Checklist for VAT rate changes in SAP | Tax Management Consultancy

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RICHARD CORNELISSE

Tax Management Consultancy

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Checklist for VAT rate changes in SAP

In Indirect Tax Strategic Plan, Processes and Controls on 04/03/2013 at 12:33 pm

By Robbert Hoogeveen, CFO of the KEY Group and Director Technology of Taxmarc
(hp://richardcornelisse.les.wordpress.com/2012/09/robbert_linkedin.jpg)There is a global trend toward increasing VAT rates and broadening the grounds for charging VAT. Governments increase their tax revenues in this way as a means of combating increasing budget shortages due to the nancial crisis and/or for nancing the reduction of direct taxes (corporate tax, income tax, etc.). Numerous multinational companies use very many dierent tax codes and risk facing a shortage of necessary tax codes. Companies face bolenecks with SAPs 2 character tax codes and the many necessary modications in SAP in the event of VAT rate changes. It seems therefore a straightforward maer, however in practice a considerable amount of activities are required to get this properly implemented in SAP.
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Checklist for VAT rate changes in SAP | Tax Management Consultancy

http://richardcornelisse.com/2013/03/04/checklist-for-vat-rate-changes-...

The reason is that VAT codes in SAP are not set-up with validity dates and therefore for every VAT rate change a new VAT code has to be created. Due to the complexity in SAP, the creation of a new code is just the starting point to get SAP up and running. Below you nd a non-exhaustive list of required activities in case of VAT rate changes. It depends on the current conguration of VAT functionality whether all activities listed below are required. The opposite is also possible that more activities are necessary. 1. Create a Rev-Track that will capture all required changes in SAP 2. Dene all involved stakeholders within the Business, Tax and IT-Support and set up periodic call to get all parties aligned. 3. Analyse the existing VAT codes and identify which new tax codes need to be created. 4. Newly created tax codes with the new rates (FTXP) are not only necessary for local transactions where the new rate will be applicable but also for purchases when the reverse charge calculation is applicable (e.g. Intra EU acquisitions). An additional check needs to be performed whether foreign VAT registered companies also use similar VAT codes. 5. Check account determination seings and the use of new VAT codes in other companies/taxprocedures in order to avoid incorrect postings on GL accounts after implementation. 6. Check all interfaces that send VAT codes/ For example feeder systems such as point of sales systems, webshop systems, HR systems. Contact responsible sta for feeder systems and determine which new VAT codes are required. 7. The VAT codes used in purchase info records, purchase orders and purchase contracts have to be converted to new VAT codes. 8. When using SAP EDI/iDocs, the VAT codes in the iDoc mapping table (T076M) have to be changed new entries with new rates but for reverse charge type of VAT codes the old entries must be replaced at time of rate change. 9. When using self-billing for purchases (ERS) all the transactions that should have the old rate must be seled rst. Only after this selement any new VAT code for the new VAT rate can be added to purchase orders or scheduling agreements. It is a very complicated process and timing/planning is critical. 10. Review all applicable condition tables with tax conditions (i.e. MWST, ZVST) as the VAT codes are represented in the condition table items and the conditions themselves in the condition table header. The header and item condition table records must be combined (using Vlookup functionality in excel) for analysis purposes. That encompasses retrieving all conditions with the old rate and dening the condition records that need to be end-dated and created with the new VAT code. In practice this could easily cause over 1,000 condition records having to be changed. Note that this is not only applicable for Sales (VK13, Category V) but for purchases (MEK3, Category M) and Services (ML53, Category MS) as well. 11. Check customized tables for VAT code mapping, i.e. for scanned purchase invoice. 12. The real estate functionality in standard SAP uses VAT codes in a dierent way. Therefore, the VAT codes must be changed in the real estate transactions/contracts as well. This exceptional process is not very familiar to most SAP support sta. 13. Check existing transactional data. There is no issue regarding the sales transactions because VAT will be re-determined in the standard pricing procedures. The purchase process SAP is however not always re-determining the VAT code and therefore the VAT code on the Invoice tab must also be changed (manually or via mass upload). For purchases of services (i.e. Planned services or Limit POs) with service entry sheets it might sometimes even be required to back-date the conditions for the new VAT codes (an audit trail issue). 14. In case the VAT invoice text message is not copied from the VAT code description but derived from standard text table (Tcode SO10), all text messages have to be reviewed and new entries

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Checklist for VAT rate changes in SAP | Tax Management Consultancy

http://richardcornelisse.com/2013/03/04/checklist-for-vat-rate-changes-...

have to be added. 15. When the VAT reporting (RFUMS) is based on selected VAT codes, the existing templates (variants) must be updated to include the new VAT codes. 16. When Intrastat reports (purchases) are based on selected VAT codes, the existing templates (variants) must be updated to include the new VAT codes. Apart from the required changes in SAP, all VAT reporting templates (i.e. excel or OneSource) must be updated to incorporate the new VAT codes correctly. Due to design limitation in SAP, all above-listed actions are required. For every VAT rate change new VAT codes must be set up in standard SAP and a signicant amount of additional changes are required to get the new VAT codes up and running for all SAP transactions. You can imagine that the costs of implementing these changes, including test cycles, will be signicant. The new tax code structure in Taxmarc (hp://taxmarc.com/en/services/taxmarc-standaloneproducts/unchanged-tax-code-structure-made-possible.html)oers an eective tool for ecient deployment of employees. With this, the solution underpins more ecient business processes and increased productivity and 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. Why? There are no new VAT codes required and only the eective VAT rate needs to be changed in SAP. It is almost as easy as changing a sales price in SAP. The risk of a shortage of tax codes will be eliminated and the name and description of the tax code in de SAP pricing procedure remain the same. This makes any control activity or outsourcing more eective and ecient. No Responses Blog at WordPress.com. Theme: Customized DePo Masthead by Automaic.

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