Note
This is especially important for European companies. The only difference in taxes from the pricing examples already shown in this course is the use of the tax liability fields in the customer and material master records. If both the customer and material are liable for taxes, then the pricing calculation for taxes proceeds as usual.
You can assign a rule such as Blank, A, or B, at the sales organization level to determine the sales tax identification number in the order and billing document.
For the Blank status, the standard priority rules are as follows:
- Rule 1:
If the payer (PY) has a sales tax identification number and a different sold-to party (SP ), the sales tax identification number and tax classification are taken from PY. The ship-to party (SH) is then not relevant. The system determines the sales tax identification number according to the tax destination country.
- Rule 2:
If rule 1 does not apply, that is if SP does not have a sales tax identification number but SH has a sales tax identification number, the sales tax identification number and tax classification are taken from SH.
- Rule 3:
If rule 2 does not apply, the sales tax identification number and tax classification are transferred from the sold-to party.
For status A, the sales tax identification number and tax classification are transferred from the sold-to party. The sales tax identification number is transferred according to the tax destination country.
For status B, the sales tax identification number and tax classification are transferred from the payer by using the same method described in the rule for status A.
Tax Classification
The system determines a tax rate in the order document or the billing document based on the following criteria:
- The business transaction (domestic, export, or import)
- The tax liability of the ship-to party
- The tax liability of the material
