Consumption Tax in Japan

[former_member357054]

Hi Gurus,

I have to configure Japanese consumption tax for accounts receivables in SAP and it's pretty straightforward, the rules are-

Goods or services provided to a domestic client in Japan is subject to 5% consumption tax on invoice

Goods or services provided to a international client outside of Japan is exempt of consumption tax on invoice

Now both the above rules are pretty straightforward and can be configured easily, however there is an exception to these rules-

Consider that our client (in Japan) is providing goods or services to IBM US then as per the second rule the invoice should not have any taxes, however if IBM US has a subsidiary in Japan then this invoice to IBM US should be treated as domestic client and is subject to 5% consumption tax.

How do we configure above scenarios, any pointers on this are helpful.

regards

Anmol   

[former_member357054]

Phani, I am aware of the basic tax configuration, Pronojit understands our requirement perfectly, and he had already suggested a wonderful solution, however business did not agreed to that solution, that is why this question i still open.

[former_member357054]

also, as of now the tax is being charged manually in the invoices for this rule, however business wants to do away with manual tax entry (because of the obvious reasons).

thanks and regards

Anmol

[phanikumar_v3]

Dear Dhanesh,

Pl Confirm to us--whether we are able to catch your requirement correctly?

If Not have you tried the Option Of C in

( IMG>>SD>>Basic Functions>>Taxes>>Maintain sales tax Identification number determination)(But it affects the total sales organisation)

If you dont want to see the Effect at sales org Level--Have you tried By changing the Material Tax Classification to 5% in Sales order itself manually(Sales order--Item--Billing tab)

Confirm to us..

Phanikumar

[phanikumar_v3]

Dear

let us convert your requirement like below:

X is your Company and Y is your IBM US and Z is Your IBM Japan.

Please create your Y customer in XD01/02 and Assign Z also As ship to party...(Always Tax will be calculated On Ship to party--Means region of the Customer)

Pl keep VAT condition type (without manual/Mandatory) in your Pricing.

Now Keep your condition records for the Combination like below:

1. X+Y---No Consumption tax

2. X+Z---5% tax.

Now at the time of sales order creation select the Destination based on the requirement(If it is Y means IBM US--No tax will come---If it is Z--Tax of 5% will be applicable retrievable from condition records)

Hope this helps...

Pl correct if any..

Phanikumar

[Former Member]

Hi Phani

The requirement seems to be different. Even if the customer is IBM US and the client is selling to IBM US, still, consumption tax should be imposed, if IBM has a subsidiary company operating in Japan.

That is, even if its

X+Y ---- Still 5% tax will be imposed.

BR

Pronojit

[Former Member]

Hi Dhanesh

What you can probably do is maintain a partner function ,eg, ZA, with partner type KU (Customers). You may name this as Affiliates. Maintain an account group with this PF, and create a customer. Maintain all the necessary partner determinations.Then assign this partner function to the overseas customers who has affiliates in Japan. This partner will have country as Japan. Then maintain the same field in your access (condition table) which you will be using for the particular condition type and maintain the conditon record accordingly and then use it in your access sequence.

Revert if you have any queries.

Regs

Pronojit Gupta

[former_member357054]

Hi Pronojit,

This is an ingenious solution, however this will involve a lot of manual work for data maintenance team involving a change management for business, so even though this is a nice solution business have not agreed for it, thanks however for your help I sincerely appreciate it.

We are looking for a way out which will reduce effort for business.

regards

Anmol

[Lakshmipathi]

This is really a tricky requirement and we need to explore the best way.  But in the meanwhile, on your comments

Goods or services provided to a domestic client in Japan is subject to 5% consumption tax on invoice

can you please clarify whether consumption will come into picture if it is service related billing?  Of course, it is clear that if some material is despatched, there would be some consumption to produce that but there also, it has to be accounted from MM side.

G. Lakshmipathi