Modules

Tax code Optimization

Numerous companies are facing issues with the lack of a validity date for a tax code in SAP

In the event of rate changes, new tax codes need to be setup. Over time, this results in a myriad of tax codes in your SAP causing confusion for your accounting department and leading to errors. Because of the multiple recent Indirect tax rate changes around the world, and the 2-character limit in SAP, companies are even running out of available tax codes.

With the integrated Taxmarc Tax Code Optimization module, no new tax codes are required in case of Indirect tax rate changes. Only the effective Indirect tax rate dates need to be changed in SAP. There will be a major reduction in maintenance effort, the risk of a shortage of tax codes is eliminated. The name and meaning of the tax code will forever remain the same, which makes life easier for your accounting employees. It also simplifies the Indirect Tax compliance processes and reports.

The main advantages of the Tax code Optimization module are:

• The tax code optimization module is fully integrated in standard SAP (no interface used).
• No new tax codes are required in case of rate changes.
• A new, global, logical, tax code structure will be implemented. One tax code will have one meaning across all companies within the organization.
• The set of tax codes will remain unchanged, leading to lower maintenance costs, less training and fewer errors.
• Indirect rate changes can be made within 2 hours and set up in advance.
• Avoids running out of available tax codes in SAP due to for example rate changes.
• Tax rates are set up only at one place (the finance module) without the need to replicate these rates in your sales or purchase tax conditions. This prevents mismatches and unnecessary errors and saves on maintenance cost. Your sales and purchase tax conditions are simply set up once without a rate.
• Reconciliation of indirect tax data across companies is easier due to uniform tax codes.

Indirect Tax ID Validation (VIES and more)

The status of an indirect tax registration has a direct impact on your indirect tax determination

For example, to apply the 0% VAT rate for cross-border transactions within the European Union the customer needs to provide a valid VAT number. Romania uses additional statuses besides valid or invalid that lead to different tax treatment (Inactive or deferred status).

Because of this it is vital for your system to register the correct status of every customer indirect tax registration in your system. Indirect tax decisions will automatically be made during the tax determination process based on this status.

The Taxmarc Indirect Tax ID Validation module is an SAP integrated solution which can automatically check the indirect tax identification numbers and names of the customer/vendor/business partner master data against the VIES database of the European Commission. Several European countries now require you to use their local registration database instead of the VIES database. Taxmarc provides connection to the German and Romanian databases.

Outside the EU connections to the UK and Singapore Tax ID validation databases are also included. Confirmation of the check results (consultation ID) will be stored for audit purposes when provided.

Indirect TAX Identification numbers can expire or change due to changes in the legal structure of customers/vendors. Therefore, it is important to periodically re-check these numbers. With the Taxmarc Indirect Tax ID validation module, the check is done on-line when maintaining masterdata but can also be scheduled periodically as part of SAP master data cleansing/maintenance.

The main advantages of the Indirect Tax ID Validation module are:

• VIES and local databases integrated in one module. Taxmarc automatically decides which database to select per requested call.
• Runs seamlessly in standard SAP. Certified solution.
• When the sales and or purchase engine is installed, the status of the Ind TAX ID number is integrated in the Tax Control Framework and in the configuration of Taxmarc. During tax determination the status is taken into consideration. For special statuses configuration is available to drive the correct tax outcome (e.g., Romania non-deductible due to inactive Ind Tax ID number)
• All results are stored in Taxmarc tables in the SAP system. For integration into the business partner (customer and vendor) additional screens are added displaying the statuses of their ind Tax ID number. This integration requires the sales and or purchase engine to be installed.
• The service can be called as a cloud service.
• Periodic mass checks as well as individual checks during BP creation are supported.

Purchase Engine

The Taxmarc Purchase Engine automatically determines the indirect tax treatment for incoming invoices posted in SAP based on an SAP purchase order

This implies that all indirect tax relevant information needs to be available during indirect tax determination on purchase orders. That includes sales information in case of a 3rd party drop shipment (when the vendor delivers directly to the end customer).

The Taxmarc agent combines the information from, the various documents with the indirect tax relevant information from the actual vendor invoices you receive, automates the indirect tax determination, and verifies the tax on the vendor invoice in real-time against the applicable indirect tax laws. When working in an SAP system, the results will be handled by the integrated Tax Control Framework.

The main advantages of the Purchase Engine are:

• The indirect tax treatment is automatically determined and validated against the applicable indirect tax requirements (integrated Tax Control Framework)
• The Purchase engine combines the information from the SAP purchase orders and vendor (master data) with the relevant information from the purchase invoice.
• The system supports invoice processing without the need to change purchase orders afterwards for indirect tax reasons only.
• Smart condition technique (an average of 150 condition records per jurisdiction).
• Efficient and effective use of employees. Manual operations in the financial department, Accounts Payable (AP) or the Shared Service Center will mostly be avoided.
• Indirect tax training, providing and updating manuals, and web-based instructions through decision trees are no longer necessary, since the indirect tax regulations are incorporated into the Tax Engine.
• Information from invoice scanning tools or e-invoicing tools will be included in the automated Indirect tax determination (e.g. the vendor registration number used on the invoice).
• Because invalid transactions will be blocked at the earliest point in your process, incorrect tax data will not make it into your financial postings.

