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Chapter 10 ■ Defining Tax on Sales and Purchases
In this example, the target country is Great Britain. Therefore, you should make sure that the country tax
code (Great Britain’s is TAXGB) is assigned to the tax procedure, which is circled in red in Figure 10-2. You
can click the Search button to call up the list of all the country tax procedures. Search for your country tax
procedure and assign it. Save your tax procedure.
■■Note
Before you move to the next step, go to “Appendix A, Chapter 10, Tax on Sales/Purchases” to create
the G/L accounts for input tax and output tax, which you will need when configuring the tax postings.
You need to define separate tax codes for sales and purchases. In the next activity, you will define the tax
code for sales specific to your company based on your country’s requirements.
Define Tax Codes for Sales
A tax code contains one or more tax rates that are applicable to different tax types represented in SAP ERP.
It is recommended that you define different tax codes for different tax types and rates. If your company has
operations in more than one country, you should define separate sales/purchase tax codes for each country.
Secondly, in some countries, you must report tax-exempt or non-taxable items to the tax-governing bodies.
Hence, you should define a 0 value tax code to report tax-exempt or non-taxable sales.
Problem: In the UK, the output sales tax (VAT) is 20%. Company C900 Plc wants you to
define a 20% sales tax code, which users will apply to sales during document entry, and to
specify the G/L account that output sales tax will be posted to.
To define tax code for sales, follow this menu path: IMG: Financial Accounting (New) ➤ Financial
Accounting Global Settings (New) ➤ Tax on Sales/Purchases ➤ Calculation ➤ Define Tax Codes for Sales
and Purchases. Or you can use transaction code FTXP.
The Country dialog box pops up. This screen allows you to determine the country-specific settings that
you want to use for your tax code. Enter your country code in the Country field. In this activity, for example,
we used the GB (Great Britain) country code. Click the Enter button at the bottom of the screen to go to
the initial screen, called Maintain Tax Code: Initial Screen, where you define your tax code (Figure 10-3).
Figure 10-3. Maintaining a tax code for output/sales tax
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