NBT & VAT Calculation in SAP / Tax Calculation procedure for Sri Lanka in SAP

asked Dec 19, 2017 in NBT by Bose (120 points)
Dear Members,

I believe at-least few of our forum members here, might have using SAP as an ERP in your organization. We are implementing SAP for our business in Sri Lanka, unfortunately we dont see any standard solution/template delivered by SAP for Sri Lanka tax calculation

Could you please share your comments how did you configure/setup a tax calculation procedure in SAP for Sri Lanka, considering the NBT, VAT &/ESC

Calculation Example    Particulars      Cr                           Dr
A                                            Vendor Cr    5890,5   
B                                              Expenses                             5000
C = B*2%                              NBT @ 2%                               100
D = [B+C]*15%                      VAT @ 15%                       765
E = [B+C]*0.5%                      ESC @ 0.5%                         25.5

1 Answer

0 votes
answered Dec 23, 2017 by Visio (4,730 points)
I have no experience in SAP but I see an issue with regard to the tax calculation

NBT and ESC are not something you are required or bound to collect from customer.  But companies charge NBT but ESC is not generally charged from customer. But still there is nothing prohibiting you to charge ESC from customer as well (this will depend on your bargaining power with the customer).

And sometimes you can charge even more than the stipulated NBT/ESC rate to compensate the cascading effect. (That mean if you charge 2% on sales, IRD will consider your revenue as selling price+ NBT and NBT is calculated on the toal and you will end up paying more as NBT than you collect from customers; this is why some companies charge 2/98 as NBT).

So If you charge NBT and ESC, it would be simply seen as part of your revenue. Therefore VAT has to be calculated based on the amount after adding NBT & ESC.

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