SAP Knowledge Base Article - Public

3352416 - Change in Customer Tax Classification on Specific Sales Area Also Reflects on Other Sales Areas of the Customer

Symptom

Using the Business Partner apps like Manage Customer Master Data or Maintain Business Partner, upon trying to update the Tax Classification of a Customer in Sales Area XXXXX, you observe that the change also reflects to its other Sales Area YYYYY. That is, the same Tax Classification gets updated to all the Sales Areas of the Customer.

Environment

SAP S/4HANA Cloud

Reproducing the Issue

  1. Go to the ap Manage Customer Master Data
  2. Find and open the Customer ID: XYZ
  3. Go to the tab Sales Areas
  4. There are 2 Sales Areas:
  5. Sales Organization: XXXXX
  6. Sales Organization: YYYYY
  7. Navigate to the details of the Sales Organization: XXXXX
  8. Go to the tab Taxes
  9. In the Sales Area Taxes, select Edit
  10. Change the Tax Classification from X to Y

For example:
Change the Tax Classification from 1 to B
Country/Region                 Tax Category                    Tax Classification
United Kingdom (GB)      Output Tax (TTX1)              B – Regulated Funds

The Tax Classification changes gets transferred to all the Sales Areas of this Customer ID. In this case, the Tax Classification also gets transferred to the Sales Organization YYYYY

The same is the behavior when you follow the below steps:

  1. Go to the app Maintain Business Partner
  2. Find and open the Business Partner ID: XYZ
  3. Display in BP Role: FLCU01 Customer
  4. Click the button Sales and Distribution
  5. Sales Org. XXXXX
  6. Click Switch Between Display and Change button to edit the Customer details
  7. In Billing Tab, change the Tax Classification from Y to X
  8. Click Save
  9. View the Customer Sales Area Tax Classification
  10. Sales Area XXXXX – Tax Classification was updated to X
  11. Sales Area YYYYY – Tax Classification was also updated to X 

where XXXXX and YYYYY represent the Sales Organization  
X and Y represent the Tax Classification
XYZ represents the Business Partner ID

Cause

The long existing behavior is that Tax Classification is at Country and Tax Category level. For combination of a Customer(KUNNR), Country and Tax Category we define a Tax Classification. Underlying table KNVI doesn't support controlling tax classification based on Sales Organization. 

This is a new requirement and a request to change log existing behavior. The system is behaving as designed. Tax classification was always at Country level and was never based on Sales Organization. The same was the behavior in ECC and it has continued in S/4. Our data model does not support enabling tax classification at Sales Organization. 

In fact, the customer tax determination works as below:

  1. The organizational unit determines the main country
  2. The other countries are then determined from the list of possible plants linked to a organizational unit.
  3. Then from the countries found, the tax categories are determined. 

The trio Customer/country/tax category is liable or not for tax independently of the sales area but the list of taxes depends on the sales area.

It is not possible to keep different tax classification in different sales-area in the same country since the tax classification for a customer depends on the country and not on the sales area. The tax classification for a customer is related to sales/billing but it is not sales area specific in a manner that the combination of a country and a tax category is global for a customer. This is a legal requirement. So if you change this field, it is changed for all sales areas in the same country.

Resolution

Use the Cloud BAdI to apply a different Tax Classification on Sales Order Header for those cases. You may refer to the SAP Help Portal documentation Business Add-Ins (BAdIs) for Sales Documents to understand how to implement a BAdI.

See Also

SAP Help Portal documentation Business Add-Ins (BAdIs) for Sales Documents 

Keywords

Tax classification change affects every sales organization, Tax Classification, Sales Organization, Sales Areas, Tax Category, Country, Region, Sales Document, Change Tax Classification, Tax Classification same on all Sales Organization, Sales and Distribution, Business Partner, Billing , KBA , AP-MD-BP-TAX , Tax Data - Obsolete - Kindly raise in CA-GTF-CSC , Problem

Product

SAP S/4HANA Cloud Public Edition all versions ; SAP S/4HANA Cloud all versions