Richard Cornelisse

Best SAP add on solution for VAT for a reason

In Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, SAP add on, SAP add on for VAT, SAP for VAT, SAP implementation, SAP review, SAP SLO renaming tax codes, System Landscape Optimization, VAT automation, VAT for SAP, VAT planning on 25/09/2014 at 12:34 pm

“It really takes a maximum of only 4 extra SAP tables to get our SAP add-on solution(s) up and running.  Other Add-on providers are trying to replicate our work.  A replication might be in practice cheaper than the original, however if quality service is the main driver where it relates to the company’s heart of its organization (its ERP system) and meeting a company’s strict IT policy is essential than such a bargain with the only effort of trying to replicate other people’s work without understanding the entire concept can backfire. Our add-on is in production for many years at listed multi billion Euro companies and client references are available. It is all about achieving client satisfaction for also the long run.”

In analogy with a car, we have tuned up standard SAP (i.e. given it extra brain power) to realize that extra indirect tax performance. The result is that the VAT treatment of all incoming and outgoing invoices is automatically determined for also the most complex transactions. In fact you have a SAP built in designated driver that makes that happen.

Even important is that you keep on driving safely. It therefore includes all the necessary safety features such as an integrated Tax Control Framework that stops the car or shows a RED light in an emergency table when danger is ahead.

Do you prefer a SUV instead of a supercar? That is possible as our features can be deselected and still added at a later stage. We are aware that not everybody needs a supercar immediately.

During Big4 software vendor selections Taxmarc™ has been selected various times as the ‘best’ SAP Add-on solution. Our Add-on is in production for many years at listed multi billion Euro companies.

A selection of our premium features:

  • Automated VAT determination of Inter-company and 3rd Party drop shipment chain transactions with 4 parties in the chain
  • Time stamped tax code design (never run out of tax codes)
  • Integrated Taxmarc™ decision tree in SAP as part of the Tax Control Framework with more automated real-time controls on transactions for VAT compliancy
  • In chain transactions with non EU countries the correct VAT treatment depends on which party is acting as importer or exporter of records. Additional data are used to either default the party acting as importer or exporter of records or define this at sales order level
  • Add-on checks the validity of VAT registration numbers against the European VIES database.
  • Data Analytics on the relevant VAT data for all sales transactions which provides a ‘Continuous Controls Monitoring tool
  • VAT management cockpit to monitor and maintain the VAT in a user friendly and cost efficient way.
  • VAT technical configurations and set-up options are grouped together in the standard SAP IMG

“The Add-on solution is also operational for non EU countries such as China, Chile, Israel, Japan, Malaysia, Mexico, Norway, Russia, Singapore, South Korea, Switzerland, Taiwan and the US?”

Besides above features our premium includes as well all our features of our standard package:

Standard package of Taxmarc™ tabel

Overview core features and its added value

  • Solution type: SAP Add-on solution
  • Technology used: SAP ABAP

2

Taxmarc™ SAP solution2

Phenix Consulting: new solutions to optimize SAP

In Benchmark, business intelligence, Business Strategy, cash management, financial audit, Indirect Tax Strategic Plan, internal audit, liquidity management, Phenix Consulting, Processes and Controls, SAP add on, SAP add on for VAT, SAP for VAT, SAP implementation, SAP review, System Landscape Optimization, Technology, VAT for SAP on 24/09/2014 at 8:08 am

1. Phenix Consulting

Phenix Consulting is a company led by 6 partners and a team of around 30 employees who have strong international business and working experience in SAP environments.

Our main business focus is to optimize SAP from a tax, financial and control perspective. 

We are located in Amsterdam, Berlin, Cologne.

Products: Tax – standard audit file for tax purposes (SAF-T)

Based on the OECD requirements we developed an ERP system independent external solution that can combine data from different sources (i.e. SAP, Oracle and Sabrix).

Our solution provides a lean and flexible solution which extracts relevant data from any system automatically and transforms it into the country specific required XML format.

The output will be a correct SAFT-XML file.

Products: Tax – e-Bilanz-cockpit for Germany

Phenix Consulting e-Bilanz Cockpit is an easy-to-use solution for German e-tax balance requirements. It is fully integrated into SAP, easily accessible and generic interface risks are avoided. One central screen with all functions at your fingertips.

The cockpit’s ten steps process provides a simple guideline to create and submit mandatory filings. The cockpit is user-friendly due to well-designed features, such as the drag & drop functionality for mapping the company’s chart of accounts to the required fiscal taxonomy.

The cockpit has an interface to non-SAP systems to enable upload of financial data from subsidiaries not running on SAP.

All the group’s tax balances can be created in and filed from one central SAP system via an audit-proof process. Any tax adjustments made in the cockpit does not influence SAP data and these adjustment could be tracked via a separate document journal.

Similar to SAP all entries and changes are recorded (full audit trail), ensuring that the cockpit meets high standards of IT and process security.

3 Phenix Consulting

Services: SAP implementation and optimization

All of our consultants have a proven track record in implementing and optimizing SAP ERP at a broad variety of customers and industries.

