ProductData BA en-Sales Product Kit

Product Documentation PUBLICSAP Business ByDesign 1302

Product Data

Table Of Contents

1 Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.1 Tax Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Tax Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Tax Determination Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Tax Determination US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

1.2 Pricing in Customer Relationship Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251.3 Working With Serial Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311.4 Sales Kit Process Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

2 Materials View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372.1 Materials Quick Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372.2 Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Assigning Statuses to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Changing Identified Stock Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Availability Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

2.3 Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Create a Material Template and Create a Material from a Template . . . . . . . . . . . . . . . . . . . . . . 51Assign Purchasing Details to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52Assign Logistics Details to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Assign Supply Planning Details to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Assign Availability Confirmation Details to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Assign Sales Details to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Assign Valuation Details to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58Add Quantity Conversions to a Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Mass Change of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Create Materials Using Microsoft Excel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Export Business Data Using Microsoft Excel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

3 Services View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663.1 Quick Guide for Services (in Product Data) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663.2 Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Assigning Statuses to a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69Cost Center Management Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Service Cost Allocation to Cost Objects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

3.3 Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Create a Service Template and Create a Service from a Template . . . . . . . . . . . . . . . . . . . . . . . 73Assign Purchasing Details to a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74Assign Sales Details to a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Assign Valuation Details to a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

SAP Business ByDesign 1302Table Of Contents P U B L I C 2013 SAP AG. All rights reserved. 3

Add Quantity Conversions to a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Mass Change of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Create Services Using Microsoft Excel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79Export Business Data Using Microsoft Excel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

4 Product Categories View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834.1 Product Categories Quick Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834.2 Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Export Business Data Using Microsoft Excel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

5 Entitlements View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875.1 Entitlements Quick Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875.2 Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88Assigning Statuses to an Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

5.3 Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Create Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90Assign Sales Details to an Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91Assign Valuation Details to an Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Add Quantity Conversions to an Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Add Entitlement Descriptions in Other Languages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

6 Products View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 956.1 Sales Kit Quick Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 956.2 Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Sales Kit Process Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 966.3 Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Create a Sales Kit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98Assign Sales Details to a Sales Kit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Assign Valuation Details to a Sales Kit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

7 Reports View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1027.1 New Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1027.2 Changed Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1037.3 New Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047.4 Changed Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

4 2013 SAP AG. All rights reserved. P U B L I CSAP Business ByDesign 1302

Table Of Contents

1 Business Background

1.1 Tax Determination

1.1.1 Tax Determination

Overview

Business ByDesign provides a tax event and uses the resulting figures to generate tax reports. Thisautomatically-created report does not replace the customer or users own tax appraisal. SAP does notassume liability for the accuracy of the automatically-created report or the tax report that is generated.

As a rule, companies are legally required to calculate taxes on products that they buy or sell or services used, andto levy these taxes on their customers. After the products or services have been provided, the taxes must be declaredand paid to the relevant tax authorities.The taxes are calculated for business documents such as orders, invoices, credit memos or down payments.Since taxation laws differ in each country, your company is faced with the challenge of calculating the correct taxfor a particular business transaction. The system supports you by automatically calculating the tax for the followingtax types:

Value-Added Tax (VAT)This tax is levied in many countries, especially countries in the European Union. Many regional differencesexist. For example, in some countries such as Canada and Australia, value-added tax is levied as "Goods andServices Tax".

Sales and Use TaxThis tax is levied, for example, in the United States, and in a similar form in Canada (Provincial Sales Tax).

Withholding TaxThis tax is levied in different forms in different countries. The system is able to calculate withholding tax forthe United States.

The system also offers a reporting tool that gives you effective control over your mandatory declaration of thesetaxes.

Prerequisites You have created the Master Data for Tax Determination [page 10]. Defining the Solution Scope for Taxation

The following activities are necessary to define the solution scope for taxation: The solution scope for taxation is specified in the system in Business Configuration under Built-In Services

and Support. The Tax Calculation business topic is located in the Business Environment businesspackage.

If you are also required to have taxes calculated in your quotes, activate the relevant option inScoping. In the Questions step, navigate to the Sales business area, and choose New Business > Quoteswith Tax Calculation.

SAP Business ByDesign 1302Business Background P U B L I C 2013 SAP AG. All rights reserved. 5

ElementsThe system collects the relevant data from the available business documents to correctly calculate the taxesapplicable. As the user, you have to configure your system with the information that is required for your businesscases. A lot of standard business cases are pre-configured by SAP, but in some cases you have to enhance yoursystem.For more detailed information about tax determination and how the system merges and classifies data, see Elementsfor Tax Determination [page 13].

Tax Number DeterminationIn the following cases the tax number is determined again:

Tax date has been changed Buyer, seller or tax reporting group has been changed Tax number is wrong Tax country has been changed

Value-Added Tax (VAT) NumbersFor Export DeliveriesTo obtain tax exemption for intra-community deliveries, you need to record, among other things, the servicerecipients VAT number to be used for the receipt of goods.If several VAT numbers are assigned to a customer master record, the system selects the VAT number accordingto the following criteria:

The VAT number of the country in which the ship-to party is located. If the VAT number of the ship-to country is not entered in the master data, the system searches for other

numbers entered in the master data and selects a number that is different from the number of the countryfrom which the goods are sent.

If there is only one VAT number for the country where the transport of goods starts, or if there is no numberat all, the prerequisites for an intra-community delivery have not been fulfilled, and the delivery must be taxedat the relevant tax rate.

If a VAT number is entered in the master data, it will be automatically displayed on the invoice. You canoverwrite it on the Taxes tab in the document. However, you can only overwrite using those numbers thathave been previously entered in the account master record.

For Other Services, Performed AbroadAccording to the EU directive 2008/8/EG and country-specific tax legislation, there is a new regulation, particularlyfor B2B commissions relating to the place in which services are performed.Generally, the place in which services are provided serves as the 'service recipient address. If the country where the'Ship-To' address is located differs from the address of the account, then the 'Ship-To' location is understood to bethe location where the service is performed. This directly influences how taxes are determined, in that the Ship-To'address is used to determine where the services will be taxed. For example, 3a (2) UStG in Germany can beconsulted. If this is not correct for each and every case, then applicable tax data must be manually adapted, mainlythe tax country and the tax code.


Business Background

In order to distinguish between companies and individuals as the service recipient, the system (tax decision tree)checks whether a VAT number has been entered in the account master data. If the VAT number is missing, thebusiness case is regarded as a service that was performed for an individual.

Therefore, it is important to remember to include the VAT number when entering the account master data.

Reverse Charge MechanismReverse charge mechanism means that, in certain cases, the customer is required by law to be liable for VAT, andto pay it to the relevant tax authority. In this case, the entrepreneur issues an invoice without VAT, but with anotification indicating that the tax debt is being transferred to the customer. The customer must calculate and paythe VAT to the tax authority, and can claim input tax deduction at the same time as usual. The transfer of tax debtto the service recipient is called reverse charge mechanism.For more information, see Tax Determination with Reverse Charge Mechanism [page 19].

Third-Party Order Processing TaxationIn typical sales scenarios, transactions take place directly between a company and an account, both businesspartners are located in the same country, and the company produces and delivers a good or service directly to theaccount. In such scenarios, there is no need for special tax regulations. However, in the event that one or moreparameters of this business scenario differ from the typical situation and, for example, account address and ship-to addresses are not the same, special regulations apply, depending on how complex the scenarios are.For more information, see Third-Party Order Processing and Chain Transaction Taxation [page 21].

