SAP Knowledge Base Article - Public

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


You have set up Jebel Ali free Zoe as a Tax Exempted region in Business Configuration based on the Postal Code.
All Involved Parties have Postcal Codes within the relevant range but, Automatic Tax Determination is not done as expected: the Expected Tax Code is not used and there is no Tax Exemption 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 Centre.
  2. Go to the Sales Order View.
  3. Search for Sales Order AAA (AAA stands for the Sales Order ID), select it and open it.
  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.

Check the Involved Parties tab: each relevant party has their address in Jebel Ali Free Zone with the relevant Postal Codes.


Automatic Tax Determination for Jebel Ali is a newly implemented requirement. 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. Open the Activity List and in Fine-Tune, search for 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



Once this is done, ensure that all relevant parties: Customers, Suppliers and Company Addresses have the same Postal Code maintained in their Master Data:


You can create a Sales Order to check that the configuration is working.
The following results can be expected for the Tax Code and Tax Determination: Tax Code: 300 - Non-Taxable Sale, Tax rate = 0%




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