2037538 - Tax Code Description: Non-Taxable Sales (Out of Scope of Law)

SAP Knowledge Base Article - Public

2037538 - Tax Code Description: Non-Taxable Sales (Out of Scope of Law)

Symptom

You are creating a customer invoice which has the account located on the United States. Once selecting the Tax Code for this document the system gives you the option in select the Tax Code 500 - Non-Taxable Sales (Out of Scope of Law).

You assume the description is wrong considering the content of the text (Out of Scope of Law).

Reproducing the Issue

You can see the Tax Code information on the Customer Invoice work center. 

  1. Go to the Customer Invoicing work center
  2. Select the Invoice Documents view
  3. Search for the Invoice ID
  4. Click on the ID
  5. Click on View All button
  6. Navigate on Items tab
  7. Go to Tax sub-tab
  8. On the Tax Code field you can search for the reference  500 - Non-Taxable Sales (Out of Scope of Law)

 

You can see the Tax Code information on the Business Configuration work center. 

  1. Go to the Business Configuration work center
  2. Select the Overview view
  3. Show Activities option
  4. Find Tax on Goods and Services activity and open it
  5. Open Define Tax Codes session
  6. Search for the Tax Code type 500
  7. Filter for country US - United States
  8. Under the column Description you can see Non-Taxable Sales (Out of Scope of Law)
  9. The Tax Event linked to it is 300 - Sales Out Of Scope Of Law

Cause

The description of the Tax Code 500 for the United States is correct and conforms with local legislation.

Resolution

The Tax Code 500 linked to the Tax Event 300 represents the Sales Out Of Scope Of Law. In this case the text description is correct since this Tax Event and Tax Code is determined when the Ship From party is outside United States. According to United States legislation, if the sale is originating outside the United States then it is outside the scope of law and cannot be taxed within the United States.

If the scenario is aligned with this explanation you cannot use the Tax Code 507 or an alternative one.

Keywords

KBA , AP-CI , Customer Invoice Processing , How To

Product

SAP Business ByDesign all versions