Relevant Date for the VAT Tax ReturnThe date used for the VAT tax return depends on the business document. For example, in the supplier invoice theReceipt Date is used, and in the customer invoice the Posting Date is used. But if you want, you can also enter a TaxDue Date.For more information on the tax due date, see Tax Due Date of Tax Items.

Entering or Changing Tax Codes in Journal Entry VouchersYou can enter or change tax codes in journal entry vouchers as follows:

Sales OrdersGo to the Sales Orders work center and choose New Sales Order or an existing sales order for editing. ChooseView All. Go to the Items tab page and from there to the Taxes tab page. Choose an appropriate entry for theorder item selected under Tax Code.

Invoices or Credit MemosGo to the Customer Invoicing work center and choose New Manual Invoice or an existing invoice or creditmemo for editing. Go to the Items tab page and from there to the Taxes tab page. Choose an appropriateentry for the invoice item selected under Tax Code.

Purchase OrderGo to the Purchase Requests and Orders work center and choose New Purchase Order or an existing purchaseorder for editing. Choose View All Items . In the Basic Data tab page, select under Taxes the appropriatetax code for the selected purchase order item.


Supplier InvoiceGo to the Supplier Invoice work center and choose New Invoice Without Purchase Order or an existing invoicefor editing. In the Overview tab page, select the appropriate tax code for the selected invoice item.

Tax Decision TreeThe system uses a tax decision tree to correctly determine a tax event. The tax decision tree consists of a sequenceof logically connected questions that the system determines as being true or false by comparing them with dataentered in the documents. In this way, the facts are narrowed down until the tax event and the correct taxationmethod has been determined.The questions are answered by comparing data entered in the document, and the underlying process can berepresented as a process flow. The questions in the following example are used to determine the tax event Exportto Third Country for a company based in Germany.

A tax decision tree is assigned to each country.


Business Background

Process Flow

The process flow for tax determination describes a sample of how the tax event is determined for an invoice:1. The sales representative creates and saves a manual invoice.2. After the required data is entered, the system transfers tax-relevant data to tax determination, such as:

Location of supplier and buyer Tax attributes of the business partner

One of these attributes is the tax exemption reason that depends on certain country-specific laws. Tax attributes of products

Tax rate type and tax exemption reason can be different for each country, region, and tax type. In theUnited States, for example, services are not normally subject to tax, so the tax exemption reason shouldbe assigned in the product master data. Products are normally taxed at the standard tax rate and noother entries are required.

3. The system uses the tax-relevant data to activate tax determination, and the data is processed automaticallyin a tax decision tree.

4. The system calculates tax on the basis of the following components: Tax event Tax types Tax rate types such as standard value-added tax rate Tax rate as a percentage Taxable amount

5. The system includes the result of the tax determination and calculation in the sales order. The calculated taxis displayed on the Pricing tab and on the Taxes tab of the Items tab.


All tax details determined by the system are displayed on the Tax tab. Examples are: Tax country Tax code Tax jurisdiction code in case the tax country is United States Tax region in case the tax country is Canada Tax date A table with one row for each tax type that lists the following:

Tax base Tax rate type Tax rate Tax exemption reason, if necessary Tax amount Deductibility type (only for purchasing documents) Country-specific parameters (if necessary), such as indicators for deferred tax (in France or India),

tax jurisdiction code (United States), or region (Canada).

However, not all tax-relevant transactions can be recognized automatically and correctly by thesystem.Therefore, we recommend that you overwrite the data manually in the document, in case the systemdoes not determine the correct tax country or the correct tax code for the transaction. If you haveto change the tax country in the document manually, the input help displays only the countries forwhich a tax authority is created and tax arrangements are maintained for your company. However,you can also enter another tax country in which sales need to be reported for tax purposes. Thesystem then displays the specific tax codes for this country. Remember that you need to create thetax authority for this country. You then need to trigger tax determination again in the document sothat the correct tax number of your company is found for the transaction. For countries that havemultiple tax rates, you can enter the tax criteria manually.Note that if tax-relevant data such as the country of the service location or of the goods recipienthas been changed in a follow-up document of a business transaction, the Tax Country and TaxCode is not redetermined. This affects, for example, changes in the address data in a serviceconfirmation that is created for a service order, or in a project invoice that is created for a sales order.

See AlsoParty ProcessingTax Determination US [page 24] (This document covers topics specific for the United States, such as deliverytaxation in Texas and California, Nexus.)

1.1.2 Tax Determination Details

1.1.2.1 Master Data for Tax Determination

To ensure that the determination within your sales processes is running properly, you have created the followingmaster data:


Business Background

Tax AuthorityIn the Tax Management work center, you have created a master data record for each tax authority that is responsiblefor your company.

Company Tax ArrangementsYou have assigned a company tax arrangement in the master data record for the tax authority. You enter your taxnumber for the tax type to confirm that your company is registered and that you have declared tax to the relevanttax authority.

Tax Exemption Certificate in Account Master DataIn countries such as the United States, France, and Italy, accounts such as non-profit organizations can be exemptfrom tax payments for a certain period of time. For these accounts, you define the appropriate exemption certificatenumber and the validity date in the account master data. The Tax Exemption Certificates are taken into account insales transactions and are required to determine both the correct customer payment, and the proper payment tothe appropriate tax authority. If the tax exemption certificate is valid on the tax date, no tax is calculated. Theexemption certificate number is automatically entered in the payment document. You should enter a reason for thetax exemption in the account master data.

Tax Jurisdiction Code in Account Master Data for the United StatesYou have created a tax jurisdiction in the account master data.

CompanyCompany data, such as the company, address, and the tax jurisdiction code is entered in organizationalmanagement.

ProductsIf you do not enter any other information in a product master record, the product is taxed at a standard tax rate. Ifyou want to change the standard tax rate for certain countries, you must assign the tax rate type and, if necessary,a tax exemption reason to the relevant product in the master data.

ServicesFor taxes, you must specify which types of services you offer, and how these are to be taxed, or who is liable for taxfor a particular business transaction, so that the system determines the relevant tax code. Enter your services in theServices view of the Product and Service Portfolio work center under the Service Description tab, and if necessary,assign them to the relevant tax exemption reason on the Taxes tab, or specify whether the service is taxable at thelocation where the service is to be provided:


If a repair part is either implemented or installed, then the tax implication can either be a work delivery orwork performance. The system can't automatically determine these cases. In each individual instance,verify the applicable tax code on the Taxes tab for the service and part item.

Specifics for European Union Certain services are always taxed at the head office of the company that provides the services, even if these

services are provided for an account located outside the borders where the head office is located. In themaster data records of such services, ensure that nothing has been entered in the Tax Exemption Reasonfield on the Taxes tab, and that the Taxable at Destination indicator has not been set. According to Directive2008/8/EC and its implementation under the Annual Tax Act 2009 from January 1, 2010 onwards, this is thebasic rule for services that are provided for a private end consumer located outside the borders where thehead office is located.

Certain services must always be taxed at the location where the service is provided, such as constructionworks on buildings. For such services, set the Taxable at Destination indicator on the Taxes tab. Here, thesystem checks where the service is provided. The transaction is not taxable domestically if the location atwhich the service is provided is abroad. If this indicator is selected, then the address of the service locationis used to determine where the services will be taxed. In such a case, the company providing the goods orservices must tax the business transaction in the receiving country and also be registered there. Accordingto Directive 2008/8/EC and its implementation under the Annual Tax Act 2009 from January 1, 2010onwards. An example of this is work performed on movable tangible property for a private end consumerabroad.

