How To Fix O1220 - If material is external, taxes have to be external too.

SAP Error Message - Details

• Message type: E = Error

• Message class: O1 - IS-Oil : Message pool exchanges

• Message number: 220

• Message text: If material is external, taxes have to be external too.

What causes this issue?

You defined the material to be posted externally but the taxes to be
posted internally.

System Response

Error

How to fix this error?

Check your entries and define the taxes to be posted externally or the
material to be posted internally.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message O1220 - If material is external, taxes have to be external too. ?

  The SAP error message O1220, which states "If material is external, taxes have to be external too," typically occurs in the context of procurement and inventory management when dealing with materials that are classified as external (i.e., materials that are procured from outside the organization).
  Cause:
  This error arises when there is a mismatch between the tax settings for the material and the tax settings for the procurement process. Specifically, it indicates that the system expects the tax type for an external material to be set as "external" (i.e., taxes that are applied to goods purchased from outside the organization), but it has detected that the tax type is set differently (e.g., as "internal" or not set at all).
  Solution:
  To resolve this error, you can take the following steps:
  
  
  Check Material Master Data:
  
  Go to the material master record for the affected material (transaction code MM03).
  Check the tax classification in the accounting view. Ensure that the tax category is set correctly for external procurement.
  
  
  
  Review Purchase Order:
  
  If the error occurs during the creation of a purchase order (transaction code ME21N), check the purchase order item details.
  Ensure that the tax code is set correctly in the purchase order. It should match the tax settings for external materials.
  
  
  
  Tax Configuration:
  
  Review the tax configuration in the system (transaction code OB40 for tax codes).
  Ensure that the tax codes used for external materials are correctly defined and that they are marked as external.
  
  
  
  Vendor Master Data:
  
  Check the vendor master data (transaction code XK03) to ensure that the tax information is correctly maintained for the vendor from whom you are procuring the material.
  
  
  
  Consult with Finance/Tax Team:
  
  If you are unsure about the correct tax settings, consult with your finance or tax team to ensure compliance with local tax regulations.
  
  
  
  Testing:
  
  After making the necessary changes, try to create or process the purchase order again to see if the error persists.
  
  
  
  Related Information:
  
  Tax Codes: Understand the difference between internal and external tax codes in your SAP system.
  Material Types: Be aware of how different material types (e.g., raw materials, finished goods) may have different tax implications.
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide additional guidance.
  Documentation: Review SAP documentation or training materials related to procurement and tax handling in SAP.
  
  By following these steps, you should be able to resolve the O1220 error and ensure that your procurement processes run smoothly.