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Non-Deductible Tax configuration for Canada taxes

Hi Experts,

My understanding is that if in config, any Acct Key is marked as non-deductible tax, then there will be no tax line for that component in Accounting document. However, this is not the behavior seen in the system.

Normally, NVV/NAV are marked as non-deductible tax. Their behavior is like--> No separate line in Acct Doc but an entry in BSET table, no GL acc associated.

In our Production systems, Canada is using external tax calculation (Vertex). Canada taxes are using Acct key VS1,VS2,VS3,VS4. For some reason VS1/2/3/4 are marked as non-deductible flag checked. Even then I notice that on posting an invoice directly using SAP transaction FB01/F-43 etc with such tax code, there is a tax line in Accounting doc for these VS1/2/3/4 components. Is it correct and expected behavior ?

OBCN -

Posting via FB01 direct -->

US taxes are also using external tax calculation. They are using NVV/NAV types. They don't post any tax line in posting, which I feel is correct.

Confusion is with VS1/VS2/VS3/VS4 only. Please advice.

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1 Answer

  • Nov 17, 2017 at 05:52 AM

    Hi Diwakar

    Not deductible in OBCN mean you cannot claim the input tax from tax authority. You will see this amount appear in the tax report S_ALR_87012357 - Advance Return for Tax on Sales/Purchases under non-deductible column. Your tax payment to tax authority is Output tax minus Input tax. If you mark not deductible to input tax meaning you cannot minus the this input tax amount from the tax payment.

    In the same configuration OBCN, posting indicator:

    1 - no posting required. Never try this option. You can test in your system.

    2 - Separate line item. If you don't want to distribute the non deductible amount to relevant expense item. You want to charge to another expense GL you select this. We won't charge to the same GST/VAT receivable GL because it cannot be deducted from tax payment.

    3 - distribute to relevant expense / revenue item. You won't see GST/VAT line item, the amount is distributed to the relevant expense line item.

    Thank

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