FI / FICOadvanced

FICO Tax Configuration Part 3: Tax Determination in Sales and Purchasing

Key takeaway

How the right tax code is found automatically: SD output tax determination from customer and material tax classification and condition records, MM input tax from tax indicators and purchasing data, and how tax lines reach GL — plus handling rate changes and troubleshooting wrong tax.

Explanation

📌 KEY POINTS
✅ SD: tax condition (e.g. MWST) determined from departure/destination country and customer + material tax classification via condition records.
✅ The condition record returns the tax code; FI posts tax to the account from OB40.
✅ MM: tax code from PO item (default from info record or tax indicator logic), confirmed at invoice.
✅ Rate changes: new condition records/tax codes with validity dates.
⚠️ Wrong tax classifications on master data are the most common cause of wrong tax.

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▶ WHERE WE ARE
Part 2 configured codes. Now determination.

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▶ 1. SD OUTPUT TAX

Country, customer tax class, material tax class → condition record → tax code.

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▶ 2. MM INPUT TAX

Tax code on PO item; defaults; checked in MIRO.

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▶ 3. POSTING

Tax lines via account keys to GL.

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▶ 4. RATE CHANGES

Validity-dated records; new codes; open orders handling.

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▶ 5. TROUBLESHOOTING

Pricing analysis in SD; PO tax code; master data classification.

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▶ STEP BY STEP

Check customer and material tax classes.
Display the MWST condition record.
Bill and verify tax in pricing analysis.

✅ CHECKPOINT: you can explain why the invoice got its tax code.

Code example

ABAP Code

===== SD DETERMINATION =====MWST access: departure country / destination country / customer tax class / material tax class → tax codeVK11 condition record: DE→DE, customer class 1, material class 1 → tax code A1 (output 19%) ===== MM =====PO item tax code (default from info record) → MIRO checks → tax line ===== RATE CHANGE =====New records valid from the change date | reprice open orders where needed

Real project scenario

During a VAT rate change, billing for orders created before the change still used the old rate. The team planned repricing for open orders and new validity-dated records, and communicated cut-off rules to sales.

Common mistakes

Wrong tax classes.
No repricing plan.
Hardcoded tax codes.
Ignoring pricing analysis.
No rate-change runbook.

Best practices

Govern tax classifications.
Validity-dated records.
Repricing strategy.
Use pricing analysis.
Runbook for rate changes.

Interview angle

Questions: "How is output tax determined in SD?", "How does MM get a tax code?", "How do you handle a VAT rate change?"
Strong answer: SD condition technique, MM tax code sources, posting via account keys, rate changes, troubleshooting.

Practice this lesson

Quick check

1. Expect scenario-based questions such as how to handle a VAT rate change without disturbing historical postings, or how to trace a tax posting that landed in the wrong G/L account. In the Tax Configuration context, which answer shows the strongest practical judgment?

2. After a VAT rate change, orders created before the change still bill the old rate. What should be planned?

3. In SD, which master data typically drives tax code determination via condition records?

Interview questions

1. Suppose you inherit an existing Tax Configuration solution. How would you review it before making a change?

Answer it in your own words first, then compare.

2. A production issue is reported in Tax Configuration. What would you check first, and how would you troubleshoot it systematically?