Sales Engine

The Taxmarc Sales engine automatically determines the Indirect tax treatment for outgoing sales orders and invoices posted in SAP and ensures Indirect Tax compliance

The solution not only addresses the shortcomings in standard SAP Indirect tax determination, but also blocks and reports exceptions through the Taxmarc tax control framework in a transparent and easily maintainable way. Every business scenario is immediately and seamlessly checked for Indirect tax compliance.

The main advantages of the Sales Engine are:

• The indirect treatment is automatically determined and validated against the applicable indirect tax requirements (integrated Tax Control Framework).
• The sales engine automatically evaluates all related documents in a flow and guarantees the tax treatment of the individual documents is coordinated (for example in an ABC intra EU flow we make sure the Intracommunity supply will be posted on only 1 of the legs)
• Efficient and effective use of employees. Manual operations in the financial department, Accounts receivable (AR) or the Shared Service Center will mostly be avoided.
• Your order entry staff does not have to know about indirect Tax and enter specific information to guarantee tax compliance. This saves time on training and prevents errors.
• The determination of the customer and company indirect tax registration numbers used for the transaction is done during the actual tax decision and stored as part of the Tax results. This guarantees that the invoices you send out state the correct information without having to develop complex logic.
• Because invalid transactions will be blocked at the earliest point in your process, incorrect tax data will not make it into your financial postings.

Intrastat

The Taxmarc Intrastat module enhances the standard SAP intrastat reporting by connecting it to your finance postings

It guarantees that only movements for which you used an Intracommunity tax code will be reported in Intrastat. Vice versa, a reconciliation report helps you to identify relevant finance transactions that are missing a corresponding entry in Intrastat.

Because the Taxmarc sales and purchase engine already guarantee the quality of your financial postings, the Taxmarc Instrastat module can now also guarantee the correctness of your Intrastat reporting. Note: This module can only be used if you have implemented the Sales and Purchase engine, this is because the integrated Tax Control Framework is crucial in this process.

Reporting and Data Analysis

In the Taxmarc Reporting and Data Analytics module, all Indirect tax relevant transactional data of legal entities operating on the same SAP platform can immediately be made visible and accessible, as this information is stored separately in one table in SAP

For the reporting Taxmarc makes use of standard SAP reports which are optimized where needed and the new Taxmarc fields are integrated. The tax control framework takes care of detecting and correcting invalid transactions at an early stage, before they make it into your finance books. This guarantees high-quality data is included in your monthly reports without the need for manual corrections.

Taxmarc provides additional reporting tools to facilitate and reconcile your tax reporting.

• The IC recon report will show you the posting status and taxcode of all related transactions in an ABC flow. You can easily see if any of the relevant transactions (customer invoice, IC sale invoice, IC purchase) are still missing. Thus, facilitating your month end close process
• The indirect tax data dump report links the standard SAP financial report (RFUMSV00) to the data from the related logistics transaction. This allows you to easily justify/validate why a certain tax code was chosen.
• The Box report tool allows you to configure the data to be reported in the various ‘boxes’ of your indirect tax return, using taxcodes. After correct configuration you can produce your monthly box report with one click of a button.
• The customs VAT reconciliation report will show you the incoming (outside the EU) commercial invoices with the customs invoices. Both invoices are managed by a clearing process, additional documents can be uploaded.
• Most reports can also be accessed from a web browser through SAP Fiori

Taxmarc Compliance Reporting Solution (TCRS)

In today’s world, many countries are transforming their tax legislation towards digitalization

The Taxmarc Compliance Reporting Solution module enables you to digitally transform and automate your indirect tax compliance reporting by generating correct XML files fully automatically and submitting them in a pre-defined format to the relevant tax authorities.

TCRS was built and deployed within the SAP environment. TCRS is a common reporting platform that is capable of handling SAF-T, SII (real time reporting) & e-invoicing. TCRS integrates seamlessly with your middleware, S-FTP for connecting to the tax authorities.

Real Time Visualization and Monitoring

The Real Time Visualization and Monitoring module is the only Taxmarc module that is not integrated into SAP

This module is an external tool built in Qlik Sense, that provides a management overview and allows for detailed data analysis. The module combines logistical and financial data extracted from your SAP system.

Where traditional analysis only starts by checking the financial data, this analysis goes deep into your SAP system and starts instead with the logistical data that form the basis for the tax posting. This allows for analysis of even the most complex flows. The solution provides an up-to-date insight into the actual flow of goods/services in your company and the indirect tax treatment that was applied. Any irregularities in the indirect tax treatment or set-up will be spotted immediately and can be further investigated.

If you use SAP, this tool is a great option to do a quick analysis of your level of compliance with indirect Tax rules.

NOTE: This analysis can only be done in cooperation with our implementation partner PwC.