If the aim of your organization is full VAT automation of AP and AR, it is important to have a clear understanding of your material risks at hand, and your lowest performing processes in order to define the functional specifications for a solution.
In our article “When is standard SAP (in) sufficient” we made the core weaknesses of Standard SAP visible using a case study.
We explained amongst others that for a correct VAT determination of a cross border chain transaction the VAT relevant data of company code A and B has to be linked real time as Standard SAP itself is only processing a transaction within one specific company code. That means a helicopter view is needed to make that happen.
This is only possible if tax logic is based and generated on a higher SAP’s hierarchy: 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.
Questions to ask before you commit
If you know the underlying weaknesses of SAP, your own indirect tax risk areas that exceed your company’s risk appetite and your underperforming processes, it is important to get a clear understanding whether or not solutions that are available in the market are actually closing the spotted gaps.
The following is a non-exhaustive list of questions that could be raised during tax software vendor selection. For readability we use ‘Solution’ to refer to the product of the respective tax software vendors.
Click to enlarge