SAP MM TAX CONFIGURATION

1.     Material master configuration (MM)
IMG Path: Materials Management>Purchasing>Taxes>
Set tax indicator for material
Transaction: OMKK
Table: TMKM1
The A/P material tax classification indicator is used as a key to
automatically determine the tax code within purchasing. Multiple tax
classifications may need to be set up for special tax rules and
regulations based on material. These tax classification indicators are
user defined, and point to user defined tax codes (see 10.5). For
example, tax classification 0 could represent an exempt material or
service which points to a tax code I0. Tax classification 1 may
represent a standard product which points to a tax code I1. Tax
classification 2 represents a service which points to a tax code I2. Tax
classification 3 represents a rental/lease that points to a tax code
defined as I3. Tax classification 4 points to a tax code U1 that
represents A/P consumer use tax. Tax classification 5 points to a tax
code I4 that represents a Taxware product code of 52000 for insurance.
Tax classification 6 points to a tax code I5 that represents a user
defined product code 9937299.
2. Define tax classification indicators for plant (MM)
IMG Path: Materials Management>Purchasing>Taxes>
Set tax indicator for plant

 Set tax indicator for plant
Transaction: OMKM
Table: TMKW1
Define the MM plant tax classification indicators.
Customizing Master Data Tax Indicators (MM)
3. Assign tax classification indicators to plant (MM)
IMG Path: Materials Management>Purchasing>Taxes>
Assign tax indicators for plants
Transaction: OMKN
Table: T001W
Assign U.S. plants a tax classification indicator.
Please note that this step is not mandatory. This step is only necessary if plant will be used to automatically determine the tax code on MM documents.
4. Define tax classification indicators for account assignment (MM)
IMG Path: Materials Management>Purchasing>Taxes>
Set tax indicator for account assignment
Transaction: OMKL
Table: TMKK1
Define the MM account assignment tax classification indicators.
5. Assign tax classification indicators for account
assignments (MM)
IMG Path: Materials Management>Purchasing>Taxes>

Assign tax indicators for account assignments
Transaction: OMKO
Table: T163KS
Assign account assignments a tax classification indicator.
Please note that this step is not mandatory. This step is only necessary  if account assignments will be used to automatically determine the tax code on MM documents.