TutorialKart.comHow to Assign Tax Codes for Non Taxable Transactions in SAP
In previous SAP tutorials you have learned how to define tax procedures step by step. After maintaining the tax procedure, the next configuration step is to assign tax codes for non taxable transactions in SAP.
Non tax codes are required when a posting is made to a tax relevant account but the business transaction itself should not calculate tax. In that situation, SAP still expects a valid tax code, so a 0% input tax code and a 0% output tax code are maintained and then assigned to the company code for non taxable transactions.
In this SAP FICO configuration tutorial, we will create the tax codes V0 and A0 in transaction code FTXP and then assign them to company code TK01 using transaction code OBCL.
- A0 – 0% Output Tax
- V0 – 0% Input Tax
Why 0% Tax Codes Are Needed for SAP Non Taxable Transactions
A non taxable transaction is not the same as a missing tax configuration. If the G/L account is tax relevant, SAP needs a tax code during posting even when the tax amount is zero. Assigning 0% tax codes helps SAP complete the tax determination and posting checks without creating an actual tax value.
For this reason, companies normally maintain separate zero-rated or non taxable tax codes for input and output tax. In this example, V0 is used for input tax and A0 is used for output tax.
Prerequisites Before Assigning Non Taxable Tax Codes in OBCL
Before you assign tax codes for non taxable transactions, check the following configuration points.
- The company code is already created.
- The country key used for the tax code is correct, such as IN for India or US for United States.
- The required tax procedure is assigned to the country.
- The 0% input tax code and 0% output tax code are created in FTXP.
- You have authorization to maintain tax code and tax posting configuration.
Create V0 0% Input Tax Code in SAP FTXP
Configuration steps for V0 – 0% Input Tax
- Transaction Code: – FTXP
- Path: – SPRO > SAP IMG > Financial Accounting (New) –> Financial Accounting Global Settings (New) –> Tax on Sales/Purchases –> Calculations –> Define Tax Codes for Sales and Purchases.
Step 1) Enter T-code “FTXP” in SAP command field.
Step 2) Enter country key “IN”, as we are tax codes for country India so we have entered In. If you are maintaining tax code for United States, enter US as country key.
Step 3) On maintain tax code: Initial screen, enter tax code that you like to create. Update as V0 and press enter to continue.
Step 4) In next screen, update tax code description and tax type as V (Input tax). Press enter to continue.
Step 5) Now update input tax – tax percentage rate as 0.
Click on save and save the configured tax code.
Create A0 0% Output Tax Code in SAP FTXP
Similarly create A0-Output tax code
Step 1) Enter T-Code “FTXP”
Step 2) Choose Country key In.
Step 3) In next screen, enter A0 in the tax code field and enter.
Step 4) Update tax code description and tax type key as A, press enter to continue.
Step 5) In next screen, you need to update tax percentage rate and update it as 0.
Click on save button and save the configured tax code.
Procedure to Assign Tax Codes for Non Taxable Transactions in SAP OBCL
After creating V0 and A0, use transaction code OBCL to allocate these 0% tax codes to the company code. This setting tells SAP which input and output tax codes should be proposed for non taxable transactions for that company code.
Step 1) Enter T-Code “OBCL” and enter.
Step 2) On change view allocate company code –> Non taxable transactions overview screen, click on position button and enter your company code in the given field.
Step 3) Now update 0% input tax code and 0% output tax code in the given field as shown below.
Successfully we have assigned tax Codes for non taxable transactions in SAP.
V0 Input Tax Code and A0 Output Tax Code Difference in SAP
| Tax code | Tax type | Typical use | Tax rate in this example |
|---|---|---|---|
| V0 | Input tax | Vendor purchases or input-side postings where the tax amount is zero | 0% |
| A0 | Output tax | Customer sales or output-side postings where the tax amount is zero | 0% |
Use the input tax code for purchase-side transactions and the output tax code for sales-side transactions. Do not use one tax type for both directions unless your tax design specifically allows it.
Common SAP OBCL Errors When Assigning Non Taxable Tax Codes
If SAP does not accept the OBCL assignment or the tax code is not available during posting, check these common causes.
- Tax code not created for the same country: Create the tax code in FTXP for the correct country key before assigning it in OBCL.
- Wrong tax type selected: V0 should be maintained as input tax and A0 should be maintained as output tax in this example.
- Company code not found in OBCL: Confirm that the company code exists and is assigned to the correct country and tax procedure.
- Tax percentage not maintained as 0: Open the tax code again in FTXP and verify that the relevant condition percentage is zero.
- Authorization issue: Ask your SAP security team to check whether your user has authorization for tax code and IMG configuration transactions.
Editorial QA Checklist for SAP Non Taxable Transaction Tax Code Setup
- Confirm that the country key used in FTXP matches the company code country.
- Confirm that V0 is saved as 0% input tax and A0 is saved as 0% output tax.
- Confirm that both tax codes are assigned to the correct company code in OBCL.
- Test one purchase-side and one sales-side non taxable posting in a development or quality client.
- Check that the posting does not calculate a tax amount but still accepts the tax code.
FAQs on Assigning Tax Codes for Non Taxable Transactions in SAP
How do you assign tax codes for non taxable transactions in SAP?
Create 0% input and output tax codes in FTXP, then go to OBCL and assign those tax codes to the relevant company code under non taxable transactions.
Which transaction code is used to assign non taxable transaction tax codes?
Transaction code OBCL is used to assign tax codes for non taxable transactions to a company code.
Which transaction code is used to create A0 and V0 tax codes?
Transaction code FTXP is used to define tax codes for sales and purchases. In this tutorial, V0 is created as 0% input tax and A0 is created as 0% output tax.
Can the same 0% tax code be used for input and output tax?
Normally, separate tax codes are maintained for input tax and output tax because the tax type controls whether the code is used for purchase-side or sales-side transactions.
Why does SAP ask for a tax code when the transaction is non taxable?
If the account or posting is tax relevant, SAP needs a tax code to complete posting checks. A 0% tax code allows the posting to proceed without calculating a tax amount.