T.code FTXP is used to create Tax code.
All the Taxes are divided into two categories.
- Input tax: All taxes related to purchase are considered as Input tax.
- Output tax: All taxes on sales come under this category. For e.g CST, service tax, VAT
T.code FTXP is used to create both input or output tax code.
Steps to create Tax code:
1. Go to T.code FTXP, and select the country for which you want to create tax [IMG - Financial accounting - Financial accounting global settings - tax on sales/purchases - basic settings - Assign country to calculation procedure].
2. Enter 2 digit alphanumeric code for e.g A8, 46, CC, etc.. in the field Tax code. Now SAP will ask you to complete other additional fields such as:
- description of the tax code (give a description)
- define the tax type (tax code is input or output tax)
- Indicator which determines that an error message should be issued if the tax amount is not correct. It is recommended to flag this.
- Eu code: Set this parameter at "1" it represents all the Sales from one EU country to another EU country. If you do not set this parameter at "1" then all transactions with this code will be not picked up in the ESL listing of that specific country.
- The target tax code fields are used in case of deferred taxes. This is applicable for example in France. The VAT needs to be paid for example not when the invoice is issued but when the customer pays the VAT. There are here again special programs available in SAP for deferred taxes.
- Reporting country: this field needs to be completed when you are using the plants abroad functionality. This means that when you as a German company have a Belgian VAT number and you have sales in Belgium (+ you need to submit a VAT return in Belgium), then ofcourse these invoices need to be booked in SAP with a Belgian tax code.
3. Now in the Menu allocate the amount where this specific tax code is used to a certain tax account. The tax type fields such as Base Amount, Input tax, Output Tax ... can be determined via the calculation procedures. Calculation procedures are defined in the IMG [Financial accounting - Financial accounting global settings - tax on sales/purchases - basic settings - Assign country to calculation procedure].
4. Account Keys.
- NVV: The non-deductible VAT is automatically added to the expenses account
- NAV: Indicate for this key a separate account for the non-deductible VAT
- ESA: Output tax in case of Acquisition of EU goods
- ESE: Input tax in case Acquisition of EU goodsLast but not least you also need to complete the tax rate field.
5. Tax percentage can be maintained in two ways & that depends upon the Tax procedure that has been followed i.e. if tax procedure is formula based then percentage can be maintained in FTXP only, whereas if the procedure is condition based then percentage has to be maintained under the identified condition type. Create condition records using T.code FV11 to maintain the tax percentages. Tax condition can be of two type Deductable or Non-Deductable
- Non-deductable: Used JVRN for Non-deductable.
For VAT, Go to FV12, select JVRN or JVRD as per our requirement .....select Tax Classification..... maintain the % of the VAT. - Deductable: Used JVRD for a deductible.
For JVRD, Go to OB40, maintain G/L acct for JP5
GL accounts has to be assigned under OB40 for automatic posting of tax amounts.