SAP FI TaxWelcome to the tutorial about SAP FI Tax functionality. This is an introductory tutorial about taxes in SAP FI included in our free SAP FI course. Learn about the high-level flow of processing of taxes in FI module of SAP ERP.

SAP Financial Accounting can be used to manage all types of taxes according to region or country requirements. In sub-modules of financial accounting, various tax functions can be utilized which include tax calculation, tax posting, tax adjustments and tax reporting. This tutorial will help the reader to have a helicopter view of SAP FI tax functionality and have a clear understanding of how tax components are linked. Below is a flowchart showing all components involved when a tax line item is being posted in financial accounting.


Flow Chart Showing How SAP FI Tax Functionality Works
Flowchart Showing How SAP FI Tax Functionality Works


Different countries use tax laws and calculation methods. In other countries, different regions can use different calculation rules and procedures, as a result, taxes are dealt with in SAP at country level. When you are making settings for taxes in SAP FI you set those per country. After the calculation procedure is defined, it is assigned to country.

Calculation Procedure

A calculation procedure contains the specifications that are necessary for the calculation and posting of tax on sales or purchase. The calculation procedure is assigned to a country. These calculation procedures contain tax types which are better known as condition types. Examples of condition types are input tax and output tax. The tax type defines the base amount on which the tax will be calculated and the account key to be used for posting the tax. Calculation procedure also contain the calculation rule, for example, whether percentage is included (A) or percentage not included (I). It is again in the calculation procedure where its specified as to which side of the account the tax amount is posted. The calculation procedure also specifies whether the user will be allowed to change the proposed tax amounts manually or not. It’s possible to lock percentages such that the user cannot change percentages.

SAP FI Tax Codes

The tax codes are defined by entering a two-digit code. This code can be alphanumeric and is used to represent a tax percentage rate. Tax codes are used to check if the manually entered tax amount is correct or to calculate the amount of tax on sales or purchases automatically. The tax code checks if the account can be posted to with the specified tax code and also determines the tax account. It is in the tax code where its specified weather it’s a tax code for input tax or output tax. A tax code can only be either in the category of input tax or output tax, it can’t be in both. The tax code can be set to output either an error or a warning if the manually entered tax amount is different from the one automatically calculated.

SAP FI Tax Account Determination

When a transaction with tax is posted, a separate line item is created with the tax amount and this line item is automatically posted. For the tax line item to be posted automatically to a tax account, there are some settings that has to be done for tax account determination. For each and every tax code defined a tax account is assigned so that the system will automatically post to that account when the tax code is used. The posting keys for debiting and crediting are also specified.

Assignment of Tax Category to General Ledger Accounts

When an expense or revenue account is being maintained in the company code segment allowed tax type or condition type has to be specified. For example, if input tax is selected, only input tax codes can be selected when posting to that account. Here it is possible to allow all types of tax codes to be selected when posting to the account.

Picking Tax Code at Document Entry

When a tax type is selected in general ledger master record, a user cannot post to that account without populating a tax code. When a user drill down on tax code box, all tax codes maintained for the company code country will be displayed and the user can choose the appropriate tax code.


Now that we have a clear understanding of how SAP System processes tax, let’s conclude by having a summary of the tax logic. When a user selects a tax code the system will read the tax type or the condition type to which the tax code is assigned. Then the system will check against the master record of general ledger account that the user is posting to and check if the tax type is allowed for the general ledger. If the general ledger allows the selected type of tax type, then the condition type will read the calculation procedure to which it is assigned to and the country assigned to the calculation procedure will be used to check against the country for the company code and the calculation rules will be applied accordingly and if the tax amount is calculated according to the percentage set in tax code, the amount will be posted to the account assigned to the tax code.

Did you like this tutorial? Have any questions or comments? We would love to hear your feedback in the comments section below. It’d be a big help for us, and hopefully it’s something we can address for you in improvement of our free SAP FI tutorials.

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4 thoughts on “SAP FI Tax”

  1. Yes. It is a good tutorial. But I think that certains informations like transaction where the customizing is done are missing. For resume, this is a great document which summarize Tax module.

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