Reporting Supplier Tax

This document presents an overview of how to generate and report supplier tax transactions. For example, in the United States, at the end of the year companies report to the Internal Revenue Service certain types of payments (1099 reportable payments) they make to suppliers, such as sole proprietorships, using a 1099 form.

The transactions created and the base amount—the amount to report to the tax authorities—depends on the withheld tax method of the supplier:

Any cash discount is not considered in the calculation for all withheld tax methods.

The withheld tax is automatically posted to a separate account. For supplier payments, accounting events AP20, AP30, AP31, AP32, AP33, and AP34 are used together with accounting type 396. When recording supplier invoices with method 3 or 4, accounting rule AP10-396 is used to post the amount to report.


A report is created indicating the reported amount and withheld tax amount in local currency per payer and invoice.

You can send the report to the appropriate authorities.

All supplier tax transactions in the FAPSER table have status 9 (included in an approved supplier tax report).

Before you start

Follow these steps

  1. Register service code during supplier invoice entry and invoice matching

    A default service code for the supplier is used when you enter a supplier invoice and post it to an expense account in one of the these programs:

    • 'Supplier Invoice. Record' (APS100)
    • 'Supplier Invoice. Process Automatic' (APS050).

    You can change the service code manually, either for the entire invoice or for a specific expense accounting line. For example, the supplier's hourly fees can be reportable and require a service code, but reimbursable business expenses such as travel do not.

    If the invoice is matched to a purchase order or to goods receipt transactions, the service code for the accounting lines is displayed in 'Supplier Invoice. Match GR Line' (APS360/E).

    Accounting lines without service codes are automatically excluded from the supplier tax routine, as are all accounting lines that do not have transaction code 41 in 'General Ledger. Display Transactions' (GLS211/E).

    Note that recurring payments in 'Supplier Payment. Open Recurring' (APS095) cannot be included in the supplier tax routine.

    Also note that for tax withholding method 4, only one service code per supplier invoice can be used during supplier invoice entry in (APS100) and that supplier invoices entered in (APS050) are not covered.

  2. Register service code during recoding

    If the invoice is posted to a clearing account in (APS100) or (APS050), no supplier tax transaction is created during invoice entry even if tax withholding method 3 is selected for the supplier. Instead, you confirm or adjust the service code to use during recoding in 'Supplier Invoice. Recode' (APS110).

  3. Pay supplier invoice

    You pay the invoices as usual in 'Supplier Payment Proposal. Open' (APS130) or 'Supplier Payment. Enter Manual' (APS120). The amount you pay is the invoice amount minus the deducted tax.

    Using tax withholding method 4, withheld tax can also be created for on-account payments by connecting a service code to the supplier in (CRS624/F) or during entry of the payment.

  4. Review tax transactions

    You review new tax transactions per payer in 'Supplier Tax Report. Display Invoices' (APS425). You can adjust or delete records. You can also create new records for invoices that are already recorded in accounts payable. If you manually change the payment amount to report or the withheld tax amount, the original value is still displayed in local and foreign currency in (APS425/E) for traceability purposes.

    Note: Since changes in (APS425) do not update the general ledger automatically, you must adjust the ledgers manually depending on the selected tax withholding method. Manual adjustments involve entering credit invoices in (APS100) or entering journal vouchers in 'Journal Voucher. Open' (GLS100).
  5. Create supplier tax report

    You create a supplier tax report in 'Supplier Tax Report. Create Proposal' (APS430).

  6. Analyze supplier tax reports

    Once the report is created, you can select option 11='Tax report' for a specific supplier tax transaction in 'Supplier Tax Report. Display Invoices' (APS425). This lists the report in which the transaction was included in 'Supplier Tax Report. Create Proposal' (APS430).

    You can also work the other way around by selecting option 11='Invoices' for a payer in (APS435)—a subprogram of (APS430)—to display the tax transactions in (APS425).

    You can always reprint a supplier tax report in (APS430) or create a detail printout for supplier tax transactions in 'Supplier Tax. Print Details (APS555).

  7. Confirm supplier tax reports

    Once the report is created and the details analyzed, you select the proposal with option 9 ='Update' in (APS430). Depending on the 'Report method' selected in 'Settings – Supplier Tax' (APS035), tables for electronic reporting and/or printouts are created.

    If the check box for 'Internal tax reference (challan) used' is selected in (APS035), an internal number together with the date is assigned to the proposal and to all supplier tax transactions included.

    You can display or print withholding tax transactions connected to the specific internal tax reference (challan) in (APS425) and in (APS555).

    You are able to enter details about the supplier tax payment made in (APS427 - Supplier Tax Payment. Open Details) by selecting the 'Tax payment' option for an updated (that is, confirmed) supplier tax report in (APS430).

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