How does tax jurisdiction codes define the tax calculation for sales order items based on ship-to address.
SAP Business ByDesign
Reproducing the Issue
In a sales order with multiple items and multiple ship-to addresses, the tax for each item includes jurisdiction taxes based on the ship-to address.
Depending on the tax jurisdiction codes maintained in your system you can face unexpected taxes included for a given address.
To verify the applied taxes for a sales order item follow the steps below:
- Go to the Sales Orders work center.
- Select the Sales Orders view.
- Open the respective sales order.
- Select the View All button and navigate to the Items tab.
- In the Details tab you can see the ship-to address for the item.
- Select Taxes tab and you will see Tax Determination and Tax Details.
In Business ByDesign, tax jurisdiction codes are defined by a hierarchical pattern.
The tax jurisdiction code consists of the pattern "2,6,6,1". Each part of this pattern represents a level:
- The first 2 characters are level 1 (standard state code)
- The next 6 characters are level 2 (country)
- The next 6 characters are level 3 (city or local level)
- The last 1 character is level 4 (local or district)
The length of a jurisdiction code will define the number of levels to be considered during the tax calculation.
During the creation of a tax jurisdiction code, you must consider the number of levels to be included in the tax calculations.
For instance, if you need a tax jurisdiction code to include two levels (state and country level), follow the required pattern including 8 characters and then assign the relevant addresses to this jurisdiction code.
To create/change a tax jurisdiction code, follow the steps below:
- Go to the Business Configuration work center.
- Select the Implementation Projects view.
- Select your current implementation project and select Open Activity List.
- Select the Fine-Tune phase and open the Tax on Goods and Services activity.
- Select the hyperlink Define Tax Jurisdictions to edit or create tax jurisdiction codes.
Note that if you change or delete a jurisdiction code already in use, this jurisdiction code will not be available to assignment to any document or item. However, items or documents that used this jurisdiction code in the past will maintain the taxes previously calculated.
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