To ensure that automatic tax determination works correctly, you must set the indicators and enter the taxexemption reasons for all relevant countries. It is especially necessary to maintain the Taxable at Destinationindicator for both the issuing and receiving countries. In comparison, if goods or services are taxable atdestination, it is the seller's responsibility to calculate and pay the tax in the receiving country. Therefore, itis not enough to maintain the tax details just for the issuing country; you also need to maintain them for thereceiving countries.However, certain circumstances may lead to non-taxation or double taxation. Non-taxation occurs if a serviceis indicated as Taxable at Destination in the issuing country but not in the receiving country. Double taxationoccurs if a service is indicated as Taxable at Destination in the receiving country but not in the issuing country.These legislative inaccuracies also exist in reality. However, the system does not support double taxation. Forservices that are not taxable in the issuing country (namely those indicated Taxable at Destination), thesettings for the receiving countries should be checked carefully to avoid accidentally leading to non-taxation.

The Taxable at Destination indicator is only utilized in CRM-related transactions, and not in SRM-related transactions.

Other services such as those provided by a company located abroad or specific work deliveries are taxedaccording to the reverse charge mechanism. For more information, see Reverse Charge Mechanism[page 19].From the seller's perspective, the transaction must be reported, but the tax debt transfers to the account. Ifthis tax exemption reason is entered in the services master record, the system applies the reverse chargerule for a corresponding sales transaction. The note referring to the reversal of tax debt (reverse chargemechanism) is printed on the invoice. The relevant tax exemption reason must be entered for the service onthe Taxes tab. According to Directive 2008/8/EC and its implementation under the Annual Tax Act 2009from January 1, 2010 onwards, this is the basic rule for services that are provided for a company abroad. Thisbasic rule is determined automatically, if the head office of the company providing the goods or services is inany EU member state. In the case of domestic accounts, however, the system does not automaticallyrecognize the reverse charge rule. Where applicable, the user must manually overwrite the tax code in thesales document (13b (1) No. 2 - 5). For this you can create your own tax code and legal phrase in business


Business Background

configuration. For more information, see Tax on Goods and Services Configuration Guide [page 22]. Thecorresponding tax event and tax exemption reason code are already available in the system.

Specifics for the United States of America The service location is always used for tax determination for services in the USA. The Taxable at Destination

indicator is not relevant for the USA.

See AlsoTax on Goods and Services Configuration Guide [page 22]Tax Determination [page 5]

1.1.2.2 Elements of Tax Determination

OverviewThe following sections provide you with an overview of the tax determination elements and their relations:

Tax Type and Tax Rate TypeEvery tax type in a tax event has a tax rate type and a tax rate that is applied to the tax base (in most cases the netamount) to calculate the tax amount for the relevant tax type.Tax rates are represented in the system by tax rate types in the example of Germany, the tax rate of 19% for value-added tax corresponds to the Standard tax rate type. This makes it easy to represent time-dependencies. If the taxrate for this tax type changes because of a new law, you can define a new tax rate in the system for a specific validitydate without having to create a new tax code.Country Specifics

India and CanadaFor tax jurisdictions such as India and Canada, where more than one tax type exists, the following fields canbe used: Tax Rate Type and Tax Exemption Reason, as well as Deductibility Type for purchasing documents.

GermanyThe Standard tax rate type is calculated for the Value-Added Tax tax type on the basis of the net amount. Thismeans that if the tax rate is 19%, a tax amount of EUR 19 is calculated for a net amount of EUR 100.

Tax RateCountry Specifics

Canada and United StatesFor Canada, tax rates are preconfigured for each province and territory in Canada, and for each state in theUnited States. However, before using the system, you must check whether these tax rates are still validaccording to any recent legislative amendments.

Tax EventIn the tax event, the system determines the method of taxation to be used for the business transaction accordingto:


Which tax types are applicable Whether the business transaction is taxable or not Whether the business transaction is subject to tax or not Which tax rate is applicable

For transnational business transactions, the system uses a tax decision tree for both the ship-from country and theship-to country to determine the taxation method used in the tax event for each country. The relevant decision treesare determined by the tax countries entered in the document, in particular by the countries of the supplier and thegoods recipient. Other tax jurisdictions can be the:

Location of the business residence of the seller who provides a service Location of the business residence of the buyer for whom a service is provided Location where the service is to be provided

Implications of the tax event for other areas: To calculate tax, the tax event takes the following into account:

Due tax type Procedure for tax calculation Tax exemption reasons, if required

To determine tax, the tax event specifies the following: Allocation criteria for the tax reports The field in which the tax is displayed on the tax return:

You can assign tax events to the fields of the tax return form for the relevant country. For moreinformation see, Tax Returns for Goods and Services.

In accounting, the tax event controls account determination.There are, of course, more tax events in the system for other common business transactions. However, you cannotcreate your own tax events.Country Specifics

GermanyExamples of tax events 10: Domestic Acquisition (15 I 1 Nr. 1) 100: Intra-Community Acquisition 310: Domestic Supply Of Goods And Services 400: Intra-Community Supply (4 Nr. 1b UStG)In accordance with Directive 2008/8/EC and its implementation under the Annual Tax Act 2009, intra-community service provision must also be declared in VAT tax returns as of January 1, 2010. For this purpose,new fields have been introduced in the VAT tax return: fields 21, 46, and 47. To use these fields for servicesprovided in a foreign member state of the European Union, there are two new tax events for Germany and allother EU member valid as of January 1, 2010. Sale 455 "EU Sale of Services, Reverse Charge" 155 "EU Purchase of Services, Reverse Charge"Errors may occur, if you use these tax events with an earlier tax date.

Deductibility TypeIn addition to the tax rate, the percentage rate at which input tax is deductible plays a part. Depending on the typeof company or the type of outgoing sales volume in which a certain incoming sales volume is incorporated, input taxcan be deducted at a rate of 100%, 0% or a rate determined specifically for the company. For this purpose, you


Business Background

define deductibility types that represent the percentage rate. The two most frequently used deductibility types areFully Deductible (100%) and Not Deductible (0%).

Tax CodeThe appropriate method for calculating tax is determined by a combination of tax type, tax event, and tax rate type,and by the deductibility type for the input tax of the sales volume. You can define tax codes in the system to avoiderrors when these parameters are entered manually.Each tax code represents a unique combination of the following parameters:

In sales Tax event Tax types Related tax rate types

In purchasing Tax event Tax types Related tax rate types Deductibility types

This makes it possible to define all parameters represented by a tax code in the document by selecting a tax code,without having to enter each parameter individually.Taxes can be calculated automatically only for those products in the product master. This is why you may sometimeshave to enter the tax code manually, especially in purchasing. Alternatively, you may enter a product category sothat the tax rate type for this category can be used, thus enabling automatic tax calculation.The system uses one unique tax code for a tax event only for those countries that have one tax type.Country Specifics

Canada and IndiaIn both countries several tax types can be taken into consideration for a tax event. India, for example, usesmultiple tax types, and each tax type has multiple tax rate types and deductibility types. The number ofpossible combinations resulting from this makes it impossible to work efficiently with tax codes. In thesecountries, the tax code corresponds to the tax event.

GermanyIn accordance to Directive 2008/8/EC and its implementation under the Annual Tax Act 2009, intra-community service provision must also be declared in VAT tax returns as of January 1, 2010. For this purpose,new fields have been introduced in the VAT tax return: fields 21, 46, and 47.To use these fields for services provided in a foreign member state of the European Union, there are two newtax codes for Germany and all other EU member valid as of January 1, 2010: Purchasing: 430 "EU Purchase of Services, Reverse Charge, standard rate, fully deductible Sale: 530 "EU Sale of Services, Reverse Charge" Exception for Italy: There the tax code for sales is: 540 "EU Sale of Services, Reverse Charge"

Exempted RegionIn many countries there are regions and areas that have special status under tax law. For example, Bsingen andHelgoland are exempt from German value-added tax. In business configuration you can define the regions that areexempt from national tax regulations, or have a special status. Such regions can correspond to political regions,communities, or tax-free zones and are derived directly from the postal code.


