To define tax exceptions

For situations in which the derived tax code is incorrect, you can define tax exceptions. A tax exception is a set of transaction details for which you define a tax code and tax country and business partner tax country other than the values that result from the standard tax code or tax country derivation.

For example, if you want to use a specific tax code for purchase transactions with a specific ship-from country and delivery terms, you can define a tax exception.

Note

If you set up withholding tax, you must use this procedure to link the group tax codes to the business partner tax classifications.

To define tax exceptions, take the following steps:

  1. In the Company Sets (tctax0170m000) session, define one or a number of financial company sets.

  2. In the Companies by Company Set (tctax0171m000) session, add financial companies to the company set. Ensure that each financial company belongs to only one financial company set.

    To define the tax exceptions for a single financial company, create a company set that contains only one company.

  3. For the financial company set, define the tax exceptions in one of the following ways:

    • For individual countries, use the Tax Exceptions by Country (tctax1100m000) session.
    • Tax Exceptions by Country Set (tctax1101m000)

      If the tax exception applies to several countries, use the Tax Exceptions by Country Set (tctax1101m000) sessions.

      • First, in the Country Sets (tctax0120m000) session, define tax country sets and in the Countries by Country Set (tctax0121m000) session, add countries to the tax country set.
      • Next, run the Tax Exceptions by Country Set (tctax1101m000) session to define the tax exceptions for the country set.

  4. In the Tax Parameters (tctax0100m000) session, select the following details:

    • Tax Exempt Level
      Select the method you use to define tax exemptions. If you do not define tax exemptions, select Limited.
    • Search Order

      Select one of the following values:

      • In one of the Search Order fields, select Exceptions by Country or Exceptions by Country Set, as applicable.
      • If, in addition to the tax exceptions, you define tax exemptions, you must also select Exemptions by Country or Exemptions by Country Set in a Search Order field.
  5. Use the Test Tax Model (tctax8100m000) session to test the resulting tax code and tax country in various situations, and make the necessary adjustments.

Related topics