The objective of introducing e-invoicing data request is to combat VAT fraud.

The tax authorities can real-time audit the e-invoicing data submitted and verify whether the invoices are meeting the tax requirements. For example, the Italian tax authorities will check the data submitted for FatturaPA to verify:

  • the name of the file transmitted and that it is not a duplicate;

  • that the document is intact;

  • the authenticity of the signature certificate;

  • the conformity of the invoice format;

  • the validity of the invoice content;

  • that the invoice is unique;

  • that the invoice is deliverable. 

After the soft landing period, the taxpayer will face penalties when it fails to meet the mandatory requirements. The penalty range for failing to issue an invoice or failing to meet the XML requirements will be 90% to 180% of the VAT amount not correctly documented.

The penalty range for not receiving the purchase invoice according to the format requirements through the use of SDI can be equal to 100% of the VAT amount not documented. Purchase invoices have to be submitted in Italy, and for specific companies in Spain when dealing with government procurement or certain subcontractors.

The VAT determination logic of sales invoices is usually automated in SAP. That does not apply to purchase invoices. In practice, many of the incoming invoices are still processed manually. AP clerks, who are not VAT experts, have to select the correct tax codes and thus determine the VAT treatment and reporting.

Inbound invoices are therefore a high VAT risk area and a critical item to assess during a real-time tax audit.

What do we offer?

We have developed an SAP add-on that automates the VAT determination of incoming invoices. The advantage is that the solution supports invoice processing without the necessity of changing the purchase orders retrospectively for VAT reasons.

What is an SAP add-on?

An SAP add-on enhances standard SAP itself.

Add-on components are extra functionalities that do not come with the main SAP product. Different organizations have different requirements. SAP has recognized that and facilitated that additional functionality can be added and that such functionality as a component can be integrated with standard SAP.

An add-on is permitted by SAP – the code 'ABAP' is written and transported where SAP allows it. That means these add-on components sit above the core and access the same dictionary objects or repository objects and perform the required functionality. It contains custom authorization objects according to SAP standards.

SAP add-on solutions are, therefore, without an external interface or external software and can be implemented with minor or no SAP impact in any other area. An SAP add-on does not change the programming code of SAP. As a result, SAP upgrades do not lead to any problems, and maintenance is straightforward.

Additional functionality is added to standard SAP:

'User-friendly, manageable, scalable, extendable, upgradeable, reliable, sustainable, SAP integrated, VAT compliant, audit trail'


Take aways 

Formal support and active involvement of senior management

Optimum process improvement or business transformations will not likely be realized by the sum of individual independent efforts.The risk is that individually everybody knows what needs to be done within his or her own area of expertise, but what is lacking is overall direction and thus progress.

Anticipate what users would want

We combine technical knowledge with industry understanding and knowhow of technologically advanced tools and methodologies available in the market or developed by ourselves.

What do we like to achieve

  • Focus on tax processes that could be improved
    • Manual process: same data requests are made by different stakeholders
  • As Is assessment
  • Anticipate future changes and the data needed
    • What are tax trends?
    • What is happening locally and what should be considered across jurisdictions where you operate?
    • Anticipate new stakeholders and their data needs or requests (internal and external)
  • Define scope and actions for short, mid and long term
  • Write business case for change
  • Realize sponsorship for implementation

‘As is’ assessment, actions and business case

  • What tax data is requested and by whom?
  • What tax process can be improved and what can be automated?
    • CIT, VAT, tax data warehouse
  • What is the Return on Investment?
    • Hard saving: process improvement
    • Meeting (new) tax requirement
  • What systems are in use: SAP, Oracle, etc
    • By which entities?
  • How many end-use computing tools (e.g. excel spreadsheet) do we have?
  • How do we avoid an ad-hoc solution?
    • Understand the bigger picture
    • Real problem and not the symptom

Risk and reward

Technology-related tax risk: understand and address the potential harms and benefits of (new) technology.

Technology tools & systems integration

Ascertaining proper IT support for ensuring efficient, timely and reliable reporting.

Change and project management

VAT should be considered in every aspect of the process, from concept through completion and beyond. Managing by design — looking at any process or transaction from end to end and factoring in all the requirements and controls essential to designing and optimizing a compliant VAT process.

Effective communication and teaming

We speak the language of the business and IT and no translation is needed.

Set up a project plan

  • Set up a project charter that will take effect preferable during feasibility but ultimately during design
  • Write a business case and problem statement
  • Define scope of the project
  • Define objectives and goals of the project
  • Involve stakeholders and define priorities
  • Set measurable milestones
  • Ensure that the right sponsors provide buy-in.
  • Identify (project) risks and how to manage them
  • Jointly validate and refine the project plan and develop a roadmap to success
  • Hold regular meeting to track progress of the various work streams