SAP Knowledge Base Article - Public

2999098 - Purchase Order tax code determination changes for Brexit

Symptom

The United Kingdom will leave the European Union on January 1st 2021. New terms of trade will then apply with all EU member states and a special agreement will be in place with regards to Northern Ireland (The Northern Ireland Protocol). This regulation introduces some new administrative processes for traders in Northern Ireland, the UK and the rest of the Europe. To support the new legal requirements, a new logic is introduced to fill the 'Tax indicator for import' (KOMP-TAXIL) when the departure country or destination country is Northern Ireland. This indicator can be used to determine the default tax code from condition records in a Purchase Order.

Note: The contents of the 'Tax indicator: Import' field is determined internally, it is not maintained manually when creating a Purchase Order. The field is visible in the APP 'Change Price Conditions' (MEK2)  and can be used for the determination of condition records. This condition record master data, is the priority source for the default tax code in a Purchase Order item (if maintained) see SAP note 501054 for further information. The user can check the value of the 'Tax indicator: Import' field in the pricing analysis of the purchase order item.
As per the note, another common and important source of a default tax code in a Purchase Order is the Purchasing Info Record. Consider your existing Info Record master data in the context of the Northern Ireland Protocol

Environment

SAP S/4HANA Cloud All versions

Reproducing the Issue

1) Open the APP 'Manage Purchase Orders' or the 'Manage Purchase Orders - Advanced' webgui tile. 
2) Create a Purchase Order using a Supplier located in one of the UK regions in Northern Ireland.
3) Navigate to the Item Invoice TAB and check the tax code determined.

Cause

Legal change.

Resolution

The import indicator used to determine the tax code in a purchase order will be determined as follows:

From Northern Ireland into the EU
After Dec 31st - import within EU (TAXIL = '2')

From GB into the EU
After Dec 31st - normal import (TAXIL = '1')

From EU into Northern Ireland
After Dec 31st - import within EU (TAXIL = '2')

From EU into GB
After Dec 31st - normal import (TAXIL = '1')

From GB to GB (NI) and vice versa
After Dec 31st - no import (TAXIL = '0')

In a Purchase Order the tax code is only a proposal and can be changed manually at any time.
If you use pricing condition master data to determine default tax codes in a purchase order, you may need to maintain your tax codes according to the new rules for the 'Tax indicator for import' above.

Notes: 
In the Public cloud the required code changes and configuration changes will be delivered as a hotfix to the standard content before the transition date of January 1st 2021.
The Northern Ireland Protocol will be in place from 1st January 2021 until 31st December 2024
Services are not covered by the Northern Ireland Protocol, hence items with Product type group '2'  are not subject to the above changes. 

See Also

SAP Note 2998267
SAP Note 2999650
SAP Note 2885225
SAP Note 3000100

Keywords

Brexit, Foreign Trade, GTS, Intrastat, TAXIL, MWSKZ, MWST, NAVS, TTX1, Irish Backstop, CL_MMPUR_UTILITIES , KBA , MM-PUR-PO , Purchase Orders , MM-PUR-GF-TAX , Taxes , Problem

Product

SAP S/4HANA Cloud all versions