How To Fix FX036 - Tax code & contains nondeductible section

SAP Error Message - Details

• Message type: E = Error

• Message class: FX - Distributed FI Application Messages

• Message number: 036

• Message text: Tax code & contains nondeductible section

What causes this issue?

The tax code &V1& you specified contains a portion not liable to
input tax deduction.

System Response

The item was not stored.

How to fix this error?

The distribution of the tax portion not liable to input tax
deduction to items of the external document is not possible at
present. Therefore, please choose another tax code.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message FX036 - Tax code & contains nondeductible section ?

  The SAP error message FX036 indicates that there is an issue with the tax code being used in a transaction, specifically that the tax code contains a nondeductible section. This typically occurs in the context of tax calculations, particularly in countries where certain taxes are not deductible for input tax purposes.
  Cause:
  
  Nondeductible Tax Code: The tax code being used has been defined in the system as nondeductible. This means that the tax amount associated with this code cannot be claimed back as input tax.
  Incorrect Configuration: The tax code may not be configured correctly in the system, leading to the error when trying to process transactions.
  Transaction Type: The type of transaction being processed may not be compatible with the tax code used, especially if it involves deductible and nondeductible components.
  
  Solution:
  
  
  Review Tax Code Configuration:
  
  Go to the transaction code OB40 (or the relevant configuration path) to check the configuration of the tax code in question.
  Ensure that the tax code is set up correctly and that it is appropriate for the type of transaction being processed.
  
  
  
  Change Tax Code:
  
  If the current tax code is not suitable for the transaction, consider changing it to a different tax code that allows for deductibility.
  Ensure that the new tax code is valid for the transaction type and complies with local tax regulations.
  
  
  
  Consult Tax Regulations:
  
  Review local tax regulations to understand which tax codes are deductible and which are not. This can help in selecting the correct tax code for future transactions.
  
  
  
  Check Transaction Details:
  
  Verify the details of the transaction to ensure that all relevant fields are filled out correctly and that the correct tax code is being applied.
  
  
  
  Consult with Finance/Tax Department:
  
  If unsure about the correct tax code to use, consult with your finance or tax department for guidance.
  
  
  
  Related Information:
  
  Transaction Codes: Familiarize yourself with relevant transaction codes such as FB60 (Invoice), FB70 (Customer Invoice), and FBL1N (Vendor Line Items) where tax codes are often applied.
  Tax Configuration: Understanding the configuration of tax codes in SAP is crucial. This includes knowing how to set up tax codes, define tax rates, and manage tax determination procedures.
  Documentation: Refer to SAP documentation or help files for detailed information on tax code configuration and management.
  
  By following these steps, you should be able to resolve the FX036 error and ensure that the correct tax codes are being used in your transactions.