Tax Jurisdiction CodeTax jurisdiction levels are taken into account in tax calculation when taxes are in states, counties, and cities, but noton national levels of government. The different levels in a tax jurisdiction code represent different administrativelevels. Fine-tuning this activity ensures that the system uses all administrative levels to determine the tax rate foreach authority.In some countries, however, other government levels have tax jurisdiction. In these cases, you can adapt them.Define tax rates after you have maintained jurisdiction code.Country Specifics

United StatesIn the United States, taxes are collected not only by states, but also by counties and cities; for domestic sales,taxation therefore depends on the state, county, and city in which your company and the goods recipient arelocated. For this purpose, you can enter a tax jurisdiction code in the master data of the company and thecustomer.The tax jurisdiction code represents the location of your company, your customer, or your supplier in ahierarchical structure, so that one country can have multiple states that, in turn, can have multiple cities andmunicipalities.The tax jurisdiction code is structured as follows: 2 alphanumeric characters for the first level; this is the standard state code 6 alphanumeric characters for the second level; for example, the county 6 alphanumeric characters for the third level; for example, the city 1 alphanumeric character for the fourth level, for example, the location or the areaIt is not necessary to use all four levels. The number of levels used depends on the state.This function is currently used only in the United States.For the United States, tax jurisdiction codes have been preconfigured in the system on U.S. state level. Youmust enter further levels as required. If a tax jurisdiction code has not been assigned to a customer, the systemuses the U.S. state in the address as a tax jurisdiction code.Example

Tax Jurisdiction Code - Description Tax Jurisdiction Code Taxation in %New York State NY 4%Albany County NYAL0181 4%Allegany County NYAL0221 4,5%

In the NYAL0181 tax jurisdiction code, NY stands for New York State, AL0181 stands for Albany County in NewYork State. For Albany County, two levels of the tax jurisdiction code are taken into consideration, and 8%(4% + 4%) of tax is levied. For Allegany County, 8.5% (4% + 4.5%) tax is levied.

CanadaOther countries such as Canada have tax rates that depend on regions. This is because Canada is divided intoprovinces and territories. In these cases, use the Region field.

Tax ExemptionTax exemption is an exemption from all or certain taxes that are levied in a country. In most cases, the basis for taxexemption is determined by legal requirements. In some cases, these may apply without having to account for them.


Business Background

To ensure transparency, many legislators require that the reason for tax exemption be specified on relevantdocuments such as invoices. Tax exemption reasons are provided in the system, cannot be changed, and areassigned to a tax type.A customer's direct payment and exempt organization certificates are applicable until they are revoked.The tax exemption certificates are determined automatically in a sales document.You can assign relevant tax exemption reasons to product and customer master data by selecting the relevant entryin the Tax Exemption Reason fields.For more information, see Tax Exemption Certificate Processing [page 17].Country Specifics

United StatesFor the United States, several tax exemption certificate types are available: Direct Payment Certificate - continuous Exempt Organization Certificate - continuous Exempt Use Certificate - continuous Exempt Use Certificate - single Resale Certificate - continuous Resale Certificate - singleThe state must be added also.Only the following tax exemption certificate types can be found automatically, since only in these cases is itcertain that the exemption certificates always apply: Direct Payment Certificate continuous Exempt Organization Certificate continuousFor all the other certificate types, you need the information from the customer whether the certificate can beused for the current transaction.You must then assign the types manually in a sales transaction.

Legal Text InformationLegal text information is a textual explanation of the exemption reasons printed on invoices. These texts explain whycertain transactions are exempt from tax, thus allowing you to meet legal requirements.The legal text information is printed on a customer invoice, if, for example, a tax exemption is applicable. However,if the texts are not available in the required language, the system uses the English text for the invoice.

1.1.2.3 Tax Exemption Certificate Processing

OverviewA tax exemption is an exemption from all or certain taxes of a state or nation in which part of the taxes that wouldnormally be collected from an individual or an organization are instead foregone.A tax exemption certificate is a certificate sent by a customer to a company claiming exemption from tax on sales.In this system, the tax exemption certificate:

Indicates the period of time during which the tax exemptions can apply Indicates if the tax exemptions apply to a single sales transaction or multiple sales transactions


Indicates if the exempted (cumulated) amount exceeds a maximum amount when the exemptions apply inmultiple sales transactions

This applies to the Tax Exemption Certificates for France only.

Indicates the reason for tax exemption

In France, a customer can apply to the authorities for exemption from VAT. If the exemption is granted,the customer receives a letter of confirmation including a license number and the period for which he isexempt from VAT. The customer sends this letter to a vendor, who must then take the tax exemption intoaccount when invoicing the customer. The vendor may not include any tax in customer invoices for thevalidity period of the tax exemption license.

PrerequisitesYour customer has registered with the tax authority for tax exemption and received a tax exemption certificate fromthem. This certificate has been assigned to the account.

Process FlowThe following steps explain the typical process flow for the Customer Tax Exemption Certificate in customerinvoicing.

1. When you create a sales/service order or customer invoice, the system searches for existing tax exemptioncertificates and automatically assigns a valid certificate. You have an option of rejecting the proposal andprevent the exemption to apply at header/line item level.You can manually assign an existing certificate and the relevant exemption reason at header/line item level.

You can see a set of elements (fields, links, push button, check box) related to tax exemptioncertificates when you create or view a sales/service order or a customer invoice. These elementsare only visible if the seller company is located in the US or France.

2. You can also create a new certificate if it does not exist and assign it immediately to the sales/invoicingdocument. The system allows you to enter the relevant tax exemption information sent by the customerdirectly in the business document.For more information, see, Create Tax Exemption Certificates

3. The certificate records and shows the sum of the amounts which were exempted. The amount exempted byeach certificate during the invoicing process is cumulated on the corresponding certificate.

In France, you can set a maximum tax amount that cannot be exceeded. The system prevents thecumulated amount to exceed the limit during the invoice creation process if a certificate only allowsa limited amount to be exempted. The cancellation of invoices including certificates reverts theaccumulation performed previously.

In the Account Management work center, under the Reports view, you can monitor in real time the tax exemptioncertificates created in the system and sent to the company.


Business Background

1.1.2.4 Tax Determination with Reverse Charge Mechanism

OverviewValue-added tax (VAT) is charged revenue from the sale of goods and services. This means that an entrepreneurissues a customer (as the service recipient) with an invoice that includes VAT, and pays the VAT to the responsibletax authority. As a result of this, the entrepreneur is the tax payer who is liable for VAT.In certain cases, however, the customer is required by law to be liable for VAT, and to pay it to the relevant taxauthority. In this case, the entrepreneur issues an invoice without VAT, but with a notification indicating that the taxdebt has been transferred to the customer. The customer must calculate and pay the VAT to the tax authority, andcan claim input tax deduction at the same time as usual. The transfer of tax debt to the service recipient is calledReverse Charge Mechanism and reverses the tax liability.

