Examples of Tax Point Handling on Procure-to-Pay Transactions

Specify the events for the tax point basis to identify the appropriate date to account and report your transaction taxes to the tax authorities.

You can define the event for reporting of taxes at various levels within tax setup for determining the tax point date. The following scenarios illustrate tax calculation using the tax point basis and tax point date on procure-to-pay transactions.

Transaction dates for the scenarios are:

Transaction	Date
Purchase order	01-Mar-yy
Goods receipt	08-Mar-yy
Invoice capture	15-Mar-yy
Invoice accounting	18-Mar-yy
Invoice payment	16-Apr-yy

Scenario 1

Assumptions in this scenario are:

• A delivery-based tax is mandated to be reported to the tax authority on its delivery date.

• The delivery document is considered as an official document for reporting and compliance purposes.

• Other taxes with a different tax point basis are assessed at this point for accruing and tracking the possible transaction liability.

The following table describes the tax point details when the configuration owner tax options for a payables invoice are defined as:

• Allow delivery based tax calculation: Selected

• Report Delivery-Based Taxes on: Receipt

• Tax Point Date: Receipt date

Tax Point Basis	Basis Transaction	Tax Point Date	Details Available on
Invoice	Invoice capture	15-Mar-yy	Invoice tax lines
Delivery	Good receipt	08-Mar-yy	Goods receipt tax lines
Accounting	Invoice accounting	18-Mar-yy	Invoice distributions in General Ledger
Payment	Invoice payment	16-Apr-yy	Invoice payment distributions in General Ledger

When the tax point basis is Delivery, taxes are calculated using the receipt accounting process based on the tax attributes on the receipt. The receipt date is considered as the tax point date and the recoverable portion of the tax is also accounted as part of receipt accounting.

Scenario 2

Assumptions in this scenario are:

• A delivery-based tax is mandated to be reported to the tax authority on its delivery date.

• The invoice is considered as an official document for reporting and compliance purposes.

• Tax information is captured and reported directly on the invoice, although the delivery date becomes the basis for tax calculation.

• On the delivery event, taxes available on the purchase order are used for accruing the transaction liability.

The following table describes the tax point details when the configuration owner tax options for a payables invoice are defined as:

• Allow delivery based tax calculation: Selected

• Report Delivery-Based Taxes on: Invoice

• Tax Point Date: Receipt date

Tax Point Basis	Basis Transaction	Tax Point Date	Details Available on
Invoice	Invoice capture	15-Mar-yy	Invoice tax lines
Delivery	Good receipt	08-Mar-yy	Invoice tax lines
Accounting	Invoice accounting	18-Mar-yy	Invoice distributions in General Ledger
Payment	Invoice payment	16-Apr-yy	Invoice payment distributions in General Ledger

When the tax point basis is Delivery, taxes are calculated on the invoice based on the tax attributes on the receipt. The receipt date is considered as the tax point date and the recoverable portion of the tax is also accounted as part of invoice accounting.

Scenario 3

Assumptions in this scenario are:

• A delivery-based tax is mandated to be reported to the tax authority on its delivery date.

• The invoice is considered as an official document for reporting and compliance purposes.

• The invoice accompanies the goods and it is registered along with its receipt. Therefore, the delivery date is always the same as the invoice date.

• Tax information is captured and reported directly on the invoice using the invoice date as the basis for tax calculation.

The following table describes the tax point details when the configuration owner tax options for a payables invoice are defined as:

• Allow delivery based tax calculation: Selected

• Report Delivery-Based Taxes on: Invoice

• Tax Point Date: Invoice date

Tax Point Basis	Basis Transaction	Tax Point Date	Details Available on
Invoice	Invoice capture	15-Mar-yy	Invoice tax lines
Delivery	Good receipt	08-Mar-yy	Invoice tax lines
Accounting	Invoice accounting	18-Mar-yy	Invoice distributions in General Ledger
Payment	Invoice payment	16-Apr-yy	Invoice payment distributions in General Ledger

When the tax point basis is Delivery, taxes are calculated on the invoice based on the tax attributes on the invoice. The invoice date is considered as the tax point date and the recoverable portion of the tax is also accounted as part of invoice accounting.