Tax destination country and partner for customer tax classification

[DeeptiK]

Hello Experts,

The scenario is -- sales organization is Canadian, Plant is in USA. So to calculate accurate taxes, we update the tax departure country as CA in sales order billing document tab. The customer tax classification is taken from ship-to party master data for determination of CTXJ condition (the access Country/State/Customer Classif.1/Material Classification). 

I noticed that when the tax destination country is also updated as CA, the source for customer tax classification changes to sold-to partner, although it uses the same access for CTXJ determination. The ship-to partner is always from Canada so even prior to manually updating this field, the destination country is always canada. 

I am trying to find any SAP note or documentation that supports/explains this behavior. All the notes/sources I found on SAP sites are related to EU taxes with VAT registration number. That isn't applicable in my scenario. (Also, we are on public cloud, if that makes a difference)

Any help would be appreciated.  

Regards,

Deepti

[jignesh_mehta3]

Hello, 

For your first point: sales organization is Canadian, Plant is in USA. So to calculate accurate taxes, we update the tax departure country as CA in sales order billing document tab

If the Sales Orgn is based in Canada and Plant (dispatch location) is in USA, then the Tax Departure Country should be US, or is my understanding incorrect here? 

For your question in second point - when the tax destination country is also updated as CA, the source for customer tax classification changes to sold-to partner

Normally the Destination country is taken from Ship to Country and the Tax Destination Country needed not be updated, except for special cases e.g. EU Triangular Sales (chained Transactions e.g. Poland Customer Ordering from German supplier, who inturn asks his French Supplier to directly dispatch to Poland. In this case the Sales Order in French Supplier will have tax Destination Country as Poland). 

For Sales between entities based in US and Canada, I do not see the need to update the Tax Departure Country. 

Thanks, 

[DeeptiK]

Hello

Thank you for your response. 

We basically want to have Canadian sales tax on the order even though plant is US. We dont treat it as export scenario. And so by default departure country is US and we manually update CA in that field to calculate canada taxes.