VAT Numbers Check A Top 10 Risk Area?

5 years 10 months ago - 5 years 10 months ago #26 by rico
See Section Validation Process Of VAT Numbers In SAP

An important control measure in terms of material indirect tax risks is checking whether the 0% rate is correctly being applied. A prerequisite for the application of the 0% rate for cross-border transactions within the European Union is a valid VAT number of the client.

The valid VAT number must also be mentioned on the invoice. Adequate monitoring of this is crucial to eliminating risks as much as possible.

The number of erroneous VAT numbers is close to 25%. From a VAT perspective this implies material risks that exceed every risk tolerance (0 percent, client acceptance with regard to preventing VAT fraud).
Validation of VAT numbers

In native SAP is it possible to check the syntax – the format of the VAT number, including the number of positions. However, it is not possible to check whether the VAT number is valid. To this end, the European Commission has provided an online database, VAT Information Exchange System (VIES) for the validation of VAT numbers.

Standard SAP does not have an interface with the VIES database. In practice, it appears that 5 to 25 percent of the VAT numbers is incorrect or invalid during various checks VAT numbers through data analysis exercises for a clients.

What IT tools are available in the market to perform such a check in the most efficient en effective way?

Richard Cornelisse

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