Configuring a Vendor Account for Automatic VAT

Transfer Postings
The input and output VAT taxes are set up in transaction FTXP and hold the rates that will be applied to the respective
documents. The input tax code can be applied on purchasing and accounts payable-related transactions by any of the
following methods:

Assigning it to the info record of the vendor/material (ME11);

Entering it in the Invoice tab of the purchase order line (ME21N);
Entering in the Invoice Verification transaction (MIRO);
Entering it in an accounts payable invoice (FB60)

The output tax code is applied on sales and accounts receivable-related transactions by any of the following methods:

Assigning it to a sales condition record for tax (VK11);

Entering it in an accounts receivable invoice (FB70)

Most countries require that a net payable/receivable of VAT is sent to the government, which means that the accounts that are
used for input and output VAT should be netted off in order to establish what is owed or expected as a refund. The input and
output tax accounts can be set up in transaction FTXP for the relevant tax code (clicking on the Tax Accounts button) or in the
automatic posting configuration transaction OB40. To configure the account for VAT to be paid over you can go to transaction
OB89 or to the following configuration menu path (SPRO): Financial Accounting (New) -> General Ledger Accounting (New) ->
Periodic Processing -> Rep ort -> Sales/Purchases Tax returns -> Define Accounts for Automatic Tax Payable Transfer
Posting. You can then enter the relevant general ledger account for the transfer posting. This account will be debited with the
amount in the VAT receivable account and credited with the amount in the VAT payable account and will therefore contain the
balance to be paid over to the tax authorities.
If you enter general ledger account in this configuration table, you will still need to transfer the VAT amount to a vendor
account in order to pay the authorities (unless you simply journal the amount out of a bank account into this G/L account).
You can however, directly enter a vendor account in this table by using this simple tip: click on the Posting Key button in that
transaction (OB89) and replace the debit/credit posting keys 40/50 to the accounts payable posting keys 21/31. When you do
so hit Save and then click on the Accounts button and then you can enter the relevant vendor account. Note that if you dropdown in this field it will still show you a list of G/L accounts (and not vendor accounts), however if you simply type in the vendor
account number, the system will recognize this account along with the posting keys (21/31) as one with an account type of K
(vendors).
The standard VAT program RFUMSV00 (or transaction S_ALR_87012357) can then be run to allow you to display the input
and output taxes on all your sales and purchasing transactions in a specified period range. It can also post the VAT balance to
the vendor account configured above. If you want to enter a different vendor account to the one configured, enter the
appropriate vendor account number in the field Alternative Tax Payable Account which is located in the Tax Payable Posting
section.