§ Types:
i. Tax on sales/purchases
ii. US sales tax
iii. Additional taxes (country-specific)
iv. WHT
§ With the provision for two taxation types:
i. Federal/country level - national level, with uniformly defined rates.
ii. State/jurisdiction level - rates defined by state/jurisdiction
§ In some countries taxes are even levied on both levels.
§ System supports:
i. Calculating the tax amount
ii. Posting to defined tax accounts
iii. Performing tax adjustments - for cash discounts or other form of deductions
iv. Tax reporting
§ Calculates the tax amount from:
i. Base amounts w (gross) or w/o (net) a cash discount (exp / revenue)
ii. Tax codes to check or calculate the tax amount
§ National regulation determine whether tax base amount is gross / net – you have to define which is to be used for each CC or for the highest level of the jurisdiction code.
§ Tax on sales and purchases: is the balance of the output tax and input tax
i. Output: on the net value of the goods and is billed to customer – liability of company to tax authorities
ii. Input: on the net invoice amount and billed bye vendor – receivable by company from tax authorities
iii. Tax payable: output tax (-) input tax
§ US Tax on S&P – Sales & Use tax
i. Both are different
ii. Both are apply to goods consumed by the customer
iii. Goods used in production / for resale to 3rd party remain untaxed
iv. Taxable good is sold either sales or use tax is levied – so goods taxed only once
v. Sales tax is collected by a vendor on a sale and remitted to the jurisdiction of the customer
vi. If customer are exempt – can specify in master record by entering appropriate indicator (Sales Area – Billing tab)
vii. Sales tax based on – Material & Customer location - posts in SO mgt & Purchasing mgt.
viii. Customer only has to pay use tax – if he was not charged sales tax by the vendor
ix. This may be the case if the vendor does not have a “presence” in the state of the customer or if the customer has a “self-assessment permit”
x. Customer determines the use tax amount and remits it to the jurisdiction where the goods are consumed
§ Tax Calculation Procedure:
i. Assigned to every country
ii. Contains:
1. order of steps:
2. tax types (condition types): that apply for the country – necessary for tax calculation
3. account key / transaction key: for additional specifications & automatic account determination
iii. TAXUSJ: including use of jurisdiction codes - TAXUSX: when employing an external tax package
iv. Condition types are tax calculations that are valid for the country
v. Base amount is the rev / exp item.
§ Jurisdiction Code:
i. Combination of the codes of tax authorities that tax movements of goods and use their own tax rates
ii. 4 possible levels below national level: State – Country – City or sub-city
iii. Using involves 2 steps:
1. have to define length of the individual element of the code for the format of the jurisdiction code
2. code must define on every level
iv. STATE - COUNTRY CODE - CITY CODE - DISTRICT CODE
v. When you post taxes with JC, you can enter taxes per J level / per tax level
§ Tax Code:
i. You can enter tax code when you post the document – this is the main connection – this depends on country uses as tax calculation procedure with tax jurisdiction codes or not
ii. Linked with either of the following:
1. Country key
2. Combination of country key and tax jurisdiction code
3. Tax codes within a jurisdictional taxation method are date-specific – you can choose whether the document date or posting date is valid for the tax calculation.
iii. Contains the tax rates.
iv. Tax rates assigned to tax types used in the procedure
v. A tax code may have several tax rates entered for different tax types (if line item is to be taxed with several tax types), but usually only one tax is entered.
vi. Zero tax :
1. exempt but have to reported to tax authorities – for this separate tax code is created
2. goods issue, goods movement, and so on – special tax code must be assigned to these transactions
vii. Tax type determines if the base amount is “percentage included” or “percentage separate”
viii. Check indicator: To detect the deviation between the tax calculated and the tax amount entered – either issue an error message (indicator set) or a warning message (indicator not set) - not for input tax codes because user must post the tax amount from the invoice regardless of whether it is correct or not
§ Tax Postings:
i. Separate line item to a special tax account
ii. Taxes with certain transaction/event keys are distributed to the relevant expense/revenue item (this is the case for sales tax payables or other non-deductible input taxes)
iii. For each transaction event key ( Posting key, Rules & Tax accounts)
iv. Exchange rate differences occur because of tax adjustments in foreign currencies – these are posted to normal account for ex rate differences
v. For each company code you can specify that the exchange rate for tax items can also be entered manually or is determined by the posting or the document date – the resulting differences posted to a special account
§ Tax Accounts:
i. Tax code properties determines whether or not the tax posted is I/O tax.
ii. Accounts to which tax items are posted define by entering the “Tax category” in GL:
1. “ “ - non tax-relevant postings (e.g., bank postings)
2. “-“ - postings that require an input tax code
3. “+” - postings that required an output tax code
4. “*” - postings which require any tax code
5. “xx” - predefined tax code
iii. “Post automatically only” must be selected if you don’t want to post tax manually
iv. “Posting without tax allowed”
1. can post to this GL without specifying tax code
2. necessary for tax postings within a jurisdiction code tax calculation procedure to foreign customers who do not have a jurisdiction code
v. Accounts for cash discounts need an entry in “Tax category” field if the system is supposed to post tax adjustments
§ READ 303 PAGE FOR EU RELATED TAX STUFF
No comments:
Post a Comment