Richard Cornelisse

Equip SAP with automated VAT Controls

In Audit Defense, EU development, 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, VAT automation on 22/07/2014 at 12:00 pm


Standard SAP VAT determination logic and functionality for VAT determination does not work for complex dynamic business models (e.g. Principal-Toller-Agent model) with for example multiple VAT registrations, pick up and drop shipments, chain transactions between legal entities (ABC / ABCD scenarios).

Tax logic should in those circumstance be based and generated on a higher SAP’s hierarchy: at client level combined with implementing the basic tax rules into the logic. Client level includes all the company codes working on the same SAP platform.

  • Taxmarc™ draws upon 30 parameters at this level to be able to fully automate the VAT determination of all (chain) transactions in SAP on real time data. Via enhancement implementation extra Taxmarc™ functionality is added to standard SAP (no interface or external software needed and low maintenance).
  • 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.

Integrated VAT Control Framework

Because the decision tree of Taxmarc™ is integrated in SAP as part of the Tax Control Framework, SAP is equipped with automated controls:

  • Real time evaluation of the consistency of the combination of the VAT data Taxmarc™ identifies real-time when certain transactions are not possible, for instance because a local VAT registration is missing
  • In the event of inconsistencies transactions are automatically blocked. The correct combination – incoterms, tax compliancy, customer/company VAT registration, export control – has to be entered via the Edit function in order for the transaction to proceed. If a transaction is classified as fiscally impossible, the internal tax function must take action, whereupon configuration occurs, such as the entry of a new VAT number
  • It is possible to allow transactions to proceed during these actions, if that is necessary from the company’s business perspective
  • Taxmarc™ keeps a logbook – Risk Register – of all identified inconsistencies. The internal tax function always has insight into the areas for attention through this logbook. This also allows companies to set the right priorities when measures are taken
  • The results are processes in VAT reports without manual interventions. The use of Excel sheets to submit tax return is in the past, as are the risks caused by manual interventions and VAT processes

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