Customer master tax classification

[Former Member]

I am interested in learning how the standard SAP tax classification works for customer master.

The tax classification is available in the Sales Area in the Billing tab.

We default all codes to '1' taxable and then update when needed.We also have custom transaction to enter tax exemption at Sold To and then update the customer master classification to '0' and insert the tax license. All linked SH partners are updated also if in state of exemption.

So my question is for standard SAP:

Does user have to always maintain the '0' and '1' classification? and then also insert the license?

Does SAP force the user to enter a license if the tax classification if the code is updated to '0'?

Does SAP automatically update the tax classification to '1' if a license is entered first?

Is there a sequence to entering the data in SAP related to the tax?

Again, I am asking because my system may be configured to behave differently than intended by SAP.

Thank you,

[Shiva_Ram · Accepted solution]

Does user have to always maintain the '0' and '1' classification?

Yes, user needs to maintain either value 0 or 1.

and then also insert the license?

Entering the license is optional, depending on business needs.

Does SAP force the user to enter a license if the tax classification if the code is updated to '0'?

No, this needs to be acheived using user exit (atleast in SAP version 4.7)

Does SAP automatically update the tax classification to '1' if a license is entered first?

NO

Is there a sequence to entering the data in SAP related to the tax?

Not clear on this question, tax cateogry has to be maintained at ship-to level if ship-to and sold-to are different.

For general info on tax determination, you can refer OSS Note 872449 - Tax determination in Sales and Distribution

Regards,

[Former Member · Accepted solution]

Well explained by Mr. Shiva.

[Former Member · Accepted solution]

Your answers are perfect. Just for clarification, the last question on sequence was if it was better to enter the tax classification first and then the license or the license first and then the tax classification. I expect the answer is it doesn't make a difference.

One last question: What is process to identify the expired license so the user knows to update the tax classification to taxable '1' or to enter a new license? Are there system reports?

Your response is very appreciated.

[Shiva_Ram · Accepted solution]

One last question: What is process to identify the expired license so the user knows to update the tax classification to taxable '1' or to enter a new license? Are there system reports?

- I don't remember any standard SAP report can provide the details. However you can easily develop an ABAP query report using tables KNVV and KNVL.

Regards,

[Former Member]

This message was moderated.

[Former Member]

Hi Anabela Rocha / all, appreciate your sharing how do you defaulted all Tax Classification KNVI-TAXKD to '1' taxable and then update when needed ?  Thanks a lot

[Former Member]

Tax classification master data is under sales area data of customer master data, BUT IT'S NOT SALES AREA-RELATED. IT'S COUNTRY RELATED. You cannot make a customer liable for tax in a sales area and not liable for tax in another one, if the country of company codes of sales areas are the same.

I may not have understood your inquiry correctly.