explain US tax Models
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Tax Models falls under "Tax Data Maintenance "
The Tax Model is where we define the taxability of wages in
SAP Payroll. The ‘model’ is a set of three SAP configuration
tables. Tax-ability Model itself refers to three tables:
T5UTE
T5UTM
T5UTY
1. The first step ‘Define tax authority model’ (table T5UTE)
is where we associate each tax authority with a two digit
model number. The model number is just an arbitrary two
digit number that was chosen at the time the system was
first setup. If a tax authority changes the way it taxes
earnings or deductions, then you would create a new tax
model for it, using the effective dates in T5UTE.
2. The second step is ‘Define taxability model’, or table
T5UTM. In this table we link each taxable wagetype to a tax
model. There are four aspects to this link – the resident,
work and unemployment taxation of the wagetype, and the
taxation for different groups of employees (the tax
modifier). The link to the wagetype is via processing class
71 – called the taxability class. For each taxability class
we specify if the wagetype is taxable for the tax authority
an employee lives in, works in, and for unemployment taxes.
These three settings can be customized per tax modifier. For
example, we may tax wages for every tax authority for
regular employees, but only tax wages for Federal for
expatriates. In that case, we put expatriates and regular
employees in different tax modifiers, and control the
assignment of wagetypes to tax authorities via table t5utm.
3. The third step is where we tell SAP which types of tax to
use for each row in t5utm. Table T5UTY (define tax type
combinations) is where we define codes to represent a set of
tax types. In t5utm, if a tax class is taxable for a
particular combination of resident, work, unemployment and
tax modifier, the system then gets the tax type combo value
and looks it up in T5UTY to see which types of tax to use.
This is how SAP knows which /3xx wagetypes it needs to
build. For example, tax type combo 06 would tell the system
to build wagetypes /303, /304, /305 and /306.
Is This Answer Correct ? | 3 Yes | 0 No |
Answer / ppatil007
Tax Models falls under "Tax Data Maintenance "
The Tax Model is where we define the taxability of wages in
SAP Payroll. The ‘model’ is a set of three SAP configuration
tables. Tax-ability Model itself refers to three tables:
T5UTE
T5UTM
T5UTY
1. The first step ‘Define tax authority model’ (table T5UTE)
is where we associate each tax authority with a two digit
model number. The model number is just an arbitrary two
digit number that was chosen at the time the system was
first setup. If a tax authority changes the way it taxes
earnings or deductions, then you would create a new tax
model for it, using the effective dates in T5UTE.
2. The second step is ‘Define taxability model’, or table
T5UTM. In this table we link each taxable wagetype to a tax
model. There are four aspects to this link – the resident,
work and unemployment taxation of the wagetype, and the
taxation for different groups of employees (the tax
modifier). The link to the wagetype is via processing class
71 – called the taxability class. For each taxability class
we specify if the wagetype is taxable for the tax authority
an employee lives in, works in, and for unemployment taxes.
These three settings can be customized per tax modifier. For
example, we may tax wages for every tax authority for
regular employees, but only tax wages for Federal for
expatriates. In that case, we put expatriates and regular
employees in different tax modifiers, and control the
assignment of wagetypes to tax authorities via table t5utm.
3. The third step is where we tell SAP which types of tax to
use for each row in t5utm. Table T5UTY (define tax type
combinations) is where we define codes to represent a set of
tax types. In t5utm, if a tax class is taxable for a
particular combination of resident, work, unemployment and
tax modifier, the system then gets the tax type combo value
and looks it up in T5UTY to see which types of tax to use.
This is how SAP knows which /3xx wagetypes it needs to
build. For example, tax type combo 06 would tell the system
to build wagetypes /303, /304, /305 and /306.
Is This Answer Correct ? | 2 Yes | 0 No |
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