What is External Sales & Use Tax Calculation in S/4HANA Cloud ?
S/4HANA Cloud differentiates between internal and external tax calculation for the United States. External Sales & Use Tax Calculation would be for example via a tax partner like Sovos, Thomson Reuters, Vertex, Wolters Kluwer, or other Tax partners.
The External Sales and Use Tax Calculation solution in SAP S/4HANA Cloud uses 0TXUSX as its US tax procedure for the United States. SAP provides a standard tax interface system that can pass all necessary data on to an external tax system. This external system determines tax jurisdictions, calculates taxes, and returns these calculated results to SAP. This data transfer occurs during master data address maintenance to retrieve the appropriate tax jurisdiction codes. It also occurs during order and invoice processing out of finance, materials management, and sales and distribution, when tax rates and tax amounts are retrieved. The tax interface system also updates third party tax files with the appropriate tax information for legal reporting purposes.
Basically, External Sales & Use Tax Calculation in S/4HANA Cloud includes 3 parts:
How It Works: The Tax Calculation Process in Sales (Example)
- The ship-from jurisdiction (origin)
- The tax jurisdiction codes of the ship-from address (plant)
- The tax class of the material being shipped
- The tax jurisdiction codes of the ship-to party (customer)
- The tax class of the ship-to partner
- The tax calculation date
- The tax jurisdiction codes of the point-of-order acceptance and the point-of-order origin