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Chapter 10 ■ Defining Tax on Sales and Purchases
To assign the account you want the tax amount for output taxes to be posted to, enter the account in the
Account field. Click the Enter button and save your account assignment.
The same steps you used to define output tax are applicable to input tax, with slight modifications to
the tax type and to the account to post the tax amount. For example, the tax type for output tax is A, whereas,
the tax type for input tax is V. In the next activity, you will define tax codes for inputs or purchase taxes in
SAP ERP.
Define Tax Codes for Purchases
Just like when you’re customizing the tax code for sales, you have to define the tax code for purchases using
a different tax code, tax type, and G/L account. It is important to create different tax codes for purchases
in different countries (if your company operates in more than one country), because each country’s tax
requirements and specifications differ. Now let’s define a tax code for purchases.
Problem: Company C900 Plc’s accounting team wants you to define a 20% purchase tax
code that users can apply to purchases during document entry and specify the G/L account
purchase taxes are posted to.
To define a tax code for purchases, 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 assign your country tax specification to your
tax code. Enter your country code in the Country field. We used GB (Great Britain) in this activity
Click the Continue button at the bottom of the dialog box to go to the next screen, called Maintain
Tax Code: Initial Screen, where you will customize your tax code (Figure 10-8).
Figure 10-8. Maintaining a tax code for input/purchases
■■Tip
There is no restriction to the number of tax codes you can create.
You define the tax code for input/purchase taxes for your company’s country code by simply typing a
two-digit tax code in the Tax Code field. There is no hard rule on the tax code that you must use here. It is
purely a matter of choice.
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