Prevent Posting Errors by Deactivating VAT Codes

  • by Kees van Westerop, Senior SAP Consultant, Kwest Consulting
  • November 17, 2015
Learn a few tips on how to remove invalid value-added tax (VAT) codes from your SAP system’s search functionality.

Within the European Union (EU) a value-added tax (VAT) has to be applied on almost all purchases and sales. In most countries, a low and a high rate of VAT are to be applied. Although historically the rates rarely change, now, due to the economic crisis, they are changing more frequently. This means that from a certain point in time a new percentage is to be applied for a VAT code. For example, in Luxembourg on January 1, the high rate changed from 15 percent to 17 percent. After this change the old VAT code (for 15 percent) shouldn’t be used anymore for new postings, but it should still be possible to report the old code.

Note
The VAT is a common tax system in the EU. The VAT is applicable for almost all sales and purchase transactions in the EU. It has been in use for more than 40 years. Each time a country joined the EU, it had to adjust its tax system to follow the basic rules of the VAT used within the EU. The current economic situation in the EU has caused several countries to change their VAT rates.

Whenever a new rate is to be used, a new VAT code must be created. The old code cannot be deleted from the system because of reporting requirements as well as for correction of old documents.

Because VAT codes have existed for more than 40 years, many of them are present in SAP systems. Therefore, when you use the search help to select a VAT code, you can still see all the invalid VAT codes. You may select the wrong VAT code, causing incorrect VAT calculation, posting, and reporting.

SAP has provided the possibility to hide old VAT codes from the search help. Refer to SAP Note 2074351 for the exact release information.

Figure 1 shows an example of how the search help for VAT codes may look before any VAT codes are deactivated. It is just an example of a posting where a VAT code is to be entered. In this example, I used transaction code FB01.


Figure 1
Search help before deactivating VAT codes

The VAT code 1B has an old VAT rate and shouldn’t be used anymore for new postings.

Kees van Westerop

Kees van Westerop has been working as an SAP consultant for more than 25 years. He has an MBA degree in mathematics and a degree in finance. Kees has been concentrating on the financial modules, especially in general ledger accounting, cost center accounting, and consolidation. He also has a great deal of experience with rollouts of kernel systems and integrating finance and logistics.

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