3587673 - Inactive Tax Condition Type in Service Order for Specific Customer in SAP S/4HANA Cloud Public Edition

• In the service order for a specific customer, the UTXJ tax condition type appears with an inactive (red) price element status.
• Despite the inactive status in the service order, the tax condition type is active in the service invoice.
• The tax determination for the service order is correct i.e no errors in pricing or downstream processing (e.g., invoicing or service confirmation).

SAP S/4HANA Cloud Public Edition

1. Create a service order with Sold-to Party and Material.
2. Go to Price Details tab.
3. Enter amount and click Apply.
4. Observe the tax condition type, it appears with a red (inactive) price element.

The UTXJ condition type appears in the service order but is marked as inactive (red status) because of the tax classification settings in the master data.

In SAP’s tax determination logic:

• Customer Tax Classification = 0 (Tax Exempt)

• Material Tax Classification = 1 (Taxable)

This combination results in Tax Code = 0 (Exempt).
As a result, the system includes UTXJ in pricing but flags it as inactive, since no tax amount is calculated for exempt transactions.
This is standard behavior and does not indicate an error.

If the customer should be tax-liable, and UTXJ is expected to be active, follow these steps to update the tax classification:

1. Open App: Maintain Business Partner
2. Enter Customer Number.
3. Select Edit → Choose Role = Customer
4. Go to "Sales and Distribution" section
5. Navigate to the Sales Area: Sales Org, Distribution Channel, Division: 00.
6. Click "Switch Between Display and Change".
7. Click the Billing tab.
8. Scroll down to "Output Tax" section.
9. Change the Tax Classification for tac condition type, change the value from 0 → 1 - Full Tax
10. Click Save.

Note: Only change the classification if the customer is intended to be taxed.
If the customer is exempt, no changes are needed, the inactive UTXJ status is expected behavior and will not impact billing or tax processing.

SAP S/4HANA Cloud Public Edition, Public Cloud, tax condition type, inactive, red status, service order, customer specific, tax determination, tax classification, maintain business partner, sales and distribution, output tax, full tax. , KBA , CRM-S4-BF-PR-2CL , S4CRM: Pricing (Public Cloud) , Problem