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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-...

RICHARD CORNELISSE

Tax Management Consultancy
ANALYSIS, BUDGET SHORTAGE, BUSINESS PROCESS, CATEGORY M, CATEGORY MS, CATEGORY V, CHANGE, CONDITION RECORDS, CONDITION TABLE, EDI, ENTERPRISE RESOURCE PLANNING, ERS, FINANCIAL CRISIS, FTXP, GL ACCOUNT, GLOBAL TREND, HEADER, HR SYSTEM, IDOC MAPPING TABLE, IDOCS, IMPLEMENTATION COSTS, INTRA EU ACQUISITION, INTRASTAT REPORTS, MAINTENANCE, MEK3, ML53, MWST, NEW TAX CODE STRUCTURE, PO, POSTING, PURCHASE, PURCHASE ORDER, PURCHASE PROCESS, REAL ESTATE FUNCTIONALITY, RECORD, REDUCTION, REV-TRACK, REVERSE CHARGE, RFUMS, SALES SYSTEM, SAP, SAP AG, SAP EDI, SELF-BILLING, STANDARD, STANDARD TEXT TABLE, T076M, TAX LAW, TAX REVENUE, TAX-PROCEDURES, TAXMARC™, TCODE SO10, UPLOAD, VALUE-ADDED TAX, VAT, VAT CODE, VAT CODE MAPPING, VAT RATE, VAT REGISTERED, VAT REPORTING, VK13, VLOOKUP, WEBSHOP SYSTEM, WORKING HOURS, ZVST

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™
(hĴp://richardcornelisse.files.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 financial crisis and/or for financing the reduction of direct taxes (corporate tax, income tax, etc.). Numerous multinational companies use very many different tax codes and risk facing a “shortage” of necessary tax codes. Companies face boĴlenecks with SAP‘s 2 character tax codes and the many necessary modifications in SAP in the event of VAT rate changes. It seems therefore a straightforward maĴer, however in practice a considerable amount of activities are required to get this properly implemented in SAP.
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1. An additional check needs to be performed whether foreign VAT registered companies also use similar VAT codes. Category M) and Services (ML53. Category V) but for purchases (MEK3. 9. 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 2 of 3 04-03-2013 20:22 . This exceptional process is not very familiar to most SAP support staff. Intra EU acquisitions).e. 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). The VAT codes used in purchase info records. For purchases of services (i. 4. “ZVST”) as the VAT codes are represented in the condition table items and the conditions themselves in the condition table header. MWST. It depends on the current configuration of VAT functionality whether all activities listed below are required. 6. i. Check all interfaces that send VAT codes/ For example feeder systems such as point of sales systems. 14. Due to the complexity in SAP. for scanned purchase invoice. Check existing transactional data. 5.com/2013/03/04/checklist-for-vat-rate-changes-.. Planned services or Limit PO’s) with service entry sheets it might sometimes even be required to back-date the conditions for the new VAT codes (an audit trail issue). When using self-billing for purchases (ERS) all the transactions that should have the old rate must be seĴled first. Therefore. When using SAP EDI/iDocs. webshop systems. Check account determination seĴings and the use of new VAT codes in other companies/taxprocedures in order to avoid incorrect postings on GL accounts after implementation. the creation of a new code is just the starting point to get SAP up and running. Note that this is not only applicable for Sales (VK13. Category MS) as well. Define all involved stakeholders within the Business. Only after this seĴlement any new VAT code for the new VAT rate can be added to purchase orders or scheduling agreements. 10. HR systems.g. The header and item condition table records must be combined (using Vlookup functionality in excel) for analysis purposes. Review all applicable condition tables with tax conditions (i. In practice this could easily cause over 1. Below you find a non-exhaustive list of required activities in case of VAT rate changes.000 condition records having to be changed. 13. 8. It is a very complicated process and timing/planning is critical. Contact responsible staff for feeder systems and determine which new VAT codes are required.e. 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. Create a Rev-Track that will capture all required changes in SAP 2. 12. The opposite is also possible that more activities are necessary. Analyse the existing VAT codes and identify which new tax codes need to be created..Checklist for VAT rate changes in SAP | Tax Management Consultancy http://richardcornelisse.e. The real estate functionality in standard SAP uses VAT codes in a different way. 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. There is no issue regarding the sales transactions because VAT will be re-determined in the standard pricing procedures. 3. 7. 11. 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. purchase orders and purchase contracts have to be converted to new VAT codes. That encompasses retrieving all conditions with the “old” rate and defining the condition records that need to be end-dated and created with the new VAT code. Tax and IT-Support and set up periodic call to get all parties aligned. the VAT codes must be changed in the real estate transactions/contracts as well. Check customized tables for VAT code mapping.

The new tax code structure in Taxmarc™ (hĴp://taxmarc. the existing templates (variants) must be updated to include the new VAT codes. ▶ No Responses Blog at WordPress.’ Why? There are no new VAT codes required and only the effective VAT rate needs to be changed in SAP.e. 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.Checklist for VAT rate changes in SAP | Tax Management Consultancy http://richardcornelisse. You can imagine that the costs of implementing these changes. It is almost as easy as changing a sales price in SAP. When the VAT reporting (RFUMS) is based on selected VAT codes.html)offers an effective tool for efficient deployment of employees.com. For every VAT rate change new VAT codes must be set up in standard SAP and a significant amount of additional changes are required to get the new VAT codes up and running for all SAP transactions. all VAT reporting templates (i. Due to design limitation in SAP. the existing templates (variants) must be updated to include the new VAT codes. 16. When Intrastat reports (purchases) are based on selected VAT codes. With this. Apart from the required changes in SAP.com/2013/03/04/checklist-for-vat-rate-changes-.com/en/services/taxmarc-standaloneproducts/unchanged-tax-code-structure-made-possible. This makes any control activity or outsourcing more effective and efficient. all above-listed actions are required. have to be added. 3 of 3 04-03-2013 20:22 . Theme: Customized DePo Masthead by AutomaĴic.. the solution underpins more efficient 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. including test cycles. excel or OneSource) must be updated to incorporate the new VAT codes correctly. will be significant. 15..