Configure foreign taxes in your SAP system by setting up the foreign country as a region within your home country.
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).