Our service offering ranges from the functional improvement of existing SAP installations to full life-cycle implementation projects. Beside our business- and IT-expertise we also provide project management and development services.

Our distinguishing capabilities

  • We understand that no SAP implementation is alike – we recommend and implement the functionalities that best fit to your size, complexity and industry
  • We help you get the maximum out of SAP: we bring in best practice approaches and combine them with your individual requirements
  • For international rollouts we are best familiar with the local requirements even of highly specific countries such as Brazil, Russia or China
  • Our team of experienced consultants takes ownership and responsibility and pushes your project to success
  • We rely on a proven set of structured methods and tools that we can bring into the project

Other services in this line: Workflow optimization, Business Intelligence, Development Support

Services: Finance – cash management & liquidity management

Cash and liquidity management is becoming more and more crucial to each organization. Despite, many companies do not take full advantage of the system’s capabilities and run their processes and reporting on a semi-automated, or even spreadsheet based approach.

SAP offers an entire toolkit of functions related to cash-management topics that are branded as ‘financial supply chain management’:

  • Liquidity reporting and planning (cash position, liquidity forecast, liquidity planner, BO BPC)
  • Optimization of available cash (inhouse-cash)
  • Facilitation and automization of cash related transactions (electronic bank statement, bank communications Management)

To cover more specific requirements like loans management or hedge accounting SAP’s treasury and risk management solution (SAP TRM) is available.

Most of these functions can be implemented independently from each other. This brings a huge flexibility in terms what brings most benefits to an organization within reasonable time and budget.

Our recommended approach is to start with functional small packages (e.g. cash position, bank statement) and – once proven successful – implement subsequent add-ons.

Our distinguishing capabilities

  • We are not functionality-driven but instead develop and implement a sound roadmap towards an integrated cash- and liquidity management
  • We offer add-on products (e.g. EBS-Cockpit) to further drive efficiency in your cash processes
  • We are also best familiar with SAP’s treasury solutions

Other services in this line: Consolidation optimization, Intercompany optimization

Services: Tax – SAP implementation for VAT / GST

For nearly every company, the accuracy and efficiency of local-country VAT compliance is nearly completely dependent on the functionality of the underlying ERP system.

Operational malfunctions in a system that is used to manage VAT compliance can lead to substantial financial risks.

There are countless examples of the mismatching of VAT treatment of purchases and sales in chain transactions, double payments of VAT and “forgotten” manual adjustments to the VAT filing, all attributable to shortcomings in SAP’s automated VAT solution.

SAP VAT logic

The SAP VAT determination logic was developed a long time ago (1980’s) and except for the “plants abroad” logic SAP’s VAT determination logic has not changed.

This in contrast with the VAT rules and business models. A brief overview of some of these changes:

  • the EU VAT laws have been more harmonized (EU VAT directive)
  • substantial increase of cross border transactions
  • businesses are registered for VAT in multiple countries
  • businesses are operating more often under complicated principal structures
  • increased number of (integrated) inter-company and supply chain transactions

As a result, there has been a huge increase in the complexity for the SAP system to meet all VAT requirements, which leads to necessary modifications to the standard SAP VAT for many multinational businesses.

Modifications of already very complicated SAP systems create a risk for maintenance and half-hearted solutions. At the same time, tax authorities across the world both sharpen their focus on non-compliant taxpayers and increase their focus on reviewing ERP systems as a source of VAT compliance risks.

Businesses have to ensure that the VAT determination logic in the SAP systems is correct, easy to implement and remains VAT compliant.

Our distinguishing capabilities

Phenix Consulting possesses practical experience and understands SAP’s possibilities, but also its limitations and thus the capability to free up resources, reduce manual activities and manage risks.

With respect to the possibilities, we can express the wishes to the external SAP consultant in his own language and we can demonstrate how these can actually be achieved in SAP. In practice, we note that certain functionality intended for the support of indirect tax objectives does not get used – due either to reluctance (not within budget) or to a lack of knowledge in this area.

From an indirect tax standpoint, the realization that you are part of a larger team in which each of the participants have other priorities is key. This means that effective communication and agreements are essential.

Instructions must be understandable and so short and compact that they can also be used as a reference framework and material for the tests. In practice, Excel is often used to record all transactions and to indicate what the VAT treatment, etc. We developed our own normative decision trees for effective communication resulting in effective workforce and less risks.

Other services in this line: SAP review,Tax Performance Consultancy

Services: Risk and Control – GRC, security and authorization management

Management of information security becomes more and more critical because of increasing regulatory requirements. A key to ensure adequate information security is the design, implementation and ongoing operation of the authorization concept in SAP.

Management and continuous monitoring of authorizations can be carried out in SAP directly or tool-based.

