S4/HANA Finance & Controlling Simplified

Tax on Sales or Purchase

In real-time it will be done by SAP Finance Consultant

 What is localization?
 What is input tax ?
 What is output tax ?
 What is non-deductible tax ?
S4/HANA Finance & Controlling Simplified

Configuration Steps:

1. Define Tax Procedure : OBYZ

2. Assign Country to Calculation Procedure: OBBG

3. Define Tax Codes for Sales and Purchases FTXP

4. Assign Tax Codes for Non-Taxable Transactions: OBCL

5. GL Integration for Tax Conditions: FS00

6. Linking Account Key to GL Account : OB40

1. Define Tax Procedure : OBYZ

IMG-->Financial Accounting-->Financial Accounting Global Settings-->Tax on
Sales/Purchases-->Basic Settings-->Check Calculation Procedure
Double click on “Define Procedures”
S4/HANA Finance & Controlling Simplified

Click on “New Entries”

Procedure
Description

Click on 
Select “tax procedure line “ and
Double click on  Control Data
Click on “New Entries”

Step Condition Description From To Acc.Key

10 BASB Base amount
20 MWVS Input tax 10 10 VST
30 MWAS Output tax 10 10 MWS

Click on 

Note: all condition and account keys are pre-defined by SAP .

MWVS – condition used for Tax on purchase -MM
MWAS – condition used for Tax on Sales -SD

Analysis for MWVS value flow:

Purchase Order Tax Procedure
Purchase Price 100 BASB 100
USD
Tax 10 MWVS VST GL
@10% Account
110
S4/HANA Finance & Controlling Simplified

End-result for the above to finance:

GR/IR clearing A/c Dr 100
Input Tax A/c Dr 10 Tax amount paid to supplier.
To Vendor Cr 110

How system determine the tax in purchase order?

In order to trig the tax in purchase order we need to satisfy the following two conditions.
1. Create tax code with reference to MWVS condition from FTXP (tcode) and maintain
the tax rate inside the tax code.
2. Enter the tax code created in step 1 either purchase info records (ME11) or maintain
tax code directly in Purchase Order at the time of creating under INVOICE tab .

Analysis for MWAS value flow:

Sales Order Tax Procedure
Purchase Price 100 BASB 100
USD
Tax 10 MWAS VST GL
@10% Account
110

End-result for the above to finance:

Customer A/c Dr 110
To Sales Revenue A/c Cr 10 Tax amount collected from Customer and
remit to Tax authorities
To Output Tax A/c Cr 110

Note:
System will post Tax on purchase (input tax) at the time of MIRO – Invoice verification only
. there won’t be any tax entry at the time of MIGO Goods Receipt. In SD , tax on sales will
be posted at the time of Billing only ie. VF01
S4/HANA Finance & Controlling Simplified

Can we assign two tax procedures for one country?

Not possible, we can have only tax procedure per country

2. Assign Country to Calculation Procedure: OBBG

IMG-->Financial Accounting-->Financial Accounting Global Settings-->Tax on
Sales/Purchases-->Basic Settings-->Assign Country to Calculation Procedure
Click on "Position"
Country (enter company code country) = 
Country Tax Procedure

Click on 
Define Tax Codes for Sales and Purchases
V = Input / Purchase
A = Output /Sales
V = Input Tax A = Output Tax
Tax code % Tax code %
V0 0 A0 0
V1 10 A1 10

3. Define Tax Codes: FTXP

IMG-->Financial Accounting-->Financial Accounting Global Settings-->Tax on
Sales/Purchases-->Calculation-->Define Tax Codes for Sales and Purchases
Country = 
Tax Code = 
Tax Code Description = 
Tax type = 
MWVS = 0% 
Click on 

Create Tax Code V1:

Tax Code = 
Tax Code Description = 
Tax type = 
MWVS = 10% 
Click on 

Create Tax Code A0:

S4/HANA Finance & Controlling Simplified

Tax Code = 
Tax Code Description = 
Tax type = 
MWAS = 0% 
Click on 

Create Tax Code A1:

Tax Code = 
Tax Code Description = 
Tax type = 
MWAS = 10% 
Click on 

Notes: Active condition font colour is BLUE.

4. Assign Tax Codes for Non-Taxable Transactions: OBCL

IMG-->Financial Accounting-->Financial Accounting Global Settings-->Tax on
Sales/Purchases-->Posting-->Assign Tax Codes for Non-Taxable Transactions
Click on "Position"
Company Code = 
Company Code Input Tax Code Output Tax Code

Click on 
Note: assignment is mandatory for Asset Accounting Implementation.

5. GL Integration for Tax Conditions: FS00

1. Input Tax Credit A/c
2. Output Tax Payable A/c

Create Input Tax Credit GL :

G/L Account 201500

Company Code

Click on 
S4/HANA Finance & Controlling Simplified

G/L Account Type Balance Sheet

Account Group Current Assets,Loans & Adv

Short Text Input Tax Credit A/c

G/L Acct Long Text Input Tax Credit A/c

Control Data Tab

Balance in Local Crcy Only 

Tax Category * All tax types allowed

Sort Key 0001

Create/bank/interest

Field Status Group G041

Click on 

Create Output Tax Payable GL :

G/L Account 105500

Company Code

Click on 

G/L Account Type Balance Sheet

Account Group Current liabilities & Provisio

Short Text Output Tax Payable A/c

G/L Acct Long Text Output Tax Payable A/c

Control Data Tab

Balance in Local Crcy Only 

Tax Category * All tax types allowed

Sort Key 0001

Create/bank/interest

Field Status Group G041

S4/HANA Finance & Controlling Simplified

Click on 

6. Linking Account Key to GL Account : OB40

IMG-->Financial Accounting-->Financial Accounting Global Settings-->Tax on
Sales/Purchases-->Posting-->Define Tax Accounts
Click on "Position"
Transaction = 
Select ‘VST’ line and
Double click on  Rules
Click on "New Entries"
ChAc Tax Code Country
 


Select Rules line and
Double click on  Accounts
Click on "New Entries"
Tax Code GL Account
V0 201500
V1 201500
Click on 

‘----------------------------------------------------------------------------

Double click on  Posting Kye

Click on "Position"
Transaction = 
Select ‘MWS’ line and
Double click on  Rules
Click on "New Entries"
S4/HANA Finance & Controlling Simplified

ChAc Tax Code Country

 


Select Rules line and
Double click on  Accounts
Click on "New Entries"
Tax Code GL Account
A0 105500
A1 105500

Click on 

End-User Testing:

1. Update GL Master Expenses/ Revenue

a. Single - FS00
b. Mass update - MASS
2. Expenses posting with Input Tax
a. Inclusive
Rent A/c Dr
Input Tax Credit A/c Dr
To Cash in Hand Cr

b. Exclusive
Rent A/c Dr
Input Tax Credit A/c Dr
To Cash in Hand Cr
S4/HANA Finance & Controlling Simplified

3. Posting from Fiori