Ask the FI/CO Expert: Know When to Ignore the Standard Settings for Purchase Order Tax Code Defaults

  • by Kurt Goldsmith, Senior Business Consultant, Enowa Consulting
  • May 15, 2003
The author explains why an FI support team might be having problems "defaulting" a 0 percent tax code when creating a purchase order.
Key Concept



Dear FI/CO Expert,

I recently joined my company's SAP FI support team. We have been asked if it is possible to "default" a 0 percent tax code when creating a purchase order, since all our items (inventory-related and cost-center related) are non-taxable in some of our company code’s plants. Our purchasing department’s end users will not take it upon themselves to input the 0 percent tax code we created for this purpose into each purchase order line item for these plants. As a result, our A/P folks have to insert this on every line during their invoice verification step, or a system error message prevents saving.

In an attempt to get the tax code default working, I have done the following: set up the "non-taxable" indicator for our plants (transaction code OMKN), for the "K" and "P" Account Assignment Category codes (transaction code OMKO), and for the only destination country (the U.S.) where we have receiving plants (transaction code OMKL). This did not lead to any defaults showing up in the purchase order. I have not yet tried anything else. I know very well that there must be some link that I am missing between these settings and the plants we want the default for, but it is very confusing. So many different IMG entries about tax codes, tax indicators, tax whatever. Why is my simple requirement so complex to implement? Your expertise is much appreciated.

Lara Cunningham (Business Analyst – SAP FI support)

Hi Lara,

Thanks for your question. I’ve decided to turn it into an "Ask the Expert" article because I believe that a lot of people besides yourself might be getting into trouble with unnecessarily complex design choices in FI/CO in general. Your case involving tax code defaults (Figure 1) is a good example of that.

Based on your question, I believe that you are up against some tricky purchase-related tax settings that either came delivered with your R/3 system, or that a prior consultant created for your site several years ago. Often, new support team members such as yourself react this way to text description labels such as “taxable” and “non-taxable” within the R/3 table settings, although, in reality, what’s being looked at has no power whatsoever—by itself—to accomplish such things as defaults. And, I agree. It is very confusing.

Kurt Goldsmith

Kurt Goldsmith is a senior business consultant for Enowa Consulting, specializing in the diagnosis and resolution of productivity-related integration issues between a company’s division of labor (end users, managers, executives) and SAP software (R/3, BW, APO, CRM). He also has a lifetime performance record of one win and two third-place finishes from five career starts as a thoroughbred racehorse trainer.

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