SAP Knowledge Base Article - Public

2520832 - Tax Exemption from Supplier Master Data not Applied in Purchase order or Supplier invoice

Symptom

You are creating Purchase Order XYZ (XYZ represents the Purchase Order ID) for your company located in Country A (A represents the country of your company) to a Supplier located in Country B (B represents the Supplier's country).

In the Supplier Master Data, under Financial Data, in Tax Data, you have maintained a Tax Exemption for Country X with the Tax Reason Resale- Exempt Purchase, Taxable sale.

In the Taxes tab of the Item details, you can see that Taxes have been applied and the Tax Exemption isn't taken into account.

Environment

SAP Business ByDesign

Reproducing the Issue

  1. Go to Purchase Requests and Orders.
  2. Go to Purchase Orders.
  3. Select Show All Purchase Orders.
  4. Find XYZ.
  5. Select Edit.
  6. Select View All.
  7. Go to the Items tab.
  8. Go to the Taxes tab of Item details

A Taxable tax code is selected by the system, despite a Tax Exemption being maintained in the Supplier Master Data.

Cause

The Tax Exemptions set up in the Supplier Master Data are only applicable for domestic transactions.

Resolution

If the purchase involves a foreign country (ship to address or Supplier address), the Tax exemptions need to be maintained in below

  • either in the Product Master Data.
  • or in the Purchase Order by changing the Tax code manually.

You can refer to Case Document 1528596 - How To Create Supplier Invoices Without Import Tax Calculation On Items for a Supplier Abroad (as default) for the first option.

See Also

As per the Indian localization, we cannot expect the system to pick exemption related tax code automatically. so always enter Tax code manually.

Keywords

Exemption reason, exempt, , KBA , AP-PRP , Purchase Request Processing , AP-POP-PO , Purchase Order , AP-SIP , Supplier Invoice Processing , How To

Product

SAP Business ByDesign all versions