SAP VAT implementation and configuration

The KEY Group possesses practical experience and understands SAP's VAT possibilities, but also its limitations and thus has the know-how to free up resources, reduce manual activities and manage risks. We implement the VAT rules in SAP and are well equipped to enhance standard SAP where necessary for both the VAT determination logic of outgoing and incoming invoices and optimize VAT reporting.

Concerning the possibilities, we can express the wishes to the external SAP consultant in his language, and we can demonstrate how to achieve it in SAP.

For nearly every company, the accuracy and efficiency of local-country VAT compliance are almost entirely 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.

Errors in the basic VAT configuration in SAP can also carry consequences for an organization. Without the proper VAT rules, many systems are incapable of processing transaction information correctly, so that transactions may become blocked. That outcome has a significant impact on logistics processes, invoicing processes and financial processes.

Companies have to ensure that the VAT determination logic in the SAP systems is correct, easy to implement and remains also moving forward VAT compliant. In practice, specific functionality intended for the support of VAT objectives does often not get used - due either to reluctance (not within budget) or a lack of VAT SAP knowledge during design.

Client's objectives typically are:

  • To be ready in time and a need of an effective and efficient work process between tax function, IT function and its third-party consultants 

  • To optimize its VAT deduction and to automate this VAT process as much as possible in SAP

  • limit VAT risks and meet VAT reporting obligations (e.g. reverse charge mechanism to avoid non VAT compliance)

  • To automate VAT processes via enhancing the SAP 'as is' functionality where possible

  • Set up processes and controls when VAT automation is not feasible

  • To test new SAP functionality prior to go-live (sandbox)

What do we offer?

There are two distinct phases for the VAT system implementation, the Solution Design (phase 1) and the 'System Implementation (phase 2). This scope of works identifies in detail the requirements for phase 1 and phase 2.

Phase 1 - Design a Business Blueprint outlining the implementation of VAT in SAP and supporting systems. Develop this blueprint through understanding and incorporating the VAT requirements, Client's VAT strategy, detailed business requirements and current system landscape.

Phase 2 - Implement the blueprint in conjunction with the Client's IT team, including testing, training, documentation and go-live support. Develop the appropriate reporting for compliance with VAT requirements between client's SAP system and government authorities.

Flyer SAP VAT implementation

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