Advertising Tax Credits in OTC process – SD, FI integration for Taxes

Case detail:

A company ABCorp has sold its product MDC to a Multinational Retail Chain XYRetail INC.

During the Festive season the XYRetail INC launches a campaign that would bundle multiple products
from multiple vendors in a promotional package TGSPack1, as a special offer, and sell it to their store
customers.

There will be a marketing promotion campaign done by XYRetail, for which it charges an advertising
fee From its Suppliers.

For company ABCorp

1) XYRetail INC is a customer for product MDC

2) XYRetail acts as an advertising vendor too for promoting it in local media and stores.

Business Requirement:

Let’s assume ABCorp is located in UK, Depending on the customer country the tax would be 19% or
0%. When the Customer has a VAT Registration number the taxes differ in the same country.

For few countries there needs to be 2 separate postings one positive and one negative to make it a
zero tax.

The G/L that would be used for posting these taxes will be the ones which are used on the Purchases
Side for their regular vendors.

Approach to Solution

1) Identify the GL’s and the relevant posting keys.

2) List out the tax codes that exist with the requested percentages
3) Gather the Invoice related text’s that should appear on these invoices
4) Verify with the Business Tax advisors if this would be an acceptable scenario and the legal
risks associated

Karthik Gunda
Solution Architect, SAP SD & GTS
YASH TECHNOLOGIES PVT LTD
Advertising Tax Credits in OTC process – SD, FI integration for Taxes

The table below is used to capture the detailed list of the requirements and the GL’s to be posted

Reverse Customer
charge has a VAT Posting
Business Customer applies number keys(GL Tax Tax
Case # Country Y/N? Y/N? Account) % Code
Germany VST (
1 DE N Y 1325010) 19 V3
Germany VST (
2 DE N N 1325010) 19 V3
ESA (
2210020) -19 EA
ESE
3 Austria AT Y Y (1325020 ) 19 EB
VST (
4 Austria AT N N 1325010) 19 V3
Switzerland VST (
5 CH N Y 1325010) 0 V0
Switzerland VST (
6 CH N N 1325010) 0 V0
ESA (
2210020) -19 EA
Denmark ESE
7 DK Y Y (1325020 ) 19 EB
Denmark VST (
8 DK N N 1325010) 19 V3
ESA (
2210020) -19 EA
ESE
9 Luxemburg Y Y (1325020 ) 19 EB
VST (
10 Luxemburg N N 1325010) 19 V3

GAP/Challenges:

1) SAP doesn’t allow the usage of Purchase related Tax codes in the Sales/OTC process, it doesn’t
allow using the Posting keys and the tax codes related to Purchases.

2) The process is expected to be accommodated on a Credit Memo and Credit Note

3) Business is not interested in posting the taxes with the Vendor(Customer defined as vendor) as
they will have to put more manual effort in comparing the postings of both sides, they need the
postings tagged to specific sales

Note: This scenario shall change with S/4 HANA once the concept of Business partners pitch in.
However this article is more emphasised on the Tax postings and the FI integration and this case
belongs to an earlier version.

Karthik Gunda
Solution Architect, SAP SD & GTS
YASH TECHNOLOGIES PVT LTD
Advertising Tax Credits in OTC process – SD, FI integration for Taxes

Solution:

Process Steps:
- Once the sales happen to the product MDC as a part of Package TGSPack1 in the XYRetail
store, there will be an Idoc that will be sent to the AB Corp with the details of Sales order by
which this product was earlier purchased by them, and the order reason for the credit as “ZA
– Advertising credit”
- This will trigger creation of Credit Memo in the SAP system of ABCorp with relevant charge
and the order reason
- Based on the Tax condition record (MWST) maintained according to Access sequence
“S.Area/Country/SalesDocTy/Ord.reason” the relevant Taxcode and the Tax percentage is
maintained

Karthik Gunda
Solution Architect, SAP SD & GTS
YASH TECHNOLOGIES PVT LTD
Advertising Tax Credits in OTC process – SD, FI integration for Taxes

Necessary Configurations in SAP SD:

1) Define new Condition table and Access sequence

2) Define new Account key for tax
3) Create/modify the tax codes, assign a GL in the tax code against the respective Tax Key
4) Define new order reason

Necessary enhancements in SAP SD:

Modify the routine against the Tax Condition (say MWST), so as to modify the Account key from
MWS (of SD side) into VST/ESA/EZE (of Supplier Side) based on the country of the Bill-to Party.

Karthik Gunda
Solution Architect, SAP SD & GTS
YASH TECHNOLOGIES PVT LTD