Our distinguishing capabilities

  • We approach information security in a combined approach bringing together our long-year audit experience and our technical excellence in setting up authorizations in SAP
  • We provide our own tools to quickly assess the quality of security and authorizations in your SAP system
  • Because we know the market well we can assist our client finding the right approach and tools to ensure sustainable compliance

Other services in this line: Internal Audit Optimization, Financial Audit Optimization

Contacts

Netherlands

Richard Cornelisse
Managing Director, Phenix Consulting
E-mail: richard.cornelisse@phenix-consulting.nl
http://www.phenix-consulting.nl

Germany

Guido Czampiel
Managing Director, Phenix Consulting
E-mail: guido.czampiel@phenix-consulting.nl
http://www.phenix-consulting.nl

2 Phenix Consulting

SAP add-on: never run out of tax codes

In Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, SAP add on, SAP add on for VAT, SAP for VAT, SAP SLO renaming tax codes, System Landscape Optimization, Tax News, Technology, VAT automation on 15/09/2014 at 4:02 am

Multi billion Euro companies operate with Taxmarc™ Tax Code Solution already for many years

Many SAP clients have multiple VAT registrations (in 10+ countries), principal structures, complex business model for sales of goods, cross-border, drop shipment, shortage tax codes (use of 900 + SAP tax codes) and centralized functions.

These organizations will face difficulties to solve the shortages of tax codes issue causing not only tax compliance, but commercial issues as well.

SAP developed a CDP solution on a 4 digit tax code. We understand that this SAP 4 digit tax code solution will not be rolled out to other customers because of risks around the stability and robustness of the solution.

This means that multinational companies still have limited options when facing issues with the limited number of available tax codes.

Alternative market solutions

  • Use the special characters ($,/,\,& etc.) for the tax code – even with the extended number of tax codes some companies will be running out of available tax codes and tax codes with these special characters are not user friendly to work with.
  • Purchase external tax engine – besides high purchase and maintenance costs as external interface have to be used for certain clients it is in conflict with own IT policy as use of standard SAP is preferred
  • Renaming of tax codes exercise (SLO projects) – downside is that in the future due to global VAT change increases a company will face shortages again

How can above downsides be avoided?

Taxmarc™ has developed – an integrated SAP solution that uses a time stamped rates for tax codes. As a result the tax code structure will always remain the same. The advantage is that SAP tax codes structure does no longer require changes and that maintenance costs and involvement of IT is reduced significantly.

Business case

A single VAT rate change could take (set up, transports across the SAP landscape and test cycles prior to production) about 200 – 300 hours. After implementation this is reduced to 2-3 hours and in order to calculate hard savings the surplus has to be multiplied by the amount of VAT rate changes expected.

How long does this process take within your organization and what will be the amount of annual saving (i.e. Return on Investment period)?

Proven solution: all our Taxmarc™ solutions are ‘implemented’, ‘tested’ and ‘in production’ for many years. This product have been implemented by several listed multinationals and are our client reference for Q&A. One customer has an annual revenue of approximately $36 billion and operations in more than 80 countries.

The solution also covers the important iDoc processes within this type of business with many intercompany transactions.

benefits tax codes

Renaming exercise of tax codes via System Landscape Optimization

One of SAP’s offerings are SLO (System Landscape Optimization) projects. For indirect tax that could mean a renaming exercise of tax codes – SLO renaming project – to set up a more logical tax code structure in which the different tax categories in each country will have the same meaning.

The result should be: a logical grouping of the various VAT tax codes in all countries. Such logical re-design of the tax code structure allows centralization of functions regarding indirect tax compliance in Shared Services Centers, as well as implementing control measures in an efficient and effective way.

This leads to substantial cost savings and improved indirect tax risk management.

The objectives of SLO projects are:

  • Align organizational structures and processes at the system level to meet the needs of corporate restructuring
  • Align with best practices and IT strategies to realize data harmonization and process optimization
  • Reduce IT complexity and centralize disparate IT solutions

SAP’s approach

The SAP approach for SLO projects regarding the tax code structure is not the most effective and efficient way. In order to keep the historical audit trail, the old active tax codes are duplicated and renamed often with the use of special characters ($,/,\,& etc.).

That causes not only an increase in tax codes but as well a potential shortage of tax codes when in the future country specific tax procedures are used.

As the company’s objective is a logical tax code structure, the use of these special characters ($,/,\,& etc.) does not meet that objective when investigation of historical audit trail is needed (e.g during a tax audit).

Our Taxmarc ™ approach

Taxmarc™ uses a different approach to perform such SLO renaming exercise of tax codes.
In our method, for the old active tax codes no new tax codes have to be set up as this will also follow the new tax code logic.

That means the renaming is no longer causing an extra increase of tax codes and that both ‘old active tax codes’ as new ‘renamed tax codes’ will follow the same logic and use of special characters ($,/,\,& etc.) is avoided.

Taxmarc ™ Time Stamped designed Tax Codes

In addition to such SLO renaming project, Taxmarc™ has also developed as describes above  a separate solution: Time Stamped designed Tax Codes. That is beneficial when a company would like to keep the current logic also in case of new VAT rate changes.

Downside of the SAP SLO renaming tax codes is that in the future due to global VAT rate changes the overall designed logic will no longer apply in all cases and could in certain cases cause a risk of tax code shortages.

The advantage of this ‘Time Stamped’ solution is also that such a VAT rate change can be implemented beforehand, takes no longer than 2 hours max to set up and has thus a quick Return on Investment.

Taxmarc™ SAP solution2

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