

Ajay

[Former Member · Accepted solution]

Hi

Also, please help to solve the below query as i posted earlier,

if we have a Jurisdiction code (Which is determined based on plant or delivery address) is that sufficient to determine the tax code and tax calculation from the backend ECC (if have Vertex or Tax software's connected to it) without tax code configuration in SRM.

Is tax code really needed to determine tax if we use tax softwares like vertex as we have jurisdiction code, is that sufficient.

Please confirm on the above two.

Thanks you so much in advance.

[Former Member]

Hi Santhosh,

Tax for Purchase is always determined by where you are delivering items not where it is originated. Lets take an example of when you buy any item online from ebay or apple store, You will put your delivery address and tax will be shown based on the delivery address, It does not matter where the vendor is shipping from or where they are procuring from. Please refer Ebay explanation as well about the tax calculation for your reference. 

http://reviews.ebay.com/Calculating-Taxes-for-International-Shipping?ugid=10000000004673247

I am not sure what is the requirement you are trying to achieve? and did you consult with any of the tax person in your organization about this. Because i believe you may be over paying or under paying taxes if you start utilizing vendor address to determine tax rate.

Thank you

Ritesh

[former_member208675]

Hi,

Tax Code is dermined from Delivery Address.

You can also customize Tax Code in SPRO->Determine Tax Code for Country/Product Category.

You should look for BAdi: BBP_DET_TAXCODE_BADI,it overrides Tax Code.

Regards,

[Former Member]

Hello Vinay

My question is quite different. I want to know the Tax determination from Vendor address not from our delivery address.

Please go through my above question, and correct me if i am wrong.

Thank you.