How To Fix FDC_POSTING_001038 - Do not use tax codes for deferred taxes

SAP Error Message - Details

• Message type: E = Error

• Message class: FDC_POSTING_001 - FI Postings

• Message number: 038

• Message text: Do not use tax codes for deferred taxes

Self-Explanatory Message

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Smart SAP Assistant

• What is the cause and solution for SAP error message FDC_POSTING_001038 - Do not use tax codes for deferred taxes ?

  The SAP error message FDC_POSTING_001038 ("Do not use tax codes for deferred taxes") typically occurs when there is an attempt to post a transaction that involves deferred taxes using a tax code that is not appropriate for such transactions. Deferred taxes are usually related to timing differences between accounting and tax reporting, and they should be handled differently than regular tax codes.
  Cause:
  
  Incorrect Tax Code Usage: The error is triggered when a tax code that is meant for regular transactions is applied to a deferred tax posting.
  Configuration Issues: The tax codes in the system may not be properly configured to distinguish between regular taxes and deferred taxes.
  Posting Document Type: The document type being used for the posting may not be set up to handle deferred taxes correctly.
  
  Solution:
  
  Review Tax Code: Ensure that the tax code being used is appropriate for deferred tax postings. You may need to use a specific tax code designated for deferred taxes.
  Check Configuration: 
  
  Go to the configuration settings in SAP (Transaction Code: SPRO).
  Navigate to Financial Accounting (New) > Tax on Sales/Purchases > Basic Settings > Check Tax Codes.
  Verify that the tax codes are correctly set up and that there are separate codes for deferred taxes if necessary.
  
  
  Adjust Posting Document: If the document type is not set up to handle deferred taxes, you may need to adjust the document type settings or use a different document type that allows for deferred tax postings.
  Consult Documentation: Review SAP documentation or consult with your SAP support team for specific guidelines on handling deferred taxes in your version of SAP.
  
  Related Information:
  
  Deferred Taxes: These are taxes that are accrued but not yet paid, often due to timing differences in recognizing income and expenses for accounting versus tax purposes.
  Tax Code Configuration: Proper configuration of tax codes is crucial for accurate financial reporting and compliance with tax regulations.
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide additional guidance on handling deferred taxes.
  
  If the issue persists after following these steps, it may be beneficial to engage with your SAP support team or a consultant who specializes in SAP Financial Accounting for further assistance.