7 Steps for Handling Foreign Taxes through a Single Company Code

  • by Paul Ovigele, ERP Financials Consultant
  • January 15, 2008
Configure foreign taxes in your SAP system by setting up the foreign country as a region within your home country.
Key Concept

In the standard SAP system, the only tax procedure that you use in a specific company code is the one that is attached to the country associated with that company code. It may be necessary, however, to deal with cross-border shipments, which involve foreign tax procedures and rates.

Imagine a scenario in which a US company with a plant in Canada ships goods to Canadian customers either from the Canadian plant or directly from a US plant. Normally you run a Canadian company code in your system to address this, but it leads to a greater amount of effort in terms of system setup and legal and fiscal reporting requirements. I worked on a tightly scheduled implementation project and learned through trial and error a seven-step process to enable your system to properly calculate foreign taxes without needing to set up the additional company code, simplifying your processes and saving you time and effort.

Step 1. Attach Canadian tax to the US tax procedure

Step 2. Insert Canadian regions into the US

Step 3. Set up a Canadian tax jurisdiction structure similar to the US structure

Step 4. Set up Canadian tax jurisdictions in TAXUSJ and TAXCAJ

Step 5. Set up Canadian tax codes in Canada and the US

Step 6. Maintain Canadian tax codes in the US condition record

Step 7. Enter Canadian and US tax conditions into the Sales and Distribution (SD) pricing procedure

Step 1. Attach Canadian tax to the US tax procedure. Go to transaction OBQ3, select the Canadian tax procedure (TAXCAJ), and click on the Control folder (Figure 1).

Paul Ovigele

Paul Ovigele is the founder of ERPfixers, an online micro-consulting platform (http://www.erpfixers.com). He has worked as an ERP financials consultant since 1997 in both North America and Europe, specializing in implementing the FI and CO modules along with their integrated areas for companies in industries such as consumer goods, chemicals, logistics, pharmaceuticals, apparel and entertainment. Paul has delivered numerous training sessions to finance professionals at both the functional and managerial levels, and he has presented at various SAP financials conferences around the world.

 

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