How Tax Calculation Done in SAP FI

by Apprisia C. SAP Service Provider

The blog provides an overview of SAP Tax Computation methods. In SAP, there are various methods to calculate taxes like calculate deferred tax, tax on special GL transaction, and Change tax. In SAP, we can calculate Tax as per country-specific taxation rules and we can format for financial reports. SAP provides Taxation methods, reports, adjustments in tax calculation and other functionalities.

There are several types of taxes in each country, like Tax on Purchase (VAT), Withholding taxes, Sales Tax, Service Tax, Excise duty on Import or Export of goods etc. Taxes are levied at National Level as well as in State Level. In SAP, there is a provision for all these types of Taxes.

SAP provides Tax Codes to calculate input or output tax. Tax code uses tax type to check that the posting has been done to the configured account and not other than that. SAP also provides Automatic Posting to the tax account. For this, you need to configure the posting key and account number of the respective tax account. Tax amounts can be calculated automatically as well as manually.

We can also calculate taxes on Special GL transactions on sales/purchase, like down payment which posted to a special reconciliation account. In SAP you can also calculate Deferred Taxes at the time of making payment. You can also maintain conditions to calculate taxes e.g., Calculate tax in Percentage and for which side (Credit or Debit side) of the account. You can make changes in Tax amount and Percentage through manual entries.

Please send us your questions, comments or assistance, and our SAP team would be glad to assist you.