Tax on sales and purchases and Withholding tax

Tax on sales and purchasesTaxes on sales and purchases are levied on every sales transaction in accordance with the principles of VAT. This applies to input and output tax, for example.Input tax is calculated using the net invoice amount and is charged by the vendor.Output tax is calculated using the net price of products and is charged to the customer.Companies can offset input tax against output tax, paying the balance to the tax authorities. Tax authorities can set a nondeductible portion for input tax which cannot then be claimed from the tax authorities.

Withholding taxIn some countries, a portion of the invoice amount must be withheld for certain vendors
and paid or reported directly to the tax authorities.SAP currently provides two functions for calculating withholding tax: Classic withholding tax and extended withholding tax.

Extended withholding tax includes all the features of classic withholding tax and, in addition, also fulfills a number of further country-specific requirements.If you wish to implement the withholding tax functions, you should choose extended
withholding tax.

Chart of Accounts and it's types

Charts of accounts can have three different functions in the system:
•        Operating chart of accountsThe operating chart of accounts contains the G/L accounts that you use for posting in your
company code during daily activities. Financial Accounting and Controlling both use this
chart of accounts.
You have to assign an operating chart of accounts to a company code.
•        Group chart of accountsThe group chart of accounts contains the G/L accounts that are used by the entire
corporate group. This allows the company to provide reports for the entire corporate
group.
The assigning of an corporate group chart of accounts to a company code is optional.
•        Country-specific chart of accountsThe country-specific chart of accounts contains the G/L accounts needed to meet the
country's legal requirements. This allows you to provide statements for the country's legal
requirements.
The assigning of an country-specific chart of accounts to a company code is optional.

Assign sales order to profit center

It is necessary to assign SD sales orders to profit centers in order to reflect receivables, sales revenues, and sales deductions on profit centers.

The profit center assignment is also passed on from the sales order through the supply chain: sales order -> delivery note-> goods issue-> billing document. This means that the when a goods issue is posted, the corresponding revenue value for the goods is also passed on to the profit center of the sales order.

Sales orders are divided into header data and item data. Each order item is assigned separately to a profit center, since this is the finer level of detail.

The system proposes the profit center of the material in the supplying plant as the default profit center. Consequently, you usually do not need to enter a profit center manually. This default supports both a product oriented and geographical division of your organization into profit centers.

You might want to divide your company into profit centers according to a sales-oriented structure. In that case, you can define substitution rules in Customizing of classic Profit Center Accounting or new General Ledger Accounting. The system uses these substitution rules to determine the profit center from sales orders. You also need to activate these substitutions for each individual controlling area.