Richard Cornelisse

Taxmarc™ Basic

In Audit Defense, Benchmark, Business Strategy, Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, SAP add on, SAP SLO renaming tax codes, System Landscape Optimization, Tax News, Technology, VAT automation, VAT planning on 02/08/2013 at 9:43 am

Taxmarc™ SAP solution2

Taxmarc™ Basic is a standard package of Taxmarc™ Tax Engine that uses native SAP functionality and contains an integrated Tax control Framework. Taxmarc™ Basic is specifically useful for companies that run medium complex business models.

Taxmarc™ Basic uses assumptions via pre-defined configuration, thus without a real-time reality check performed by Taxmarc™ of such. For those businesses that have a complex business model but do not need the full Taxmarc™ Tax Engine functionality, the Taxmarc™ Basic solution offers a VAT compliant determination solution.

Taxmarc™ Basic does not only address the shortcomings in standard SAP VAT determination, but also ensures control of VAT with the integrated VAT Control Framework in a transparent and easily maintainable way.

Taxmarc™ Basic is built on the proven Taxmarc™ platform and the de-scoped features from the full Taxmarc™ Tax Engine can be added at any point later on when additional budget becomes available or new requirements and controls are needed due to changes in VAT legislation and/or business models.

Introduction

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 much. This in contrast with the VAT rules and business models as these have changed significantly. 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) intercompany 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. As a result, businesses have to ensure that the VAT determination logic in the SAP systems is correct, easy to implement and remains VAT compliant.

Taxmarc™

Taxmarc™ Tax Engine integrates tax relevant data from multiple transactional data sources to determine the correct VAT in a consistent way. Taxmarc™ Basic uses assumptions via pre-defined configuration, thus without a real time reality check performed by Taxmarc™ of such.

For those businesses that have a complex business model but do not need the full Taxmarc™ Tax Engine functionality, the Taxmarc™ Basic solution offers a VAT compliant determination solution.

Taxmarc™ Basic does not only address the shortcomings in standard SAP VAT determination, but also ensures control of VAT with the integrated VAT control framework in a transparent and easily maintainable way. Compared to any other solution available in the market the features of Taxmarc™ Basic contribute considerable more in realizing indirect tax objectives.

An additional advantage is that when the proven platform of Taxmarc™ is implemented, the de-scoped features can be added at any point later on when additional budget becomes available or new requirements and controls are needed due to changes in VAT legislation and/or business models.

Taxmarc™ Basic features

Taxmarc™ Basic includes the following features:

  • VAT management cockpit (light version)
  • Standard SAP IMG (Implementation Guide) functionality to implement and customize the Taxmarc™ solution and enabling easy and cost efficient maintenance
  • Automated VAT determination based on available customer VAT registration (combined with tax control framework)
  • Smart VAT condition design – using a maximum of approximately 250 conditions per tax jurisdiction (low maintenance costs)
  • Automatic assignment of condition records/tax codes in case the company gets new VAT registration numbers (jurisdiction must already be available in Taxmarc™)
  • An integrated Tax Control Framework which ensures that transactions that fail to comply with fiscal requirements are automatically blocked (immediate resolving the non-compliance) or put in an emergency table (retrospective correction)
  • Automated VAT determination of: 1. Standard Triangulation, 2. VAT group scenarios, 3. Bonded/VAT warehouses, 4. Domestic Reverse charge, 5. Special VAT regions (i.e. Canary Island), 6. Plants abroad scenarios, 7. Intra EU and Export. 8. Supply of services (including VAT package 2010)
  • Automated sequential invoice numbers per Tax Jurisdiction
  • Automated and improved VAT code determination for EDI (iDoc) intercompany invoices
  • Required VAT data to comply with invoice requirements

Taxmarc Basic final

Return on Investment – after implementation Taxmarc™ Tax Engine

  • Less resources needed for indirect tax compliance process due to automation (excellent ROI)
  • Less commercial risks re vendors and customers because of  incorrect invoicing with cause effect a hidden factory: substantial time spent on corrections and monitoring (excellent ROI)
  • Reduction on time needed re maintenance and training resulting in lower overall costs (excellent ROI)
  • Reduction of unforeseen tax risks during audits (outcome lower assessments) and time needed for inhouse and/or external advisor to manage indirect tax risks that exceed companies’ risk appetite properly (excellent ROI)
  • Lower external advisory costs due to improved effective communication possibilities as stakeholders can be given access real time to relevant data by which wrong assumptions/rework/inefficiencies could be avoided (excellent ROI)
  • Real time blue print of business model available and accessable for continuous monitoring and planning re change management: new supply chain (model), centralization, outsourcing etc. (excellent ROI)
  • Optimized multidisciplinary (tax) planning via real time data: e.g. detailed visibility of intercompany transactions for transfer pricing, customs and VAT purposes (excellent ROI)
  • Efficient and effective Indirect Tax function: real time involvement on risk areas that matter by which future firefighting can be avoided (excellent ROI)

By Richard Cornelisse, Director Strategy & Sales van Taxmarc™

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