Richard Cornelisse

Taxmarc™ Tax Engine

In Audit Defense, Benchmark, Business Strategy, EU development, Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, Technology on 11/02/2013 at 10:21 am

Taxmarc™ SAP solution2

Taxmarc™ – a virtual VAT manager – provides companies with a complete overview of all data relevant to determining the VAT liability for business transactions.

This enables tailor-made VAT determination of transactions.

Moreover, Taxmarc™ provides an automated tax control framework that encompasses real-time evaluation of tax compliance and the consistency and accuracy of the combination of the VAT data entered.

Hereby it offers an effective tool that facilitates efficient deployment of employees and optimal risk management regarding indirect tax.

For virtually every company the efficiency and accuracy of compliance with local VAT regulations depends entirely on the functionality of the underlying ERP system, such as SAP. Determining the VAT liability and recovery in these systems is only partly automated and is mostly done manually.

By drawing upon 30 parameters instead of the 4-8 parameters in standard SAP, Taxmarc™ enables – without extra interface – a fully automated VAT determination of all (chain) transactions in SAP.

The tool incorporates VAT relevant data of all (chain) transactions between legal entities in order to ensure the correct VAT determination.

SAP exclusively focuses on transactions within a single company; it only assesses the underlying individual transactions and fails to link the current transactions to the VAT results of previous transactions. As a consequence, companies with VAT registrations in different countries cannot automatically comply with all VAT obligations.

Extra ‘brain capacity’

The business models of internationally operating enterprises have radically changed over the last couple of years. As business practices go beyond national boundaries and sufficient harmonization of regulations in different countries is lacking, maintaining the VAT position is extremely complicated.

Without the right VAT regulations, regular ERP systems fail to process data correctly, risking incorrect calculation of VAT, failure to comply with local VAT obligations, and transactions that cannot be commercially executed”, Richard Cornelisse, Director Strategy & Sales of Taxmarc™ emphasizes.

“The standard functionality of SAP is insufficient for ensuring the correct VAT determination. In actual practice, these flaws in SAP are often patched up in order to keep the system running. Taxmarc™ basically creates a bypass in SAP, thereby building on the standard functionality and infrastructure of SAP, but we are adding extra ‘brain capacity’.”

Real-time fiscal monitoring

Taxmarc™ provides a Tax Control Framework integrated in SAP. This framework ensures that transactions that do not comply with tax laws are automatically blocked.

Beside the highly improved preventive controls regarding risk management, Taxmarc™ underpins more efficient business processes and increased productivity.

It enables a substantial reduction of the working hours and resources that are spent on the regular manual tax return process, as well as centralization of local compliance functions (Shared Services Centers).

No more interventions afterwards

Taxmarc™ has been implemented by multiple renowned multinational companies, including AkzoNobel, Sigma Aldrich, ASM International, Fujifilm and ExxonMobil.

“Our business model is extremely complex, especially with regard to VAT. We’re operating worldwide with many (chain) transactions that go across the borders and therefore we often have multiple VAT registrations per legal entity.

Using the standard settings in SAP, automatic VAT determination of individual transactions was not possible,

Taxmarc™ has enabled automatic VAT determination of all transactions for our company.

Taxmarc™ identifies real-time when certain transactions are not possible, for instance because a local VAT registration is missing.

Improbable and atypical results are immediately visible and can instantly be corrected, so corrections afterwards can be prevented.”

Client references are important and can be provided. It is your way to validate that we indeed keep our promise.

Taxmarc™ is investigated by a Big4 organization and is qualified as the best VAT quality solution for the complex business models of customers.

Functionality of Taxmarc™

The standard VAT functionality of SAP is far from optimal. Partly due to this reason SAP offers a certain degree of flexibility within the system, which enables users to apply adjustments in order to customize SAP for their organization.

Previously this was known as ‘user exit’ and nowadays as enhancement points or enhancement implementation.

It offers users the possibility to add functionality and that is exactly what is accomplished with the implementation of Taxmarc™.

Taxmarc™ enables, by drawing upon 30 parameters, – without extra interface – a fully automated VAT determination of all (chain) transactions in SAP.

Taxmarc™ incorporates VAT relevant data of all (chain) transactions between legal entities in order to ensure the correct VAT determination.

SAP exclusively focuses on transactions within a single company; it only assesses the underlying individual transactions and fails to link the current transactions to the VAT results of previous transactions.

As a consequence, companies with VAT registrations in different countries cannot automatically comply with all VAT obligations.

Real time assessment

Taxmarc™ ensures that VAT relevant information is collected and added on client level. This is the highest level within the hierarchy of SAP in which legal entities are defined. Taxmarc™ distinguishes itself from regular ERP systems like SAP as it incorporates source data from different databases of organizations.

The VAT relevant information is subsequently entered into a decision tree, which, based on real time data, determines the VAT treatment or blocks the transaction automatically when it cannot be categorized or validated.

Taxmarc™ operates on the basis of tables that can be time-dependent defined, which has the advantage that the structure of tax codes for fixing prices is also maintained when tax rates change.

Because of this, Taxmarc™ enables – in contrast to Native SAP and external VAT managers that operate through an interface – independently and on the basis of real-time data the VAT determination of complex chain transactions.

Moreover, an upgrade of SAP does not affect the functioning of Taxmarc™, neither for incoming, nor for outgoing invoices.

Taxmarc™ can be implemented in the different recent versions of SAP (R/3 and ECC).

  1. Taxmarc™ prevents that time-consuming manual processes outside of the system are necessary. The virtual VAT manager allows the following operations in SAP to be executed automatically – without extra interface:
  2. fully automated VAT determination of outgoing invoices (AR) on the basis of 30 parameters instead of the 4-8 parameters in standard SAP;
  3. fully automated VAT determination of all incoming invoices (AP);
  4. fully automated VAT determination of all chain transactions in SAP;
  5. an integrated Tax Control Framework ensures that transactions that fail to comply with fiscal requirements are automatically blocked. This makes a reliable procedure available to efficiently and effectively complete transactions in accordance with business objectives;
  6. the existing (optimized) tax code structure is also maintained in the future, which makes it no longer necessary to create new VAT codes when tax rates change.
  7. validation process of VAT numbers in SAP
  8. is currently running in more than 35 jurisdictions worldwide (including US).

Download Taxmarc™ Digital Flyer

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