SAP Knowledge Base Article - Public

2332709 - Tax Prepayment Must be Outgoing - How to Process an Incoming Tax Prepayment

Symptom

You have received an incoming tax prepayment from your tax authority. You externally create this incoming tax prepayment. It now appears in status In Preparation in the Tax Payments view of the Tax Management workcenter.
When trying to post this incoming tax pre-payment, meaning with a positive amount, an error message appears: Tax prepayment must be outgoing.
How can this tax prepayment be posted as well as cleared according to the specified Clearing Due Date?

Reproducing the Issue

Pre-Condition: You have externally generated an incoming tax prepayment from the Tax Authority via bank statement creation. This incoming payment now appears as tax payment in the Tax Management workcenter:

  1. In  the Tax Management work center navigate to the Tax Payments view.
  2. Select the incoming tax payment in status  In Preparation and press View.
  3. Enter the Tax Return Arrangement ID.
  4. In the Tax Payment Type field select Tax Prepayment.
  5. Enter the Clearing Due Date.
  6. Now enter a positive tax pre-payment amount and press Check or Post.
  7. An error message appears: Tax prepayment must be outgoing.

Cause

In SAP ByDesign it is currently not allowed to post incoming bank transfers/ checks as tax prepayments as the system is programmed in a way that tax prepayments always have to be created a tax payables of a company to the tax authority.

Resolution

There is, however, a workaround to post the tax pre-payment as well as clearing it with the respective VAT return:

  1. In the payment allocation of the incoming payment the amount needs to be credited directly to a G/L account.
  2. When the tax return for the accounting period of the pre payment's clearing due date is being paid the tax pre-payment amount needs to be debited from the earlier used G/L account.

TO ALLOCATE THE INCOMING TAX PREPAYMENT AMOUNT:

  • The incoming tax prepayment needs to be cancelled/deleted: This can be achieved by cancelling its payment allocation.
  • To identify the payment allocation check the external reference of the tax prepayment. This is the ID of the respective bank statement ID.
  • The cancellation of the payment allocation triggers the creation of the new payment allocation in status In Preparation.

Lets assume you have received a tax prepayment of 200,00 EUR from the tax authority.

  1. In the new payment allocation navigate to the Allocation to G/L account tab.
  2. Select a G/L account of your choice and enter the taxprepayment amount of 200,00 EUR in the Credit Net Amount column.
  3. Press Post.

TO CLEAR THE TAX PREPAYMENT AMOUNT WITH THE TAX RETURN:

Now you have released the tax return for which this tax prepayment is to be considered, most likely for the last period of the fiscal year.

If the tax amount of the tax return is a tax RECEIVABLE amount, i.e. a positive amount, lets say, 10.000,00 EUR, you will receive an incoming payment of the tax authority of the tax return amount minus the tax prepayment amount, i.e. 9.800,00 EUR:

  1. In the payment allocation of the incoming payment first navigate to the Customer/Supplier tab.
  2. In the Customer/Supplier ID field enter the ID of the tax authority.
  3. In the Payment Allocated to field select 8 - Tax payables or receivables.
  4. In the Allocated Amount field enter the full tax return amount, i.e. 10.000.00 EUR. The Allocated Amount on the top of the payment allocation is now higher than the Transaction Amount.
  5. Now navigate to the Allocation to G/L account tab.
  6. Here select the G/L account which you have used for the tax prepayment earlier.
  7. Now enter the tax prepayment amount, i.e. 200,00 EUR in the Debit Net Amount field. Transaction Amount and Allocated Amount display the same amount.
  8. Press Post.

If the tax amount of the tax return is a tax PAYABLE amount, i.e. a negative amount, lets say, -10.000,00 create an outgoing payment of the tax return amount plus the tax prepayment amount, i.e. 10.200,00 EUR.

  1. In the payment allocation of the outgoing payment first navigate to the Customer/Supplier tab.
  2. In the Customer/Supplier ID field enter the ID of the tax authority.
  3. In the Payment Allocated to field select 8 - Tax payables or receivables.
  4. In the Allocated Amount field enter the full tax return amount, i.e. -10.000.00 EUR. The Allocated Amount on the top of the payment allocation is now lower than the Transaction Amount.
  5. Now navigate to the Allocation to G/L account tab.
  6. Here select the G/L account which you have used for the tax prepayment earlier.
  7. Now enter the tax prepayment amount, i.e. 200,00 EUR in the Debit Net Amount field. Transaction Amount and Allocated Amount display the same amount.
  8. Press Post.

 

Keywords

KBA , SRD-FIN-AU , Auditor Workcenter , How To

Product

SAP Business ByDesign all versions