How To Fix FF725 - Tax code contains more than two tax percentage rates

SAP Error Message - Details

• Message type: E = Error

• Message class: FF - FI Function Module Messages

• Message number: 725

• Message text: Tax code contains more than two tax percentage rates

What causes this issue?

The used tax code contains more than two tax percentages. However,
the function "Tax classification in deductible and nondeductible
portion" cannot be carried out here.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Please use another tax code, which only contains deductible and
nondeductible tax.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message FF725 - Tax code contains more than two tax percentage rates ?

  The SAP error message FF725 indicates that the tax code you are trying to use contains more than two tax percentage rates. This typically occurs in scenarios where multiple tax rates are defined for a single tax code, which is not allowed in certain configurations of SAP.
  Cause:
  
  Multiple Tax Rates: The tax code in question has been configured with more than two different tax rates. This can happen if the tax code is set up incorrectly in the system or if there are changes in tax regulations that require multiple rates.
  Incorrect Configuration: The tax code may have been incorrectly defined in the system, leading to the inclusion of multiple rates.
  Data Entry Error: During the creation or modification of the tax code, an error may have occurred, resulting in the inclusion of multiple rates.
  
  Solution:
  
  
  Review Tax Code Configuration:
  
  Go to the transaction code OBYZ (or OB40) to review the tax code configuration.
  Check the tax code settings to ensure that it only contains two tax rates. If there are more, you will need to modify the tax code to comply with the requirement.
  
  
  
  Modify Tax Code:
  
  If the tax code is indeed set up with more than two rates, you will need to either:
  
  Remove the additional rates, or
  Create a new tax code that correctly reflects the required tax rates.
  
  
  
  
  
  Consult with Tax Authorities:
  
  If the multiple rates are due to changes in tax legislation, consult with your tax advisor or local tax authority to ensure compliance and determine the correct tax code setup.
  
  
  
  Testing:
  
  After making changes, perform a test transaction to ensure that the error no longer occurs and that the tax calculations are correct.
  
  
  
  Related Information:
  
  Tax Code Structure: In SAP, tax codes are typically structured to allow for two rates: one for standard tax and one for reduced tax. If your business scenario requires more than two rates, consider using different tax codes for different rates.
  Documentation: Always refer to SAP documentation or your organization's SAP guidelines for tax code setup to ensure compliance with local tax regulations.
  Transaction Codes: Familiarize yourself with relevant transaction codes such as:
  
  OBYZ: Maintain tax codes
  OB40: Define tax codes for sales and purchases
  FB60/FB70: For entering vendor/customer invoices where the error might occur.
  
  
  
  By following these steps, you should be able to resolve the FF725 error and ensure that your tax codes are correctly configured in SAP.