SAP Knowledge Base Article - Public

2620415 - How to Set Up Automatic Tax Determination for Jebel Ali Free Zone


You set up Jebel Ali free Zone as a Tax Exempted region in Business Configuration based on the postal code.
All Involved Parties have postal codes within the relevant range, but there is no Automatic Tax Determination:

  • The expected tax code is not used.
  • Tax exemption is not applied.


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Reproducing the Issue

Pre-requisite: You have maintained Jebel Ali Free Zone as a tax exempted region in Business Configuration activity: Tax on Goods and Services.

  1. Go to the Sales Orders work center.
  2. Open the Sales Order view.
  3. Open Sales Order AAA (AAA stands for the Sales Order ID).
  4. Navigate to the Items tab.
  5. Go to the Taxes subtab.

You can see that Tax Code BBB (BBB being the Tax Code number) is applied as Domestic Sales, Standard Rate.
The Tax Code expected is CCC (CCC is the correct Tax Code number): Domestic Sale, Zero Rate.

  1. Check the Involved Parties tab.

 Each relevant party has its address in Jebel Ali Free Zone with the relevant Postal Code.


Automatic Tax Determination for Jebel Ali is a new feature; it needs to be configured according to the settings outlined below.


  1. Go to the Business Configuration work center.
  2. Select the relevant Implementation Project.
  3. Go to Fine-Tune, open activity Tax on Goods and Services.
  4. Open Define Exempted Regions.
  5. Add a row and maintain the following Information:
  • For Country United Arab Emirates, FEZ needs to be entered in the Postal Code with Status 03 - reduced tax rate area:



  • Make sure all relevant parties — Customers, Suppliers and Company Addresses — have the same Postal Code maintained in their Master Data:


  • Create a Sales Order to check that Automatic Tax Determination applies the right values: Tax Code: 300 - Non-Taxable Sale, Tax rate = 0%:





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