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Former Member

Central Finance with External Tax Engine

Hi,

We have a scenario where client is using external Tax engine in Source system so do we need to connect External Tax engine to Central Finance?

Thanks in advance,

Regards,

Vikash

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4 Answers

  • Oct 10, 2017 at 09:49 AM

    Hi

    In one of my previous clients, the source SAP ECC System had connection to an external tax system. The S/4HANA System, which housed Central Finance was also going forward need to have all logistics transactions in the same box with the same company codes. However, the client did not want to use the external tax ware. So we used the value mapping functionality of MDG to convert all the incoming tax codes to just one tax code each for input and output. This was done, since tax reporting was not the main intent of central finance function in S/4HANA . However, going forward also the customer did not want to use the tax reporting engine from an external system

    However, coming to your specific case, you have to choose depending on your customer road map. If you will use the same system for logistics as well some time in future and also would have central finance on the same box, i suggest you choose properly the external tax reporting and you will need to maintain all the required configurations.

    If however, if your central finance system will just be a reporting system for finance only, you may not want to use an external tax ware in it and use the MDG value mapping that I had talked about

    Thanks & regards

    Sanil Bhandari

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    Former Member
    Oct 14, 2017 at 11:06 PM

    Hi Sanjay,

    Thanks for your response. So are we saying that we need not have to have the same Tax structure what we have in the source system? I thought that's a mandatory step and this is what SAP added in 1709 as well.

    In our case we will use S/4 as Central Finance as interim but will use this system as S/4 going forward so for interim it will be just finance so are you suggesting that we do not need to hook the external tax engine in Target system and just connect to the source? If this is the case than why SAP is asking us to connect the External Tax engine to both source and Target in CFIN Admn document 1610 FSP2?

    Appreciate your response on this and Thanks in advance.

    Regards,

    Vikash

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  • Oct 18, 2017 at 05:53 AM

    Hi

    It may not be mandatory. As i said, you can use MDG Value mapping to change the tax codes which are replicated from the source system. If however, as you mentioned that the same system would be used for logistics as well some time in near future, than I think you must use external tax system unless you can do a massive master data maintenance, which is required for jurisdiction based tax procedure. So yes, the recommendation is to use external tax ware in both the source and target system based on what you have stated already in terms of business requirement

    regards

    Sanil Bhandari

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    Former Member
    Oct 19, 2017 at 03:38 AM

    Thanks Sanil but if you refer to SAP document on 1709 you will find that SAP does stress that you should have the same configuration of Tax what you have in Source system and if you don't than system will not allow you to move forward.

    So if you say that you can have different configuration than what you have in Source than it conflicts with what SAP proposes. I have not done Central Finance before but guessing based on SAP documents.

    Please correct me if my understanding is wrong.

    Regards,

    Vikash

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