Automatic Tax Determination with Reverse Charge MechanismCountry Specifics for GermanySome services, such as those provided by a company located abroad, or services that are provided for a servicerecipient located abroad are taxed according to the reverse charge mechanism. From the perspective of the seller,the transaction must be reported, but the tax debt transfers to the account. According to Directive 2008/8/EC andits implementation under the Annual Tax Act 2009 as of January 1, 2010, this is the basic rule for services that areprovided for a company abroad. This basic rule is determined automatically, if the head office of the companyproviding the goods or services is in any EU member state. No tax exemption reason code must be entered in theservice master.For Germany, the system currently only covers the transfer of tax debt for other services provided by an entrepreneurlocated abroad if these services are provided domestically ( 13b Abs. 1 Nr. 1 UStG), or if a German company providesother such services for a service recipient located abroad.The process flow for tax determination describes the determination of tax event 240 Reverse Charge Acquisition13b II 1 Nr. 1 UStG, tax event 312 Export of Service, Reverse Charge, and the anomalies to be taken into account:

1. Create a sales order, a purchase order, or an invoice.2. While the document is being processed, the system transfers the tax relevant data to tax determination.

Examples of tax relevant data for reverse charge mechanism are: Location of supplier and buyer

Sale of a service The seller company must be located in Germany.

The address of the seller is used, and the system normally uses the standard address of yourcompany unless you have overwritten the address in the sales order on the Involved Parties tab.

The service recipient must be located abroad.The location where the service provision takes place is used and must not be in Germany. Ifthe recipient is a private individual, the service can only be subject to reverse chargemechanism if it is provided in the European Union (EU). If items in an invoice contain servicesthat have been provided at different locations (according to the address of the service or goodsrecipient on the Involved Parties tab), these addresses are used first.

Purchasing a Service


The supplier must be located abroad.The address of the supplier is used as a basis, and the system uses the standard address.

The service recipient must be located in Germany.The location where the service is provided is decisive. It is also possible that individual invoiceitems contain different locations where the services have been provided (according to theaddress of the goods recipient). In this case, this is used as a priority.

Tax attributes of productsTax rate type and tax exemption reason can be different for each country, region, and tax type. In theUnited States, for example, services are not normally subject to tax, so the tax exemption reason shouldbe assigned in the product master data.Enter the following settings for reverse charge mechanism in the master data for services on the Sales > Taxes and Purchasing > Taxes tabs as required: Tax Exemption Reason: Buyer liable for VAT The Taxable at destination checkbox must not be selected.

3. The system processes all tax-relevant data in tax determination.4. The system calculates tax using the following components:

Tax event, for example 240 Reverse Charge Acquisition 13b II 1 Nr 1 UStG for purchasing or 312 Export of Service, Reverse Charge for sales

Tax codes Tax type Tax rate type such as the complete value-added tax rate with which the tax rate is determined as a

percentage, for example 19% Taxable amount

5. The system enters the result of the tax determination and the tax calculation in the document currently beingprocessed. The calculated tax is displayed on the Pricing tab. All tax details determined by the system aredisplayed on the Tax Details tab, such as the Tax Country and the Tax Code of the tax country.

If reverse charge is determined for a sales order or a manual invoice, a note is displayed on the printedinvoice that the customer must pay tax.

For more information on the general process of tax determination, see Tax Determination [page 5].The system cannot process other reverse charge mechanism scenarios in the automatic tax determination, so thesemust be checked manually.

Manual Control for Reverse Charge MechanismFor some countries there are also other sales or purchasing processes that are subject to reverse charge but cannotbe determined automatically by the system, as for example, in Germany sales according to 13b (5) UStG orpurchases according to 13b (2).Country Specifics for Germany

For mobile radio units and integrated circuits with a tax date as of July 1, 2011 and an invoice amount of atleast 5000 Euros, reverse charge applies according to 13b (2) Nr.10 UStG.In this case you have to change the tax code manually to one of the following: 15 Reverse Charge Acquisition 13b II 1 Nr. 10 UStG 515 Reverse Charge Supply 13b II 1 Nr. 10 UStG

For these processes, the system provides the tax events 313 Reverse Charge Supply 13b V UStG and 50 Reverse Charge Acquisition 13b II 1 Nr 4, 6 - 9 UStG, 11 Reverse Charge Acquisition 13b II 1 Nr 2 UStG,


Business Background

12 Reverse Charge Acquisition 13b II 1 Nr 3 UStG, 13 Reverse Charge Acquisition 13b II 1 Nr 5 UStG and240 Reverse Charge Acquisition 13b II 1 Nr 1 UStG. But you need to create your own tax code in your system.

If you obtain your sales revenue according to 13b (5) UStG, you must enter the tax code manually.

Tax Events Stored in the SystemCountry Specifics for GermanyThe following tax events are currently stored in the system and can be used to create tax codes for Germany:

Purchase: 11 Reverse Charge Acquisition 13b II 1 Nr. 2 UStG 12 Reverse Charge Acquisition 13b II 1 Nr. 3 UStG 13 Reverse Charge Acquisition 13b II 1 Nr. 5 UStG 50 Reverse Charge Acquisition 13b II 1 Nr. 4, 6 9 UStG 240 Reverse Charge Acquisition 13b II 1 Nr.1 UStG 15 Reverse Charge Acquisition 13b II 1 Nr. 10 UStG

Sales: 312 Export of Service, Reverse Charge 313 Reverse Charge Supply 13b V UStG 315 Reverse Charge Supply 13b II 1 Nr. 10 UStG

The following tax code and tax events combinations are provided by the system and determined automatically: Tax code 504 Not taxable (reverse charge mechanism) is linked to tax event 312 Export of Service, Reverse

Charge Tax code 530 EU Sales of Service, Reverse Charge is linked to tax event 455 EU Sale of Service, Reverse

ChargeFor purchasing, tax code 430 EU Purchase of Services, Reverse Charge, Standard Rate, Fully Deductible with taxevent 155 is available.If you need further tax codes, you can create them under Define Tax Codes of the Tax on Goods and Services activityin Business Configuration Implementation Projects Activity List Fine-Tune .

When you create a tax code, ensure that you provide the tax type under Details.

1.1.2.5 Third-Party Order Processing Taxation

OverviewThird-party order processing scenarios involve at least three parties: Seller, account, and supplier.A Third-Party Order Processing is a sales transaction that is conducted by several parties for one item, where theitem is shipped directly from the supplier to the account or ship-to party.For more information concerning the general processing in the system, see Third-Party Order Processing.Chain transaction means consecutive supplies of goods between three or more legal entities, where the contractualobligations of all parties in the chain are discharged by a single movement of goods from the first supplier in thechain to the final customer.


From a taxation point of view, the scenarios where the sales transaction crosses borders and the subject to tax hasto be determined, are of interest.This also has an impact onto the country where the taxes have to be paid. In the following processes, the systemsupports the user by displaying warning messages and triggering a check of the tax codes:

You are a supplier in a chain transaction and you enter a ship-to party that is different from the account. Thesystem displays the message if the head offices of the ship-to party and your company are in differentcountries.

In a third-party deal, you are the company that creates a sales order to which an external supplier is assigned.The external supplier delivers the goods directly to the customer. These transactions are generally notinvoiced automatically during an invoice run.

Country Specifics in case the seller and supplier are different: Germany: These transactions are not invoiced automatically during an invoice run if the head office of your

company is in Germany.Value-added tax for chain transactions is treated differently, especially if the item is transported across a stateborder. It is necessary to decide on a case-by-case basis, which of the companies involved is allowed to issue a tax-exempt invoice. If the tax has not automatically been calculated correctly in this transaction, or if tax has beencalculated even though the transaction is tax-exempt, change the tax code and, if necessary, the tax country, on theTaxes tab accordingly.

