Shortage of Tax Codes Eliminated In SAP
Taxmarc™ Tax Code Solution offers a new design for tax codes in SAP that resolves limitations of standard SAP, without changing the standard functionality of SAP.
By using Taxmarc™ Tax Code Solution no new VAT codes in SAP are required when a VAT rate changes. Only the effective VAT rate needs to be changed in SAP.
The risk of a shortage of tax codes is eliminated and the name and description of a tax code in SAP will always remain the same.
Background
The Taxmarc™ Tax Code Solution provides companies with a logical fixed tax code structure in which the different tax categories in each country have the same designation. This results in having the same logic for the categorization of various VAT results in all countries.
This logical design of the tax code structure allows centralization of functions regarding indirect tax compliance in Shared Services Centers, as well as the taking of control measures in an efficient and effective way. This leads to substantial cost savings.
In many countries around the world the VAT revenues make up an important part of the total revenues of the government. Combined with the financial crisis and the need to reduce the budget deficits, VAT rates are changed frequently. Europe has seen changes in 7 countries in the period 02/01/2012-02/01/2013.
The change of a VAT rate has a huge impact on an ERP system. Due to design limitations in standard SAP, for every new VAT rate a new tax code must be set up. As a consequence a significant amount of additional changes are required to get the new tax code up and running for all SAP transactions.
Limitations of Standard SAP
As a tax code in SAP consists of only 2 characters, the number of possible tax codes is limited. Numerous multinational companies use a considerable amount of tax codes and risk facing a “shortage” of the necessary tax codes.
Multinationals have asked SAP for a solution over the last couple of years, but to date, SAP has not complied with the request.
Taxmarc™ Tax Code Solution
Taxmarc™ Tax Code Solution offers a new design for tax codes in SAP, with the following benefits:
- - The name and description of the tax code in de SAP remain the same.
- - Every country has the same logic for categorization of various VAT results (e.g. Belgium and Netherlands use for standard VAT rate always B1 respectively N1)
- - Because of its time stamp design – no new tax codes required in case of a VAT/GST rate changes.
- - The risk of a shortage of tax codes is eliminated.
- - This integrated SAP solution makes an external tax engine redundant.
- - Return on Investment opportunities (ROI), with hard, soft and potential savings and a break even point within twelve months.
The new tax code structure in Taxmarc™ Tax Code Solution offers an effective tool for efficient deployment of employees. The solution not only underpins more efficient business processes and increased productivity, also the implementation costs of any VAT change will be reduced to a minimum; the solution enables a substantial reduction of the working hours that are spent on maintenance.
Taxmarc™ Tax code solution is a flexible solution and can be implemented with a new tax code structure or on top of the existing tax code structure.
About Taxmarc™
Where We Differentiate
The standard VAT functionality of SAP is far from optimal. SAP exclusively focuses on transactions within a single company; it only assesses the underlying individual transactions and fails to link the current transactions to the VAT results of previous transactions. As a consequence, companies with VAT registrations in different countries cannot automatically comply with all VAT obligations.
Partly due to this reason SAP offers a certain degree of flexibility within the system, which enables users to apply adjustments in order to customize SAP for their organization. Previously this was known as ‘user exit’ and nowadays as enhancement implementation.
It offers users the possibility to add functionality and that is exactly what is accomplished with the implementation of Taxmarc™.
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