C_TS4FI Financial Accounting Practice Question
A financial accountant at a company using SAP S/4HANA needs to post a vendor invoice that includes a withholding tax amount. The company has activated extended withholding tax. The accountant creates the invoice with transaction code MIRO and expects the system to automatically calculate and post the withholding tax. However, upon simulation, no withholding tax is calculated. Which of the following is the most likely reason for this behavior?
⚠ Common exam trap
The trap here is assuming that activating withholding tax in Customizing is sufficient, overlooking the need to maintain the tax type and code on each vendor master record.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The vendor master record does not have the withholding tax type and code maintained in the company code segment.
Withholding tax calculation during vendor invoice posting relies on the vendor master record containing the correct withholding tax type and code in the company code segment. Without this, the system cannot determine the applicable tax. While Customizing activation is necessary, it is a global setting and would affect all vendors, making a vendor-specific omission the most plausible cause in this scenario.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
The withholding tax code is not maintained in the company code's payment terms configuration.
Why it's wrong here
Payment terms determine due dates and cash discount periods; they do not control withholding tax calculation. Withholding tax codes are assigned to vendors, not to payment terms. Configuring payment terms with withholding tax codes is not a standard practice and would not resolve the issue. Therefore, this option is incorrect.
- ✗
The invoice item does not have a tax code assigned, so the system cannot determine the withholding tax base amount.
Why it's wrong here
In extended withholding tax, the withholding tax base is typically the gross amount or net amount depending on configuration, and it is derived from the invoice line item amount. A tax code is used for input tax calculation, not for withholding tax base. Even without a tax code, withholding tax can be calculated if the vendor master is set up correctly. So this is not the primary reason.
- ✓
The vendor master record does not have the withholding tax type and code maintained in the company code segment.
Why this is correct
For extended withholding tax to be calculated during invoice posting, the vendor master record must have the withholding tax type and withholding tax code assigned in the company code segment. Without this configuration, the system does not know which tax type and rate to apply. This is a common oversight when setting up new vendors or when migrating from classic withholding tax.
- ✗
The withholding tax type is not activated in the relevant company code in Customizing.
Why it's wrong here
While activating the withholding tax type in Customizing is necessary, it is a broader setting that applies to all vendors. If the type were not activated, no vendor would have withholding tax calculated. The scenario implies that other vendors might work correctly, so the issue is more likely vendor-specific. Thus, this is less likely than a missing vendor master configuration.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official SAP exam blueprint
This C_TS4FI practice question is part of Courseiva's free SAP certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the C_TS4FI exam.