Intra-Community Triangular TradeAn Intra-Community Triangular Trade is a special kind of third-party order processing, where all three participantsare located in different EU member states. Under certain circumstances, a simplification can be applied to intra-community triangular trades. The prerequisites for the application of this process are:

The three companies transact business for the same item. All participating companies are registered in different EU member states for value-added tax purposes. The item goes straight from the first supplier to the final account. The item goes from one EU member state to another. The first supplier or the first company is responsible for the transport of the item.

Country Specifics Germany: If the simplification can be applied to the triangular transaction, then the 512 - Triangular

Transaction tax code can be entered manually in the invoice.

1.1.2.6 Tax on Goods and Services - Configuration Guide

In this configuration activity, you can create and change parameters required for the tax determination in sales,purchasing, and service processes such as tax jurisdictions, currency conversions, exempted regions, legal textinformation, and tax codes. These parameters are required for the system to determine the tax due for a businessdocument.To comply with country specific legal requirements, currency conversion types are required. This includes theexchange rate type and conversion types that must be used to convert tax amounts from the document currencyto the reporting currency.To find the Tax on Goods and Services activity, go to the Business Configuration work center and choose theImplementation Projects view. Select your implementation project and click Open Activity List . Select the Fine-Tune phase, then select the Tax on Goods and Services activity from the activity list.


Business Background

PrerequisitesYou have completed the Tax Settings for Purchasing activity for purchasing processes.To find this activity, go to the Business Configuration work center and choose the Implementations Projects view.Select your implementation project and click Open Activity List . Select the Fine-Tune phase, then select the TaxSettings for Purchasing activity from the activity list.

Business BackgroundTax DeterminationAs a rule, companies are legally required to calculate taxes on products that they buy or sell, and to levy these taxesfrom their customers. After the products have been provided, the taxes must be declared and levied to the respectivetax authorities. The system supports you by providing a substantially automated tax calculation for the following taxtypes: Value-Added Tax (VAT), Sales and Use Tax, Withholding Tax. The system also provides a reporting tool thatgives you effective control over your obligatory declaration of these taxes.For more information, see Tax Determination [page 5].

Master Data for Tax DeterminationFor more information, see Master Data for Tax Determination [page 10].

TasksDefine Currency Conversion Type

1. To create a new currency conversion, click Add Row .2. Select the country for which the exchange rate is valid.3. Enter the date for the end of the validity period for the exchange rate type and

conversion type.4. Enter the type of exchange rate used such as Historical Currency Rate or EMU

Regulation Fixed Exchange Rate.5. If necessary, change the conversion type which is defaulted to Mid Value to either Bid

Value or Ask Value.6. Save your entries.

Define Exempted Regions1. To define an exempted region, click Add Row .2. Select the country of the exempted region.3. Enter a code for the exempted region.4. Enter a description for the region.5. Select the status of the exempted region.6. Optional: Under Details, enter the Postal Code.7. Save your entries.


Define Tax Rate Schedules1. To define tax rates and validity dates, click Add Row .2. Select a country for which you want to create a tax rate schedule.3. Select the applicable tax type of the taxes that must be declared and paid to the

respective tax authorities such as value-added tax, sales and use tax, and withholdingtax.

4. Select the tax rate type, for example, Standard, Reduced, or Exempt Rate.5. Enter the date from which the tax rate is valid.6. Enter the rate as a percentage.7. Save your entries.

Define Standard Phrases for Legal Text Information

We recommend that you create a standard phrase specifically for each country sinceexemption reasons can differ for each country. If a standard phrase is not availablefor the required language, the English text is printed in the invoices. All languages aredisplayed in this view.To enter the legal texts for a specific language, you must be logged on to the systemin that language.

1. To define standard phrases for legal text information, click Add Row .2. Select the country for which the legal text information is valid.3. Select the applicable tax type for which legal texts are required such as value-added

tax, sales and use tax, and withholding tax.4. Select the number of the Tax Exemption Reason.5. Check the selection of the Language field. It is preset according to the language in which

you are logged on and must correspond to the language of your legal text.6. Enter the legal text explaining the legal basis of the exemption.

This text is then included on the invoices where required.7. Save your entries.

Define Tax CodesFor more information, see here.

Follow-On ActivitiesAfter you have completed the tasks here, we recommend that you check the tasks of the country-specific activitiesthat are required for countries that you have scoped.

1.1.3 Tax Determination US

Here you can find tax information specifically for the United States.


Business Background

Delivery TaxationTaxes on materials deliveries within the United States are levied according to the law of the destination state (Ship-to). Only in California and Texas are the deliveries taxed according to the state of origin (Ship-from). Taxes on servicedeliveries are levied according to the law of the state of destination.You can add your own combinations in business configuration and decide which combination is origin-based ordestination-based for an intrastate transaction, which means that ship-to and ship-from are the same US state. Tofind the activity, go to the Business Configuration work center and choose the Implementation Projects view. Selectyour implementation project and click Open Activity List . Select the Fine-tune phase, then select the Tax on Goodsand Services US activity from the activity list.

NexusNexus is a connection between a taxpayer and a state where the taxpayer has to pay taxes. The rules to establishthe connection between the two differs from state to state. However, with this nexus a state is required to collectsales tax for sales.Therefore a sale within a particular state is only taxable in the system if the seller company has nexus in the state.If the seller does not have a nexus, no sales tax will be determined and the system assigns tax code 507 Non TaxableSale Under Nexus Rules to the sales document.This means the seller company issues an invoice without tax for nexus reasons. The transaction is recordedstatistically in the tax register.If your company has nexus in a state, you must have the following settings prepared:

You created a tax authority for this state in the Tax Management work center. For more information, see QuickGuide for Tax Authorities (Tax Management).

You created entries in the system for every tax authority to which tax returns have to be submitted. You created a company tax arrangement for every tax authority that is relevant. You entered a tax registration number for the company tax arrangement. This documents that the company

is registered in the state where the tax authority is located, and provides the basis for nexus determinationin the tax determination.

If a company tax arrangement has been created properly for a state, and a sale takes place in this state, the taxdetermination works as described in Tax Determination [page 5].

1.2 Pricing in Customer Relationship Management

OverviewPricing is based on price master data such as price lists and discount lists, which are used to automatically calculatepricing within all business documents for sales and service processes. A predefined pricing procedure is used todetermine the gross value the customer has to pay for certain products or services to be received on a certain dayat a certain place. The pricing procedure consists of price components, such as list price, discounts, surcharges,freights, taxes, and costs. The order of these price components is essential for the calculation of the total value.


Price ComponentsSAP Business ByDesign contains a predefined set of price components, most of which you can activate through thebusiness configuration. Price components can be:

Automatically determined by the system and non-editable, for example, tax Automatically determined by the system and able to be overwritten by the user, for example, list price or

automatically-determined product discounts Manually entered by the user, for example, a restocking fee or a manually-entered product discount

The manual behavior is influenced by the Manual flag in the business configuration for pricing. If the Manual flag isset, the system does not find the price component automatically and it must be added manually by the user.The following sections show the set of price components that may display depending on your configuration.

List PriceThis price component is naturally the first step of a pricing procedure, because many price components such asdiscounts or surcharges depend on it. To determine the net list price, the system checks all price lists that fit theparameters passed from the sales or service document. These parameters are customer, customer group,distribution chain, and date.Price lists can be customer specific, distribution chain specific, and base price lists. The price lists are maintainedas price master data, have a validity period, and need to be released before they are active.Because the customer may have special prices, the system checks first for a customer-specific price list. If there isno customer-specific price found, then it checks for a distribution chain specific price list. Finally, if there is nodistribution-chain-specific price, it checks for the base price list. You have to ensure that the system can find a pricefor all products or services you sell in the base price list at the very least. Prices can be manually revised within asales or service document, allowing you to flexibly adjust your net prices.

An approval procedure can be activated for price lists and discount lists which is done in the businessconfiguration in the scoping (under General Business Data Product and Service Pricing ). If this settingis active, the line manager automatically receives an approval task should his or her employee try to releasea price or a discount list. The price list or discount list cannot be released and included in all businessdocuments for sales and service processes until the line manager (or representative) approves the pricelist or discount list. If a manager is authorized to approve price and discount lists, he can directly releasethe price or discount list in the price master data view. This automatic approval is done without creating abusiness task if the manager himself releases the prices.For more general information on Business Task Management, see Business Task Management.

Product Discount (%)To determine the discount, the system checks all discount lists that fit the parameters passed from the sales orservice document. The parameters are customer, distribution chain, customer group, product, and date. All founddiscounts are considered in the price calculation.Discount lists can be Customer Specific Discount Product, General Customer Discount, Overall Customer GroupDiscount, and Customer Specific Discount Product Category discount lists.Because the customer may have a special discount for a certain product, the system checks for a discount list withcustomer product discounts.Discounts can always be revised manually within a sales or service document, allowing you to flexibly adjustdiscounts.


Business Background

An approval procedure can be activated for price lists and discount lists which is done in the businessconfiguration in the scoping (under General Business Data Product and Service Pricing ).If this settingis active, the line manager automatically receives an approval task should his or her employee try to releasea price or a discount list. The price list or discount list cannot be released and included in all businessdocuments for sales and service processes until the line manager (or representative) approves the pricelist or discount list. If a manager is authorized to approve price and discount lists, he can directly releasethe price or discount list in the price master data view. This automatic approval is done without creating abusiness task if the manager himself releases the prices.For more general information on Business Task Management, see Business Task Management.

Working Condition (%)This price component is important for service scenarios. If service performers work at nights or on weekends orpublic holidays, a surcharge can be invoiced to the customer.

SurchargeTwo different price components are available for surcharges. You can define surcharges as percentages or fixedamounts according to your needs. All surcharges can be used side by side.

Warranty/GoodwillThese price components are important within service scenarios. For example, in a service document, services orspare parts may be covered by a warranty. The warranty or goodwill discount will be calculated based on the Coveragefield in the service document.

Quality Loss FeeThis price component is used for return scenarios. This element displays only if the Returns business topic is includedin your business configuration. If your customer returns goods which are damaged or opened, you can manuallydefine a deduction on item level.

Restocking FeeThis price componentis used for return scenarios. This element displays only if the Returns business topic is includedin your business configuration. If your customer returns goods, you can manually define a restocking fee for eachindividual return document.

Migration PriceThe migration price is needed for open sales and service documents that are migrated from a legacy system intoSAP Business ByDesign. To ensure that prices are the same in both systems, there will not be any additionalcalculation of this price.

Total Item Net ValueThis is calculated by adding all the item net values. This value cannot be edited.

FreightThis price component covers the freight amount determined automatically or entered manually. Depending on thebusiness configuration settings it is possible to determine a fixed freight amount or to make the freight dependenton the net weight of the goods you sell.


Cost and Profit MarginCost displays only if profit margin is included in your business configuration. Cost is basically derived from financialsand makes the calculation of the profit margin possible.

Overall Discount (%)The overall discount (%) is an additional general discount applied to the total item net value. This can only be appliedmanually.

Total Net ValueThis is calculated by adding all the item net values plus freight, without considering taxes. This value cannot be edited.

Total Given DiscountsThis is calculated by adding all the relevant product discounts given. This value cannot be edited directly by the user.It can be influenced by editing the product discounts at item level.

Rounding DifferenceThis is a value that has been lost or gained through rounding. This value is used only for currencies that do not havelow denomination coins such as 1c or 2c for example, Swiss francs or Australian dollars. For these currencies, theprice must be rounded to the nearest available value, such as 0c or 5c.

TaxThis price component covers all requirements in regards to taxation. All taxes are calculated according to legalrequirements and the results of this calculation are put into this price component.

TotalThis is calculated by adding the total net value plus tax.

Price CalculationPricing is centrally implemented in SAP Business ByDesign and linked to all relevant business processes. Theprocedure is predefined and you cannot modify the procedure or create a new one.The pricing procedure controls which price components are automatically calculated for the relevant businessdocuments, such as sales quotes, sales orders, and service orders. It contains the most commonly-used pricecomponents, including product prices, discounts, surcharges, and tax. These various kinds of price components canbe combined and control the price calculation process.The pricing procedure also contains the sequence in which the system takes these price components into accountduring pricing. It calculates the gross and net prices and taxes. The pricing procedure also determines:

Which subtotals will be considered during pricing To what extent pricing can be processed manually Which method the system uses to calculate percentage discounts and surcharges Which requirements for a particular price component must be fulfilled before the system takes the element

into account. For example, freights are not considered for service items.


Business Background

Currency and Quantity ConversionDuring the price calculation, currency conversion occurs if the currency of the price master data differs from thedocument currency, depending on the exchange rates maintained as master data. The document currency isdefaulted from the account master sales data.In addition, during the price calculation, quantity conversion occurs if the unit of measure requested in the documentdiffers from the price unit maintained in the price list. A prerequisite is that the quantity conversions are maintainedin the product or service master data. For example, product master data maintains a quantity conversion 1 pallet= 20 each, the price list specifies a price unit of $50/1 each, and the sales order requests 5 pallets - in this case,the 5 pallets are converted to 100 units and price is calculated at $5000.

ScalesYou can define scales for prices which depend on different quantities. The scale you use determines how values arecalculated. For example, you can use a scale to define that a single boiler costs $500, but if you buy at least 10 boilersthe price decreases to only $450 per unit. You can also define scales for freights, which depend, for example, on thesales order value.You can also define scales for product discounts.There is also an additional feature where the system proposes the values for scales for every additional line that isadded by the user while maintaining scales. The following example explains the logic for calculation of the proposedvalue for scales:

Logic for determining the proposed scale value during price or discount scale maintenance.

ValueofScales Percentage Calculation of Percentage0 0 0 010

10% 11/10=1.1

10*1.1 = 11


ValueofScales Percentage Calculation of Percentage20

11% 11/10=1.1

11*1.1 = 12.1

30

12.1% 12.1/11=1.1

12.1*1.1 = 13.31

40

13.31% 13.31/12.1=1.1

13.31*1.1 = 14.641

50

14.641% 14.641/13.31=1.1

14.641*1.1 = 16.105


Business Background

ValueofScales Percentage Calculation of Percentage60

16.105% 16.105/14.641=1.1

16.105*1.1 = 17.716

See AlsoConfigure Price StrategyPrice Agreements for Customer ContractsGross Pricing

1.3 Working With Serial Numbers

OverviewSerial numbers are unique identifiers that you can assign to a single item of a tangible product. They are used todifferentiate that item from other items of the same product. A serial number identifies a particular item that enablesyou to distinguish between individual pieces. Since serial numbers are only unique per reference material, twodifferent reference materials could have the same serial number. Serial numbers in SAP Business ByDesign arerepresented by registered products. These are integrated into subsequent service scenarios, for example, warrantyhandling.Some of the main benefits provided by the use of serial numbers are as follows:

You can track serial numbers through the SAP Business ByDesign system. This allows you, for example, tosee which supplier delivered a specific product to your company. The registered product screens provide acomplete tracking history showing all processes in which this product has been handled. You can see thefollowing detailed information in the tracking screen: Movement history (such as deliveries or returns), servicerequests, service orders, and related labels.


It ensures data consistency by introducing checks for complete serial number input. It enables automatic creation of the registered products from transactional processes, for example, goods

receipt posting from supplier delivery. It allows automatic updates of registered products, for example with account information, from transactional

processes such as goods issue to customer. This depends on your settings for the business option AutomaticProduct Registration found in the Business Configuration work center, under Questions Services Entitlement Management Registered Products .

You can record serial numbers in inbound logistics, outbound logistics, third-party logistics, third-party orderprocessing, over-the-counter sales, and repairs in the following business scenarios:

Supplier delivery Return to supplier Customer delivery Third-party delivery Customer return Over-the-counter sales Service confirmation (for spare parts only) Third-party repair (for spare parts only) Customer return of repaired materials Intracompany stock transfer

Serial Number Profiles in Material Master DataUsing serial number profiles in the material master, you can define the processes for which the entry of serial numbersis mandatory, optional, or forbidden. The profile determines the conditions for serial number recording in differentbusiness documents. The following serial number profiles are available:

No Serial Number Assignment Serial number recording is forbidden. Optional Number Assignment Serial number recording is allowed, but not mandatory. Mandatory on Transfer (to/from Customers) Serial number recording is required on transfer to or from

customers. For example, a serial number (and therefore also a registered product) is created in outboundlogistics when a part is delivered to your customer.

Mandatory on Transfer to/from Customers and Suppliers Serial number recording is required on transferor from customers and suppliers. For example, a serial number is created in inbound logistics (and thereforealso a registered product) when you receive a product from your supplier. If this part is then shipped to acustomer, the serial number is entered or scanned in outbound logistics which updates the trackinginformation in the registered product.

Mandatory on Transfer to/from Customers, Suppliers, and Sites Serial number recording is required ontransfer to or from customers and suppliers as well as between sites.

Maintaining Serial Number ProfilesYou use the Serial Number Profile in the material master to control the recording of serial numbers which dependon the business event Transfer.

Serial number profiles do not control whether the input of the affected registered product is required inService Requests, Service Orders and Service Confirmation. However, they do effect the consumption ofserialized spare parts during the repair process.


Business Background

Registered products can be created automatically during various business processes. Depending on the serialnumber profile selected, the system creates the registered product in the processes where serial numbers arerecorded for the first time, for example, the delivery of a new product to the warehouse.The creation of registered product is automated and integrated into the various processes. The processes in whichthe automatic creation of registered products is provided depends on the chosen serial number profile.No Serial Number AssignmentSerial number input is forbidden in all scenarios.Mandatory on Transfer (to/from Customers)This setting prevents you from entering serial numbers with a supplier delivery. That is, (and because productionprocesses are out of scope), during processing of outbound deliveries to customers the existence of registeredproducts cannot be expected.

Process Serial Number Recording Automatic CreationSupplier delivery Forbidden Return to supplier Forbidden Customer delivery Mandatory YesThird-party delivery Mandatory YesCustomer return Mandatory NoOver-the-counter sales Mandatory YesService confirmation (for spare parts only) Mandatory NoThird-party repair (for spare parts only) Mandatory YesIntracompany stock transfer Forbidden

Mandatory on Transfer to/from Customers and SuppliersFor all scenarios in which no parts with new serial numbers are being supplied by suppliers (for example, by theheadquarters) it is assumed that the registered products have already been created during previous processes. Thisis due to the fact that in those scenarios in which a serialized part is supplied, the corresponding registered productis created.

Process Serial Number Recording Automatic CreationSupplier delivery Mandatory YesReturn to supplier Mandatory NoCustomer delivery Mandatory NoThird-party delivery Mandatory YesCustomer return Mandatory NoOver-the-counter sales Mandatory NoService confirmation (for spare parts only) Mandatory NoThird-party repair (for spare parts only) Mandatory YesIntracompany stock transfer Forbidden

Mandatory on Transfer to/from Customers and Suppliers and Sites

Process Serial Number Recording Automatic CreationSupplier delivery Mandatory Yes


Return to supplier Mandatory NoCustomer delivery Mandatory NoThird-party delivery Mandatory YesCustomer return Mandatory NoOver-the-counter sales Mandatory NoService confirmation (for spare parts only) Mandatory NoThird-party repair (for spare parts only) Mandatory YesIntracompany stock transfer Mandatory No

Optional Serial Number AssignmentThis setting should only be used in exceptional cases. Serial number recording is always optional and, if recorded,registered products are automatically created.If the registered product does not exist when needed, you can create it manually. The common task New RegisteredProduct is available in the following work centers:

Inbound Logistics Outbound Logistics Third-Party Order Fulfillment Over-the-Counter Sales Third-Party Logistics Service Orders Field Service and Repair Service Entitlements

Recording Serial NumbersOn some of the screens, you can enter serial numbers using the Next Serial Number entry field. This adds a line tothe serial numbers table. You can enter the serial numbers in this field either manually by typing in the entry andchoosing Enter , or by scanning (in the inbound and outbound logistics processes). The entry of serial numberscan be mandatory or optional depending on the Serial Number Profile defined for the product in the material master.If the profile defines that no serial numbers are required for a product, the Serial Numbers tab is not available forthat particular product.

See AlsoRegistered Products Quick GuideInbound Delivery ProcessingOutbound Delivery Processing


Business Background

1.4 Sales Kit Process Flow

OverviewA sales kit is defined as a logical group of items that can be sold together as one unit. Wholesale and componentmanufacturing industries like to offer product bundles as single selling units. In the Business ByDesign system asingle selling unit comprising of various components is called a sales kit .For example, a laptop and an adaptor are two different products that can be grouped together and sold as a singleunit. This combination of the laptop and adaptor is available on paper as a unit and has a price associated with it.However, the kit itself does not exist as a physical entity.The various components of a sales kit are listed in the sales kit item list. In the case of the laptop and adaptor, boththe individual products exist as physical entities. They are stored and transported, and so have inventory value.However, since they are a part of the sales kit, their individual prices are not relevant and only the price of the saleskit as a whole is considered.

Process Flow1. Create a Sales Kit

You can create a sales kit in the Product and Service Portfolio work center by choosing the New Sales Kitcommon task. The sales kit you create represents the unit that is sold to the customer.For more information, see Create a Sales Kit [page 98].

2. Add sales information to the Sales KitYou can add sales details for the sales kit. This includes information such as the sales organization, distributionchannel, and so on. You can also assign advanced sales details to each distribution chain, for example, aspecific sales unit of measure, warranties, internal comments, sales notes, customer part numbers, taxinformation and so on. However, you must mandatorily enter a sales organization and distribution channelfor the sales kitFor more information, see Assign Sales Details to the Sales Kit [page 99].

3. Add valuation information to the Sales KitYou can add valuation details for the sales kit which includes information such as basic valuation details, anda status to each company and business residence that provide financial data for a sales kit. You can alsoassign advanced valuation details such as a specific inventory valuation unit of measure, and cost informationfor each relevant set of books.For more information, see Assign Valuation Details to the Sales Kit [page 100].

4. Create a Sales Kit Item ListUsing the sales kit ID created during the process of creating a sales kit, you can create a sales kit item list,which consists of all the items that are included in that particular sales kit. Each of these items has an inventoryprocess associated with it, but is not price relevant w

ProductData BA en-Sales Product Kit

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